2016 Budget Year-End Review

Budget Year-End Review

2016 Budget Year-End Review

Hello everyone! Thanks for stopping by The Green Swan today. It is that time of the year where I reflect back on our financial progress in 2016 and make goals for 2017. I’ll recap my year-end review in a two part series. Today’s post, Part 1, will focus on how we did budgeting and managing our expenses in 2016 with a look ahead for 2017. Part 2 next week will delve into investment performance with my annual model going forward.

The Home Front

2016 was a great year in many respects for the Swans, it is hard to know where to start. But before I get into the financial aspects, let me hit on a few major developments on the home front.

  • First off, Lucy and I launched The Green Swan! This has definitely been a new chapter for us and we’ve enjoyed connecting more closely with the personal finance community and others on their path toward early retirement.
  • All three of my siblings moved and two of them got married! One brother, James, relocated to manage the new business we all bought together. Another brother, Jon, moved as his new wife earned her doctorate and a new job in the South. And lastly, my older brother moved with his new wife to a house they bought together in the same city.
  • My brothers and I went in together on the purchase of a small business that James is running day-to-day. This is something that had been in the works for a while, but finally came together after a long search for acquisition opportunities.
  • And lastly, my wife and I are super excited to be expecting our second child! The babe is due in early April, it is coming up fast!

2016 Expenses

As you may be able to tell, we keep a very close eye on our expenses and we run a fairly tight ship. As I detailed in my post on tracking and budgeting expenses, we use Personal Capital to aggregate our account activity and I transfer that into my excel file which allows me to cut and slice the data in more personalized ways. Personal Capital simplifies my life immensely and is free. If you don’t already use Personal Capital you should consider signing up today!

As detailed in the chart below, we came in below our estimated total expenses, but there are a couple key accounts I’d like to draw attention to as well as other broad conclusions. I still like to keep some numbers private. What I’ve chosen not to include below are income figures, income taxes, gift expenses and cash donations.

Budget Year-End Review

2016 Talking Points

  • Utilities are much lower than prior years given our purchase of solar panels last year.
  • I love the low gas prices! Plus, we benefited by a deal at the local grocery store that offers $10 off a $50 gas card when we buy over $50 in groceries. In 2016, we bought 21 of these discounted gas cards. And 7 of those cards we were able to get $20 off with the extra benefit of a competing grocery store’s coupon for the same deal (double discounts offered by the one grocer are no longer offered…go figure). That amounts to $270 off gas on the year!
  • Groceries were pretty spot on to the budget. We were slightly below which was due to lower expense on dining out and slightly more than estimated spent on groceries. We didn’t necessarily make a concerted effort of dining out less, but it just happened naturally with not wanting to go out as much with a young kid. We also shifted our dining out to breakfast as opposed to dinner which probably had an effect too. That naturally is cheaper and we’ve benefited from a few Panera gift cards, double win! We have never felt deprived of dining out and have enjoyed our morning outings with our son.
  • Car tax and maintenance was pretty spot on had it not been for the unanticipated chip in our windshield!
  • Refer to our prior post for more detail on our kid-related expenses. We also got $100 back from tuition due to the lost jackets Lucy mentioned in our December Swan Life recap.
  • Personal care expenses consist primarily of my LASIK eye procedure last year that I financed at 0% over 2 years. Expenses were up in this category though driven by a few minor health related issues and RX required for both my wife and I (nothing serious…). Plus, 2016 was my first full year of haircuts at home which I estimate saves us approximately $150 per year with my $20 wahl clipper!
  • Each year we usually buy one or two furniture items for our house. In years past it has been new couches or a dining room table, etc. We didn’t have any major purchases to make this year.
  • The Entertainment category would normally consist of tickets to a few local NBA / NFL games or various movie theater dates. We don’t necessarily care to do this though with a young kid. Instead, our entertainment has consisted of many bike rides to the park! We have also enrolled the little guy in gymnastics and swimming lessons occasionally which falls under the Other Kid Expense line item.

