How we spend our monthly income?

At the time of writing this our family is living on a quite tight budget. I mean we make enough to support a normal middle class life, but the lifestyle that we have at the moment doesn’t quite match our income. I try to give an idea where the money goes and how we believe (and hope) that things will change in the near future. And what we need to do if they don’t. Again, we have written this post mainly for our kids to read when they grow up, but we are also happy to share this.

Our monthly cost structure

Here is a brakedown of the cost structure of our daily life. I won’t give exact numbers, but the percentages surely give the picture. This structure represents the normal cost structure in an average month. In the summer months the “Other” is about 20 percentage points bigger (more than half of the month expenditures) as it’s just so much more expensive to be at home (on holiday) than at work.

 

 

Housing is a big part of our monthly expenses, but we have chosen to put a big portion of our income there as we value all the things our current housing choice gives us. We don’t see the absolute nor the relative expenditure of housing to go down in the coming years. If we manage to increase our income substantially in the coming years (meaning more than 20%) we might consider putting even more money in housing as we do at the moment.

Other means all the thins that are not specified here. For example buying clothes, going to the movies or bowling etc, spending a weekend at a hotel, organizing kids’ birthdays. The list goes one. These are the costs that make life worth living. If you just spent all the time indoors and doing nothing then yes, you would save a shit ton of money. But that would be a very underwhelming life. We value experiences and are always willing to spend money there. Thus, with limited income you always end up having to choose between spending some today or loads more in the future (assuming that our investments grow nicely of course).

Grocery store and restaurants spend is too high. We can admit that. But it used to be much higher and we think we have done a good job bringing it down. From this level it becomes increasingly difficult to cut costs. We don’t want to eat only casseroles and value the occasional restaurant of cafe visit quite high. But there are two things we can cut back easily, treats and drinks. Cutting these back a little would propably save us a 1 000 euros a year and still we wouldn’t have to completely give up on them.

Hobbies and fun equals the parents’ hobbies and streaming services basically. Our kids might have hobbies or their own starting from next year so we should also prepare for that financially. We would never want to limit our kids’ hobbies due to money constraints. We gladly take out the money somewhere else.

We drive a cheap car and are happy with it. Buying an expensive car is, in our view, one of the things that just don’t make sense. But this is because we don’t value having a nice car very high. Somebody else might and then they absolute should invest in one.

The last one is daycare. It’s a small one and we didn’t put the exact number there (nor if it’s for 1 or 2 kids atm), as it’s too easy to make estimations of one’s income based on the daycare payments. So 4% is just a ballpark figure.

Plan forward

So how do we plan on getting slightly more financial room in our lives? There is definitely a possibility to increase our income from day job. Thus, we see that in the next 5 years our net income could increase up to 10-20% in real terms (in today’s money). But it could as well be that it doesn’t grow that much. It’s somewhat in our on hands how much we want to increase responsibility at work. The cost of housing is likely not coming down and we are also quite hesitant reducing much of the other slices of the pie. We see a few places where we could save some, but increasing the income is the main driver.