In 2020 I spend almost exactly 25.000 EUR. I said it before, but I started working at a 1270 EUR wage and I still remember this. So spending 25.000 EUR in one year is a huge amount. I have to admit I have been hit by lifestyle inflation, and because my money kept growing I never really paid much attention to it.
2020 Budget review
In this blog I want to have a closer look at how I did in 2020 (as opposed to 2019), where the money went, I also want to budget for 2021, but that might be a follow up blog. Something I never tried in the past as my income was always higher then my expenses, but a change in expense can really do a lot to reach Financial Independence.
At the same time I don’t want to drastically cut costs, there is a few things that remain important to me, that I will not cut on.
Would you want to reach Financial Independence to realize you have nothing to live for? I don’t think so. So I do feel its important to keep investing in living, but at the same time I do need to admit there was certain things I bought that now I wonder why I have them. So the main thing I want to do less in 2021 is buy stuff.
Where did the money go?
The easiest way to find out is the visualize this in a flow chart.
When seeing the flow chart it actually makes much more sense. The large majority went into Housing Costs (11261 EUR), which is mostly my loan (I include the principal + interests), and syndic costs (a stunning 2600 EUR this year). Then we have groceries, again a little bit on the high side, but not completely unrealistic.
What stands out the most is Shopping at 2646 EUR and Hobby’s at 2848 EUR. I don’t really blame myself for spending so much on hobby’s, as I said I do think its important, but it would be great if I could cut back on Shopping. I actually do feel I have to much stuff in my home already!
I do want to compare with 2019, so I did the same exercise then.
So I actually spend almost 6000 EUR less in 2020.
Where are the differences? Much higher hopping, restaurants, holiday expenses and slightly higher housing costs.
In all fairness in 2019 I spend almost 100% of my workdays abroad. I do get a small reimbursement for this which is specifically meant for food like going on restaurants, and is at least as much as the extra expenses I have on restaurants. I do not always have the option to cook at home, especially if I’m on a hotel. For that matter I really think the restaurants costs are okay, even if at a first glance my expenses seem much to high. I also went to South Africa in 2019, and I do think the 3500 EUR spend on vacation was worth it as this was really a once in a lifetime trip!
At the same time I do think its to high and I am happy I was able to reduce my expenses with 6000 EUR in 2020, and feel I should try to reduce it further.
Budget for 2021
So for the first time I will budget my expenses in the hopes that it will make it easier for me to reach lower expenses.
I would like to set as target to spend 2,5% less in 2021.
It’s possible if there is big changes in my life that I will recalculate this budget however right now I feel its realistic. I will also be checking my monthly savings rate to see that I am still on budget.
| Total 2020 | Target 2021 | Budget per month 2021 | |
| Activities | 25 | 150 | 13 |
| Business Expenses | 520 | 260 | 22 |
| Costs | 739 | 923 | 77 |
| Day trips | 349 | 349 | 29 |
| Gifts | 240 | 360 | 30 |
| Groceries | 2967 | 2670 | 223 |
| Health | 760 | 608 | 51 |
| Hobbys | 2848 | 2848 | 237 |
| Holidays | 1233 | 2467 | 206 |
| Housing Costs | 11261 | 11261 | 938 |
| Restaurants | 1420 | 1278 | 107 |
| Shopping | 2646 | 1217 | 101 |
| Transport | 93 | 93 | 8 |
| Total Expenses | 25101 | 24484 | 2040 |
What has changed?
In total I am hoping to spend 2,5% less in 2021. I see 2021 as a special year as I am planning a move, and will rent a place. I expect there will be a few months overlap between my loan and renting. This is the main reason my housing budget will remain the same as in 2021, its only in 2022 I expect this to cut in half.
I have foreseen more budget for activities (post-covid), costs (expecting extra car costs), gifts (more parties in 2021) and doubled my Holiday budget.
I have cut on Business Expenses (lowered my wordpress subscription from Business to Premium – I have 2 sites), Groceries (I feel I can do better then last year by going to the Aldi), Health (no Mouth mask purchases planned and Im in better health then last year), Restaurants and Shopping (severely cut back, I want to buy less stuff!).
I kept my planned expenses for hobby’s identical, as said before this is really important for me.
For housing I also made a more detailed calculation what my costs would look like the next 3 years if I found an apartment for 750 EUR rent / month and moved in May. As you can see both the moving date and the amount it will cost me to rent are a bit hard to predict. I would be okay with renting for 800 EUR to probably.
The most important thing is that its clear that there is a constant drop in costs during the year, so even if I would be spending more in 2021 I know there is a drop coming. This drop is mostly thanks to paying off my loan on my first property. If renting out my first property goes well, I might buy a second apartment at one point.
I will be checking if I am on budget during my monthly saving rate check ups of course!
What did you expenses for 2020 look like? Do you feel I spend to much or to little? Post a comment and let me know?
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