2017 Expected Expenses

Usually at this time I would take these historical results and my expectations for the next year to put together my 2017 budget. However, I’m having trouble this year. For the first time since 2010 I may not actually put a budget together. There is a simple reason for this and that is because of the huge uncertainty at this point around London, whether we end up deciding to move or not, when we would move, and what our income and expenses would look like. We just don’t know right now, but hopefully we will get some more certainty one way or the other in the next month or two, then we could start piecing together that puzzle.

For now though, it isn’t worth the trouble. And if we end up staying put in Charlotte, I wouldn’t really expect much for changes to the budget (with exception to the increase in daycare expenses). So in the meantime we will just keep on keeping on, controlling our expenses where we can. But even without a budget, I will continue to track expenses diligently! We make actually spend less as we don’t want to accumulate any more things that we would potentially need to move or store. We already completed a significant purge of the house recently!

Summary

I’m fairly happy with our 2016 on the expense side. We kept things within budget and under $60,000. Keeping it under $60K doesn’t sound all that impressive, but there are some big one-time expenses worth noting.

  • We are paying close to $9K in daycare. While that is on the low side compared to what many pay for daycare, that’s a large number we didn’t have just a few years ago.
  • We paid close to $6K in car payments. I’ll note that we had the cash ready to pay for our new car in full, but when we could finance it for under 2% and the opportunity cost would be the potential 8% long term return in the stock market, the decision was simple.
  • We took a lot of trips in 2016 which is even more expensive now that Jr. doesn’t fly free anymore. Trips included flying home for two of my brothers’ weddings, bachelor trips for those weddings, and our holiday trip home among other miscellaneous travel. We travel hacked a bunch (future post perhaps…) but it still cost us around $5K in travel.
  • As mentioned above, I’m still paying for my LASIK procedure to the tune of $2K in 2016.
  • Our mortgage represents almost $22K in annual payments. Of course we need a place to live, but this is a big lumpy portion of our budget and it won’t be there forever.

Take out the daycare and car payments and our actual expenses would have been around $43K. Take out the mortgage payments, travel expenses and LASIK costs and what I’ll define as our “Core Expenses” amounted to just $15.5K. Not too shabby and the key is this hasn’t changed much for Lucy and I over the last 9 years of combining our financials!

Thoughts?

How did your year-end review turn out? Did you keep your expenses in line with budget? Let me know in the comments below.

Also, this is just Part 1 of my year-end review. Check back next week for my overview on investment asset performance for 2016 and projections going forward.

Thanks for taking a look!

The Green Swan

 

 

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39 Comments

  1. Hi Swans! I’ve been reading your content for a couple months. Keep up the good work.
    When I was working in financial services I came across so many families where the one killer to their finances was daycare. It’s so tough to fund that bill (especially when you have more than one child). But looks like you did a great job budgeting. I ended up moving myself, and my expenses for living went down luckily; so I came in under budget for 2016 for expenses with some extra cash in the bank account. Bring on a great 2017!

    1. Thanks, Stock Street! Glad you’ve enjoyed following the blog.

      Daycare is a killer! It was eye opening when I first heard how expensive it was a couple years before we had Jr. I wondered how people afforded it, especially with multiple kids!?

      That’s a great move, especially if it was for a higher paying gig!

      Thanks for the comment and have a great 2017!

  2. Well done on hitting your budget for the year, especially with a little one in the house. They can tend to drive unexpected expenses. As for us, I haven’t pulled all the numbers together yet for 2016, but I suspect we came in fine as well. I don’t set a budget each year, but I have all of our savings pulled out automatically, so as long as I didn’t bounce any checks, which I did not, then I know we were in good shape and hit our targets!

    Here’s to a great 2017 and good luck (either way) with your potential trip to England!

  3. Hey GS, looks like it has been a pretty good year for you! I had no idea that budgeting could be done till such a detailed level. I’ve got much to learn! Oh and yeah, something we just have to live without a budget. It’s really hard to plan when there is so much uncertainty. Anyway, I am looking forward to part 2!

