Why we decided to revisit our budget system before end of the year

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We have been tracking our expenses since 2011 using an Excel sheet with 6 different accounts and different categories within each account. Thanks to having a budget/expense tracking system, our net worth has increased by 250% in 5 years!

Our budget system is similar to the envelop budget system where you allocate a certain amount of month to an expense category each month. The minor different being we are not too bogged down if we are under or over the set monthly amount. Rather, we review the annual expenses in each account at end of each year and see which categories we can reduce and optimize. This allows a bit of flexibility as expenses in some months can be higher (like when we host dinners), and some months can be lower.

A trend that I noticed over the last half year or so is that our food expenses have been creeping up slowly. I used to go to Costco once a month to get what we need. Lately I have been going to Costco two or three times a month. Although we always shop at Costco with a list to ensure our sanity, we have been adding semi-unnecessary or good-to-have items on the shopping list (like pasta, rice, tomato sauce, etc). As a result, our pantry and freezer are both quite well-stocked.

We are doing great in the other accounts. However, the increase in food and a few other expenses within the necessities account meant we have spent over $2,000 than what we have allocated. With only have 2 more months to go this year, I have been feeling a bit worried that we would end up with a gigantic deficit.

So last night Mrs. T and I sat down and went through our budget Excel sheet to see what we can do to get back to a balanced necessities budget.

So far in 2016 we have spent:

  • An average of $720 per month on groceries
  • An average of $145 per month on household items
  • An average of $95 per month on internet and cellphone
  • An average of $65 per month on T Cat ($25 goes toward savings for future expenses, like a vet visit for example)
  • An average of $93 per month on clothing
  • An average of $120 per month on gas
  • An average of $120 per month on utilities

We then did a quick comparison between 2015 and 2016. A few things jumped out at us right away...

  • Property taxes, house insurance, and car insurance amount increased by ~$150. Unfortunately not much we can do here.
  • Compare 10 months food spending in 2015 and 2016, we are spending $130 per month more on food
  • If we compare the 2016 ten months average to the 2015 twelve month average, we are spending $78 per month extra on food (Mrs. T's family was over for Christmas last year, so we end up spending a lot more on groceries last December)
  • We are spending about $160 per month less on household items compared to 2015
  • We are spending about $30 per month less on gas compared to 2015
  • We are spending about $13 per month more on internet and cellphone
  • We are spending about $5 per month more on utilities

Baby T1.0 is now eating more food than last year and we just introduced solids to Baby T2.0. But I doubt these two are eating an extra $130 worth of food each month. Therefore, an increase of $130 per month is a bit concerning, specifically knowing that we are growing and eating our own vegetables and herbs.

After analyzing the numbers, we were quick to come up with a plan of action:

From now until middle of December (we'll be in Denmark for Christmas), we are not buying any meat. We will use what we have in the freezer. We will also use what we have in the garden and pantry first. We will purchase produce from a local produce store rather than Costco as things are significantly cheaper at the local produce store (i.e. apples $1.50/lb at Costco vs $0.69/lb). Since we eat eggs for breakfast every morning, we will continue buying organic eggs from Costco and will buy fish occasionally to increase our fish consumption. While our spending of household items has reduced compared to 2015, we will limit Honest company monthly shipment to only one shipment for rest of 2016.

Why I love our budget system and the Excel sheet that we use? Because we can do analysis so quickly. Gotta love having a supportive spouse that's totally on board with frugality and working toward financial independence.

Will we be successful in having a balanced necessities budget by end of 2016? I think so but we will find out once 2016 is over. I have my fingers crossed.

Dear readers, do you go over your budget regularly to see what you can reduce or optimize? Is your significant other on board with tracking expenses? Are you tracking together or separately?

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32 Comments

  • Reply
    Vivianne
    November 1, 2016 at 9:47 am

    It's amazing that you can keep track of everything to the core. Also, what size of house do you have that utilities only cost you $100? Is it because the energy cost in Canada is much cheaper?

    • Reply
      Tawcan
      November 1, 2016 at 7:22 pm

      I don't know if energy cost in Canada is cheaper or not but we are very conservative when it comes to energy use - using LED light bulbs, turning lights off when we're not in the room, and low temperature settings on thermostat.

      • Reply
        robmunich
        November 2, 2016 at 7:37 am

        What do you spend a month on hydro, in Ontario at least rates have sky rocked in the past couple of years.

