Planning Expenses
My partner and I recently made quite a large move into a new unit in Sydney. Our rent went up in Wollongong by quite a bit, and we couldn't justify paying that much to live in wollongong.
We're both earning a pretty ok salary, but moving into literally one of the most expensive cities in the world can be a bit daunting. We wanted to try to visualise our expenses and see if it was even something we could afford.
I'd tried financial planning before, but it always ends up being a chore, falling out of sync or just becoming way too much of a hassle. Instead, this time I tried to simplify things.
Plan for the worst case scenario
The first step of this plan is to write down every recurring expense. For variable things like groceries - pick the most expensive reasonable shop you did recently and round it up. Usually our weekly groceries range between $140 - $160 but depending on if we want snacks, are having guests or just want to buy some drinks it can sometimes be more. I've rounded up Groceries to $200 in our planner.
I then split them into a Google sheet like so:
| Expense | Yearly | Monthly | Fortnightly | Weekly |
|---|---|---|---|---|
| Rent | $850 | |||
| Groceries | $200 | |||
| Utilities | $200 | |||
| Car Rego | $1,500 | |||
| Youtube Premium | $11 |
I then sum everything down into the weekly column, again assuming worst case:
- Monthly = total / 41
- Yearly = total / 12
| Expense | Yearly | Monthly | Fortnightly | Weekly |
|---|---|---|---|---|
| Rent | $850 | |||
| Groceries | $200 | |||
| Utilities | $200 | $50 | ||
| Car Rego | $1,500 | $125 | ||
| Youtube Premium | $11 | $2.75 |
Next calculate the totals:
- Yearly = weekly * 52
- Monthly = yearly / 12
- Fortnightly = weekly * 2
| Expense | Yearly | Monthly | Fortnightly | Weekly |
|---|---|---|---|---|
| Rent | $850 | |||
| Groceries | $200 | |||
| Utilities | $200 | $50 | ||
| Car Rego | $1,500 | $125 | ||
| Youtube Premium | $11 | $2.75 | ||
| Total | $63,843 | $5,320.25 | $2,455.50 | $1,227.75 |
These bills are then split between both my partner and I. We then each have our own table in the same spreadsheet with our own personal expenses. If there's a personal subscription in USD, assume the worst and select the highest recent expense and round it to the nearest dollar. For example, I'm charged for my IDE in USD. It's 49 USD, and I was last charged $75.37, I round this up to $80. Assuming the worst case.
| Expense | Yearly | Monthly | Fortnightly | Weekly |
|---|---|---|---|---|
| Bills | $613.87 | |||
| Domains | $150 | $12.50 | ||
| IDE | $80 | $6.67 | ||
| FFXIV | $20 | $5 | ||
| BackBlaze | $27 | $6.75 | ||
| Total | $33,529.08 | $2,794.09 | $1,289.58 | $644.79 |
I get paid on a fortnightly basis - so from this table I know that I need to move at least $1,289.58 into my billing account each fortnight. This method also slowly builds up padding - not all expenses will likely come out at once, but if they do technically you will be able to handle them.
If you want as well you can add in an extra row showing the total minus your salary, giving you a good idea of how much money is left over you can save.
I've left these examples extremely terse, but you should really add everything in.
- Go to the arcade a few times a week? Add $30 worth of "coins" to your expenses.
- Sometimes order food out when your cant be arsed to cook? Add $50 for "Uber eats" to your expenses.
- Have a random $3 recurring donation? Add that $3 to your spreadsheet!
As I mentioned in my calendar post, what I really care about is seeing what's going at a glance - I don't really care how much is in my account now all I really care about is "can I afford to continue living how I currently am?".
This method of planning might be naive, but it really helps me with the stresses that come with finance, it can help me plan for future purchases or savings goals and I know what sort of buffers I could have in the future. Obviously I pay attention to my bank balance and put away money to save long term but this does a really good job at doing what I need doing.
Unrelated but I'd love if someone could email me a recommendation for a self-hosted version of Google sheets - I just want a good web spreadsheet program, even a nice cross-platform one with sharing would be amazing2.