  4. Oh man, I didn’t know The Green Swan was so young! Congrats on growing your blog so much!
    Thanks for sharing your annual spending figures. Is there a reason you carry car payments? I know some people are opposed to them so I was just curious about yours. And holy cannoli I love those entertainment expenses. We don’t have a category for entertainment on our budget but I do think it’s a good thing to track so I’ll have to add that to ours as well.

  5. The daycare line item brings back painful memories of that one. At peak, we were paying nearly $24,000 pa for two kids. Thankfully only for a year as costs dropped as they went through 2-4 years old. At nearly 10 and 8 now, those days are long gone!!

    Our biggest budget win last year was on dining. We ate out much less and that was a huge factor for saving. We do spend $1,000 per month on groceries but with growing family of four who all enjoy meat, fish, we continue to find it hard to eat (pun intended) significantly into that number. Most families see a significant spike in this item as kids start to grow up. You will be amazed how much they need to fuel their energy demands.

    1. Yes, daycare is painful indeed! We have years more to enjoy! 🙂

      I am nervously waiting for the food budget to shoot up! I’m not surprised at all you spend that much, and it may continue to go up as they enter their teens! I may have to consider buying a farm!!

      Thanks for the comment, Mr Pie!

  6. Great job sticking to your budget in 2016. I think you should still keep a budget for 2017. You’re not moving until later in the year, right?
    Yeah, I’m so glad that our kid is in kindergarten now. Life is a lot easier. He is in school longer and we don’t have to pay for preschool anymore. Our kid expense is going to decrease quite a bit this year.

    1. Yeah I might as well pencil out a budget quick, it isn’t too hard and if we end up staying it’ll be good to have.

      Enjoy the influx of extra cash now that RBJr is in school. It’s such a huge difference maker. Where will you put that extra cash now? Investment contributions or perhaps more spend on vacations with the family?

      Thanks for the comment, Joe!

  7. So glad to have moved out of daycare/preschool expenses. While we found a really good quality inexpensive half-day program for Little Bit when she was 4, that option was only available because Jon was willing to stay home. And the option we used before that was both poorer quality and more expensive. So glad that our daughter has moved on to a very good public school, and that we found a house in a good district. Being confident in our local public school probably saves us $10K a year in private school fees now.

    1. Great point, Emily. We live in the best school district in Charlotte and made sure to do so when we moved in five years ago. That will be perfect once they’re school aged and also for resale.

      Thanks for the comment!

  8. Our spending finished a bit higher than what I planned before I retired in April. Two drivers were that we bought a new (to us) sports car and finished off a home office in our lower level. These expenses were planned and we will be able to enjoy them over the coming years. Fortunately our income was much higher than expected, due to a strong year in the markets, so we were happy with everything finished up.

    1. That’s great 2016 treated you well, Mr FireStation! And I saw that sports car post you had, very nice and I can see why that drive expenses a bit higher! 🙂

      Here’s to a great 2017 and a continued bull market!

  9. Our expenses were up a bit (quite a bit) since we had our first child this year but we did save about $480 in interest by paying off the car in early 2016. So even though our expenses were up a bit this year overall we got a new addition to the family! 🙂 All in all, couldn’t be happier!

    1. That’s great news, congrats! There’s no doubt that kids are worth the added expenses. I couldn’t imagine life without Jr and can’t wait for our new addition again in early April!

      Best of luck on 2017! Thanks for the comment, Wes!

  10. Thanks for sharing! Great job staying within the budget for the year. I am in awe of your entertainment expenses as well. I guess I throw dining out into entertainment, but you still have me beat. I haven’t figured up the annual totals for 2016 yet, but I’m looking forward to it – guess that qualifies me as a pf nerd.

    1. Perhaps the entertainment bucket is skewed as any “entertainment” on vacations gets thrown into the vacation category. And dining out fires w into the food budget (although I do break this category out privately between grocery, dining out and alcohol) Entertainment for 2016 was basically two trips to the theaters for a matinee.

      Props to being a fellow pf nerd! Thanks for the comment, Amanda.

