Jonathon Wardman

Finances: February / March 2012

My housemate made a comment with regard to finances the other day and it made me think. She commented on how I should be able to put a certain amount of money into saving each month. While I do save money, and I have a salary-sacrifice pension too, I don’t think I am saving as much as possibly I could. I was also thinking recently about a possible future change to my outgoings and wondering what I could afford. So I decided to do some analysis on my spending over a few months in early 2012. The following is a break down of February and March, and I will take a look at April once the month is complete.

I have broken my spending down into 10 broad categories: housekeeping, basic outgoings for rent, electricity, home insurance, TV license, etc. (I think it’s worth noting that I don’t pay 100% of these expenses, they are generally split 50/50 with my housemate, but as they go through my account they are all included in this analysis); entertainment, including going out, books, DVDs, music, games, etc.; cash, as I have taken this information from bank statements I can’t define what cash is spent on, it is most likely a mix of the other categories; purchases, general material purchases such as clothes and camera equipment; internet, both our home internet, my mobile internet, and various hosting and domain services I make use of; savings, money I manage to put into savings; food, generally Tesco shopping where I’ve used my card, although does include some other bits and pieces; other bills, a broad category covering some insurance policies, my mobile phone bill, NI contributions and things like that; travel, mostly train travel, but can include air travel; charges and interest, a small amount paid in bank charges, overseas transaction charges and any relevant interest charges on things such as credit cards. All figures quoted are percentages of total outgoings for the month — they do not reflect income — but they do cover all expenditure for the month.

February gives a good base to work from. As expected the majority of my costs come from housekeeping — rent and bills. Material purchases this month felt quite high (although time will tell) as I made a number of clothing and footwear purchases before a short holiday. This holiday is also the reason the cash percentage is quite high — all expenses on my break were paid in cash, including the hotel.

March is similar, but there are a few notable differences. Firstly the cash section is much smaller, as expected, and secondly the travel section is much larger. This is down to buying a couple of flights (while the flights will be taken in April, of course I bought them in advance). Food is also considerably smaller. I don’t think I ate a huge amount less, but I presume I bought more food with cash — even at 3.3% of total expenditure it’s a reasonable amount of money.

So the obvious savings are going to be made from what I currently spend on entertainment. There are some savings to be made elsewhere — for example my ISP have just increased their data rates and we don’t need the larger allowance so I will downgrade the service as soon as I can, and I can always save on my mobile phone bill — but not only is the money I spend on entertainment the second largest expenditure each month, I think it should also be possible to reduce the amount I spend without really affecting quality of life.

The ultimate aim is, of course, to increase the size of the light blue savings pie slice. That starts this month, and I’ll let you know in 27 days how I get on.