        Food could the increase be due to inflation falling dollar?

        I love YNAB and run reports on a regular basis. Much less work than trying to enter in everything in manually

        • Reply
          Tawcan
          November 2, 2016 at 11:26 am

          We spent about $35 per month on hydro. We use to spend about $25 when we lived in an apartment. There are probably some stuff we can do to reduce our hydro bill even more.

          I think the food increase is mostly caused by eating more meat and eating better quality food items.

          I like having my excel sheet that I control.

          • Paul
            November 7, 2016 at 9:34 pm

            As Rob mentioned, hydro in Ontario is much higher than BC. I just took a look at my utilities tracking and my bill has gone up $15 to $20 per month from last year and my usage is about the same. I use to spend about $50 per month which I thought was pretty good, now my bill has gone up to $65 to $70 per month.

  • Reply
    Finance Solver
    November 1, 2016 at 10:50 am

    Without knowing the numbers, it's really hard to be make an educated decision going forward. Tracking things definitely helped me get even more obsessed about personal finance so that I make sure my budgets aren't too out of the norm month to month. Thank you for the transparency and sharing your numbers of your expenses!

    • Reply
      Tawcan
      November 1, 2016 at 7:22 pm

      It's nice to be able to compare numbers from different years and that definitely helped us to stay focused.

  • Reply
    Biglaw Investor
    November 1, 2016 at 11:53 am

    I found the same thing to be true by using the YNAB system. You end up discovering small inflation in budget categories much earlier (since you're forced to allocate your money and you quickly realize there's not enough to go around).

    • Reply
      Tawcan
      November 1, 2016 at 7:23 pm

      Exactly, that's why having a budget system is so useful.

  • Reply
    Mr. Tako @ Mr. Tako Escapes
    November 1, 2016 at 12:21 pm

    Costco can get pretty expensive. Not everything sold there is a fantastic deal. Lately we've started to cut back on our costco spending, and I think it has helped.

    I also recommend taking a look at alternative protein sources as a good way to cut back: http://www.mrtakoescapes.com/2016/10/25/eggs-tofu-beans-oh/

    Hope you get that budget balanced again!

    • Reply
      Tawcan
      November 1, 2016 at 7:25 pm

      Hi Mr. Tako,

      We definitely need to cut back on Costco spending. 🙂

      We eat quite a bit of eggs already (typically get 4 dozen organic eggs each time we go to Costco and that last maybe 2 weeks, less if Mrs. T does pastry stuff). I love tofu but Mrs. T doesn't so that doesn't quite work for us. We are trying to eat more beans as an alternative to meat.

  • Reply
    PhysicianOnFIRE
    November 1, 2016 at 1:06 pm

    Interesting to see the breakdown, and how your spending has changed over time. We've established a baseline with one year tracked, and it will be interesting to continue to gather spending data to see how the numbers compare from one year to another.

    Best,
    -PoF

    • Reply
      Tawcan
      November 1, 2016 at 7:25 pm

      It's nice to have a baseline to compare moving forward. We're going over our necessities budget mostly because we reduce the percentage compared to last year.

  • Reply
    Mr. SSC
    November 1, 2016 at 1:28 pm

    This year we've switched our monthly "budget" report out to compare to last years numbers and we can see how things compare. It's been great seeing the daycare drop, but it will be the same for another year before it drops again.

    We found Costco to be a big money sink for us. The stuff we got wasn't super great compared to other store prices, but like you, we would end up putting other non-essential essential types of items in our cart and the bill just got bigger each time. 🙂

    We found it easy to compare monthly spending and year averages after tracking spending for so long. That makes it really easy to see what is going up/down or staying the same.

    • Reply
      Tawcan
      November 1, 2016 at 7:27 pm

      Daycare can cost a lot of money, glad that Mrs. T is staying home to look after the kids. We now have pre-school expenses but that's pretty minimum.

      Costco is good for non perishable items IMO. For produce and fruits Costco may not be as cheap. Because you buy bulk and can't hand pick the items, from time to time we end up with the odd bad apples/oranges.

  • Reply
    Dividends Down Under
    November 1, 2016 at 2:39 pm

    Interesting to see how somethings have gone up in expenditure. I think it's okay that you've spent a little more, as long as you feel a bit better about your diets. What about inflation, could that be a factor with some of this? Are you eating out less, therefore buying more supermarket food so you're actually doing better than you think?