  11. All things considered those are some really low expenses! I think we came in $29k for our spending plus our giving. But that is with no mortgage. A comparable mortgage would add another $10k to our expenses. I’m still excited to hear if you guys will move overseas. We moved to Germany when our baby was 6 months old. A little stressful, no going to lie, but in the end it was worth it!

    1. Good for you folks on the expenses, especially with a house full of kids!

      Thanks for the well wishes. I’m a bit nervous about how stressful it’ll be moving two little ones over there, but I’m sure we’ll get through it fine. Hopefully we find out soon, it’s always tough waiting in processes like this.

      Thanks for the comment, Ms Montana!

  12. Great job on your budget. You had lots going on this past year and it looks like you’ll have lots going on this year too! We stayed pretty close to our budget, slightly over mainly due to some one time expenses. The big one, as usual for us, was medical costs (goodbye $12k!) but I was happy with the overall results. If I were in your situation, I’d still budget for 2017, but know that budget might change quite a bit by the time I was done.

    1. Oh boy, that’s a big expense to have to swallow. I hope everything is ok, health-wise!

      That’s a good tip, Gary. I think I will budget 2017 still, there’s no harm in that.

      Thanks for the comment!

  13. Great job on that point landing! If you take into account the principal paydown of the mortgage and car loan, which are actually savings rather than expenses, your annual costs were really very manageable. But long-term you probably have to also have some allowances for home and car repairs. I remember when I had a single-family home something always broke. Every year. Same with the car.
    Anyway, good luck with the 2017 expenses nd with the potential move to the UK!

    1. Yeah that’s absolutely true, there’s always something to fix or replace. I’m afraid it may be the water heater in 2017…

      Thanks, ERN!

  14. The Swans did great in ’16! And some very exciting life events, to boot!

    I’m excited for Part 2 of the series, and’ll look forward to it. In the meantime, congrats on nailing your budget and being so well organized… well, until April comes, that is!!

  15. “Our kid was our entertainment” – love it! And they will continue to entertain you (and cost you a heck of a lot in daycare too! ) Since we don’t use a budget, I’m surprised to see just how close you were in most categories. That’s excellent! And we hope those gas prices stay low too!

    1. Yes they will be!

      That’s really the benefit of having budgeted and tracked expenses for so long, we have a good inside look at what drives our expenses and can anticipate them pretty well. There are one-time expenses, but there always are…

      Thanks for the comment, Vicki!

  16. Congrats on a great year. I launched my blog this year as well and it’s been a blast to build and connect with others on personal finance topics. There’s nothing I’d rather talk about!

    How are you liking the solar panels? Looks like they saved you about $140 this year. What’s your expected timeframe to recoup you investment? I’m curious because I’ve thought about solar panels down the road.

    Thanks for sharing and here’s to a great 2017!

    1. We are loving the panels and they’ve actually saved us much more than that. Check out my post http://thegreenswan.org/buying-solar-panels-year-one-review for complete detail.

      You’re probably looking at how much better than budget we did on utilities, but that change is largely unrelated to panels as we already owned them at that time and I had a good idea how much we’d save.

      Let me know if you ever have any questions on panels though, I’d love to help you out any way I can.

      Thanks for the question!

  17. Thanks for sharing the summary!

    Daycare will be coming up for me within the next 6 months. But my wife will also go back to work. We’re planning on saving all of her income except what we need to fork out in daycare. Any tips for finding good, affordable daycare?

  18. Congrats on the progress made last year. There are several milestones, financial and personal, to be proud of. It’s also great that you came in under budget in relation to your projected expenses. Not many, including myself, can say that for last year. This is partially because we finished our transition year as we moved into our new house and had a lot of costs with that & buying a new-to-us family car ahead of schedule.

    1. Thanks, Josh!

      At least those are both good reasons to be over budget. That sounds like us last year with a couple large, but good expenses we made.

      Thanks for sharing!

    1. Thanks! A big wild card is kids and how many you have, they can really drive the budget.

      Here’s to a great year! Thanks for the comment, Ken!

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