July 2022 Spending

Hi all again. Today I want to update you on the spending the Mrs and I have accumulated this month. If you read my July 2022 Update (which was essentially an update on what I had been up to and an update on my FI fund), you will have seen we went on holiday this month. So as you may have guessed, our budget has been blown out of the water a bit.

Let’s have a dive in and see what’s underneath!

July 2022 Spending

OK so as I said in this post, I plan on updating you all on our spending each month. Essentially what we do is just take out our mobile phones, open our mobile banking app and write down each and every item we have spent money on. We include all of the data in a spreadsheet and update it every month. We have been doing this since January 2022.

We initially made an estimate budget based on what we thought we spent on various things. In the table below, you can see the budget is included in red. The fixed costs were easier to calculate as these are generally repeatable known costs. As for the variable costs, I think we may need to have a re-think about what we actually spend. As you will see, our initial estimate undercooked what we actually spend. But we shouldn’t get too ahead of ourselves, we still have 5months of the year left so maybe just maybe we might get closer to our original estimate.

As I said previously, this month has been a bit of a car crash. We went on holiday and the Mrs also had her Mum and Sister (with kids) staying with us so we spent a lot. An overspend on groceries and holidays is therefore understandable (we realise this won’t be the case every month). But we also did probably spend too much on eating out and drinking out. An easy win for the budget would probably be to reduce these two spend items but we tend to struggle with this - hopefully we can improve!

Otherwise, as you can see, our total fixed costs are £1,381.64.

The breakdown of the fixed costs are shown in the table below. For perspective, we live in a 4 bedroom house in Newcastle and have 1 car (a Hyundai i10) that we share between us. We also have a lodger that shares the property with us.

So, as you probably guessed it, the month of July 2022 is our worst month. What I time to start blogging eh!

This month, at £139.54, we were 62% over our daily spending target of £86.08.

This means our average “actual” daily spend has increased to £97.90. Which if you multiply by 365days, is projected to be £35,731.97 per year for us as a couple. If you multiply this by 25 (proxy for the 4% rule), this indicates we would require an investment pot of £893,299.32 to sustain our current lifestyle - based on these projections.

We also need to realise that we don’t need to continue with our currently lifestyle to reach FIRE. We could downsize our house and some of the payments we have in our fixed costs have the potential to significantly reduce.

Remember, each additional £1,000 you want to spend yearly when you reach FIRE results in an additional £25,000 required in your investment pot (assuming the 4% rule - find out more about the 4% rule here). This gives me motivation to try and breakdown what brings me true value vs what is more of a “nice to have” or “wasted spending”. I think we all have the potential to optimise a little bit better.

I also like to show things in graphical form (I think that’s because of the engineer in me) so enjoy the plots below.

The 3rd chart makes this month look like one of the inflation prints we have seen recently!

Let’s hope next month is a better one because this month has really given us a shake up! I suppose it is a good thing as we can see exactly where the money has gone and hopefully it makes us think twice in August. Although, saying that, we are planning to go to London for a friends BBQ party and we also have a friends “big birthday” in a brewery that we are invited to. Let’s see if we can keep the spending down otherwise.

See you next time and thanks for reading.