Macro Household Budget Ratios

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  supnigs super skids on 08/03/2017 - 13:35

  +2

  never worked out percentages no do i think it matters as it is up to the individual and their lifestyle.

  as long as you pay off that mortgage and spend less than you make its a good thing. Buy a new car if you think you can afford it and if it is of value to you vs. your older one.

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  Cheap Charlie on 08/03/2017 - 14:25

  Bejahi

  I would suggest compromising in other areas and smashing out that Mortgage.
  You seem like a clever chap, so I am guessing you have previously played with a mortgage repayment calculator.
  The flow on effect from even small additional deposits is pretty impressive.

  In relation to your 18% savings, I would suggest funnelling some of these funds against your Mortgage.
  Have your cake and eat it too, do you have a redraw facility against your Mortgage?

  • 

    try2bhelpful on 08/03/2017 - 14:32

    +1 on knocking over the mortgage. This gives you lots more extra money once that has disappeared. As a two income household we would put all one wage into the mortgage and lived off the other wage. We ran pretty lean for a while but our mortgage was paid off decades in advance. (Probably a bit harder nowdays but it would make a significant difference in the future).

  • 

    bejahi on 08/03/2017 - 14:37

    At the moment, all of that 18% goes into an offset account against the mortgage. The idea being that once it equals the mortgage, I pay it out and I'm done.

    It's better than putting the money on the mortgage, as even though you can redraw easily, there are tax implications if you want to use that redraw to buy another property eg. investment property.

    edit: This isn't my first time round the block with a mortgage, having previously paid one off :) Learnt about the offset vs redraw lesson the hard way.

    • 

      Master Bates on 08/03/2017 - 19:25

      Care to share that offset vs redraw lesson?

      We're about to sign up for a redraw over an offset, or does the issue only apply if you want to buy another property?

      • 

        bejahi on 08/03/2017 - 20:38

        I wanted to redraw the money on my mortgage, use that as a deposit for a new home, and then keep the 1st home as an investment.

        If you redraw the money, then the interest on the old property which you are renting is not tax deductible, i.e. you can't negatively gear etc.

        If I had left all the money in an offset account, The mortgage technically would have still been high, meaning I could take all the offset cash, spend it on another property, and then claim interest on the original mortgage when I rented it out.

      • 

        Master Bates on 08/03/2017 - 21:18

        @bejahi: Right, good to know! Thanks for sharing.

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  Malarkey on 08/03/2017 - 14:32

  +3

  Here is my breakdown….
  27.3% Home (rent, groceries, internet, netflix, electricity, contents insurance)
  4.6% Vehicle (rego, insurance, fuel, maintenance, RACQ)
  17% Personal (gym membership, health insurance, mobile phone, spending money)
  51.2% Savings (currently split 30% of that into shares and 70% into high interest savings account)

  Edit: Some more information - no kids, living with my with girlfriend. We split shared costs like rent, groceries and house bills 60/40 due to income differences.

  • 

    [Deactivated] on 08/03/2017 - 15:03

    Nice. Well done.

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  Gunther on 08/03/2017 - 14:37

  +1

  20.1% Home/Living plus investment property related costs
  3.3% Personal
  76.6% Savings (Offset Account)

  No one wants to work forever.

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  pernunz on 08/03/2017 - 15:44

  Percentages are meaningless without the raw numbers behind them when comparing a group of people like this forum. People here may also be reporting household vs individual.

  • 

    bejahi on 08/03/2017 - 18:19

    +5

    on the contrary, percentages are more meaningful than the absolute numbers. If I earn $150k and you earn $50k, I'm likely to buy a bigger house or car or spend more on eating out.

    So instead of falling back to the conversation in the other thread, about how I should take my lunch to work or a thermos of coffee to save money, the percentage that we each spend will be a more productive conversation.

    I'm hoping people report household, individual makes no sense unless you live alone.

    • 

      dasher86 on 08/03/2017 - 20:26

      It sort of makes sense however you are forgetting the buying power of money.
      Yes you are more likely to spend money eating out etc but if you're living day to day then essentials will be a higher % making comparisons harder.

    • 

      pernunz on 09/03/2017 - 13:19

      Yes, so you need the raw numbers behind the %'s

      $150K for a single household family of 5 vs $50K for a single person living at home with their parents is very different.

      For each person the absolute values (and therefore %'s) differ. For example, the fixed cost of having electricity and gas supplied to a residential property are constant, and the % will differ based on income.

      • 

        bejahi on 09/03/2017 - 14:00

        My point still stands… larger income, larger house, more turning the heater up in winter or cooler up in summer, similar overall net % of income spent on utilities.

        Unless we're talking very rich people where the scaling becomes less linear, I think you'll find $50k and $150k or $250k households spend similar percentages of net income on each category.

      • 

        pernunz on 09/03/2017 - 16:10

        @bejahi: Not at all. Individual circumstances vary. Whilst some people spend more as their income increases, others look to increase their savings so they can reach other goals (which may include retiring early or working less).

        Certain expense categories that you've listed above work in the opposite direction (Poorer people generally live further away from the city, requiring longer commute time, or spending more money on fuel.

        People on higher incomes can live in small, energy efficient homes.

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  Ozstache on 09/03/2017 - 12:16

  You are already paying off a loan under transport expenses and you want to buy a new car, the mother of all depreciating assets, supposedly with a bigger loan? A path to riches, this is not.

  • 

    bejahi on 09/03/2017 - 13:57

    +1

    Our household has two cars which we own outright. There are no loans. The text next to the category describes what would go in there. If I get a car loan it will be under Transport.

    Even if I did have a loan, you'll notice the total net expenditure on transport including maintenance, running costs, insurance, and loans is 7%, which is very low compared to most guides I've found.

    Cars are not assets, they should be considered as a service you pay for each month. How much are you prepared to pay for what level of comfort and convenience. The standard method of thinking of them as a depreciating asset makes no sense to me, nearly anything else would be a better investment.

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  mvbc85 on 09/03/2017 - 22:45

  +1

  Thanks for sharing OP! Got me thinking about my expenses.

  With data from the last 12 months, these are my costs (me and my partner, no kids, Perth):

  25% Rent
  18% Savings
  13% Pampering (eating out + drinks 8%, movies and activities 2%, Clothing 2%, OzBargain useless gadgets 1%)
  11% Visa Costs + Debts (Paid for my permanent residency and paid off some money loaned from family when I came to Straya)
  10% Groceries + Utilities
  9% Health (Health insurance, doctors and gyms)
  5% Sending money to family abroad
  4% Car costs
  4% Travel
  1% Other (public transport, charity, education)

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  kiitos on 12/03/2017 - 14:50

  Impressed that everyone can bring up these figures with ease…I clearly need to start documenting my household income and outgoings.