Coming to end of 1H'22. Long time since last tracked my expenses. With the global economy in gloomy atmosphere and stock market in tatter, it maybe prudent to increase one's saving when the inflation is high and hopefully able to channel it to cash generative assets to negate the rising prices.
Has been quite some time since last reviewed family expenses. For simplicity excluded support from my wife which probably balance out roughly with her daily expenses taken from family pot while she shares some of the transport fares. Basically the Math is to extract out the expenses taken out from my saving bank that is digitally recorded for download.
To make the review more meaningful, Income tax, home loan and saving type of insurance removed to focus what's matter. This is more applicable to myself.
Hopefully will give a good perspective of more realistic expenses to focus on. The expenses work out to about S$113 k for rolling 12 months period or 9.4 k monthly expenses.
What Is Lifestyle Creep?
In Investopedia, Lifestyle creep occurs when an individual's standard of living improves as their discretionary income rises and former luxuries become new necessities. The rise in discretionary income can happen either through an increase in income or decrease in costs.
It isn't entirely a bad thing but a progress but it can become a Monster when one's income falls or disappears. And this is my primary concern if one plans to retire.
Most of the withdrawals are easily tracked in this saving account. Purchases via credit card is also paid out from the same account. So the data capture is quite robust.
Due to tiredness, we have get accustomed to taking car with our toddlers. Used to take a long walk instead when we have our first child. This item is now a good chunk in transport costs.
Food wise we have seen a spike as we stay at home mostly with delivery foods and going for more dishes. There is one time medical cost which will not repeat. A special Apple gift. A Hotel family expenses. And some misc items from oversea internet purchases.
Belt Tightening Operation
Despite there are items which are one-off it is not going to skew the total too much. In life there are likely many one-off of different events. Ignoring them is to our own financial perils which is why buffers are needed. After some discussion we decided to focus on list for the remaining 2H'22 expenses.
The first category of items are on myself is to reduce my breakfast expenditure. Something which I can control easily without much sacrifice. Takeaway simplified and consume home-made kopi. This cut down expense some. Next is night snack. Instead of bread plus others, it will be biscuits. Both cuts are much easier to handle.
Second category related to children expenses. After consultation with wife, we decide to cut down on transport expenses to nanny's place. This may not be possible always such as raining days else we will take long walk with strollers more often. My knee feels tearing from the long walk so is not roller coaster walk. Long run I think is good for health. There is always temptation to take car so we shall see.
Next is nappy which is quite sizeable expense. The elder one is now three and toilet trained. There will be focus to reduce nappy use other than sleep. She has reached nursery age but we plan to have her spend a few hours after school to be taken care of by nanny. Expecting some ball park saving range. Sometimes out of tiredness, we will ask our nanny to help out on Sat. or holiday. This cannot go one. For two toddlers the cost could work out some saving.
Our meals for our dinner is the next focus point. We often have food delivery service due to work and timing to fetch our children. The potential saving can be sizeable. Will target saving per meal for both of us.
This works out to about below table. Looks like there is still some ways to go about in improving my financial situation. Will be vigilant in any non-essential costs to put some controls in place. However I have to admit, there is limit on what I can do when we have a family with kids other than raising income. To be realistic, at current measure we are not there yet of below 6 digits expense.
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