    I think it's a good goal to reduce the expenditure though. We have recently improved our diet and stopped eating out, both of these factors have increased our supermarket shopping by quite a bit.

    Tristan

    • Reply
      Tawcan
      November 1, 2016 at 7:30 pm

      We are definitely eating better, a lot of organic products and such. Good point on eating out, I think on average we are eating out less this year compared to 2015 so makes a bit of sense that we might be spending a little bit more on food.

  • Reply
    PassiveIncomeDude
    November 1, 2016 at 2:58 pm

    Very interesting Tawcan. My two quick comments - I find I spend more than I want EVERY time at Costco. 🙂 Funny how that works out. And two - have you considered using Mint? I would imagine you can get just as good analysis, and perhaps in less time. Great update!

    • Reply
      Tawcan
      November 1, 2016 at 7:31 pm

      No wonder Costco is making great profits huh? I totally should have bought Costco stocks years ago. 🙂

      I have considered Mint but I don't like the idea of giving a 3rd party app access to all my personal accounts.

  • Reply
    Brian (@DebtDiscipline)
    November 1, 2016 at 6:16 pm

    We use a combination of spreadsheet and Personal Capital to track our budget/net worth/expenses. We did review often. I think we can all relate to the Costco spending creep. 🙂

    • Reply
      Tawcan
      November 1, 2016 at 7:32 pm

      Unfortunately Personal Capital doesn't work for us Canadians. I know a lot of bloggers use Personal Capital but I am not sure if I want to allow a 3rd party app access to all my financial information.

  • Reply
    Dividend Family Guy
    November 2, 2016 at 5:58 am

    We are over on food as well. Mostly from baby food so hopefully that will go down next year.

    • Reply
      Tawcan
      November 2, 2016 at 11:25 am

      We haven't been feeding Baby T2.0 any baby food. She's doing baby led weaning so just eating soft normal food.

  • Reply
    Mr Defined Sight
    November 3, 2016 at 8:53 am

    We just use an Excel spreadsheet to track the budget. I have noticed an increase in groceries as well. I haven't figured out the average monthly increase though. The gas savings have been nice though as you mentioned. Take care!

    • Reply
      Tawcan
      November 3, 2016 at 11:33 am

      I have changed my driving habit a bit lately and have seen a positive impact to overall mileage. 🙂

  • Reply
    Maggie
    November 3, 2016 at 7:13 pm

    I'm jealous of your telecommunications costs. Our internet is $100 and that's the cheapest plan that doesn't charge extra for bandwidth! But I can rub it in that we never have to purchase fish. 🙂 Mr. T gets our Excel sheet to do what I want it to do and then I manage it. Periodically I have him sit down with me to look it all over, but I mostly interact with it.

    • Reply
      Tawcan
      November 4, 2016 at 8:46 am

      Our telecommunication cost would have been higher if we get a faster internet plan. It's pretty low because Mrs. T has a basic cellphone plan and mine is being paid by work.

  • Reply
    Team CF
    November 4, 2016 at 2:15 am

    Don't forget on the grocery topic that food/household item inflation in Canada has been pretty bad since the dollar lost value against the greenback. That alone might account of 5 to 10% higher grocery bill. But the kids definitely do add to costs too, obviously.
    That being said, it's good to review the expenses on occasion to make sure you are as efficient as you can be.

    • Reply
      Tawcan
      November 4, 2016 at 8:47 am

      Very true Team CF. Definitely have seen produce price increasing over the last year or so as the Canadian dollar lost value again the greenback.

  • Reply
    Joe
    November 4, 2016 at 6:50 am

    Our budget is a big different. We have a monthly budget and if we're below that we're okay. That's said, I noticed that our grocery has been creeping up in 2016 too. I think that's natural as the kids age. Our kid is eating more now. It's not a big impact yet, but I'm sure he'll eat a ton when he's a teenager. We'll try to cut back in Nov and Dec to bring the average down.

    • Reply
      Tawcan
      November 4, 2016 at 8:48 am

      Both Baby T1.0 and T2.0 are eating more and more each day. Totally need to take them to all-you-can-eat places when they're teenagers lol.

  • Reply
    BeSmartRich
    November 5, 2016 at 3:59 am

    Having to re-look at budgets are extremely important. There is always room for improvement. Good job Tawcan.

    BSR

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