Sunday, July 8, 2012

Expense Analysis 2012 YTD

Although it sounds extremely dorky, I actually enjoyed looking at the data and making the charts for my last post looking at my credit card rewards for the first half of this year.  I took a slightly more in depth look at my expenses overall, especially with my handy budgeting app, and wanted to share the results.

You can easily tell that I already exceeded my last year's expenses and it's only halfway through the year.  This is really bad right?  Not necessarily.  I mentioned in my credit card post that this year that I had some more plane ticket purchases.  The huge jump in June is due to my having to prepay my summer housing which is also a lot more expensive than my housing last summer.  Add to the fact that this year I had to account for my plane ticket to Hong Kong, it shouldn't make that much of a difference.  But it might be a good idea to take a closer look at two specific categories.

First is food.  This shouldn't change very much year to year so I would expect it to be similar unless I increase my standard of living and start eating out every day or something.  Then you might see an elevated level of spending over the previous year.  You can see in the chart below, however, that so far it's been a pretty good tracker.  I spent a bit more money eating out over Winter Break and in March when my brother came to visit me for Spring Break, but it is partially offset by lower spending in the other months.  This "seasonality" should even out after I get out of college but it gives a good measure of what I can expect to spend over a given year.

The other big expense item is transportation.  You can see that last year was categorized by three major peaks when I bought plane tickets for summer, returning to school in the fall, and travel during winter.  This year, I had a huge spike in buying my plane ticket for Hong Kong as I've mentioned before, and May and June have included plane tickets to New York, back to California, and then back to school in the fall.

Higher travel along with higher summer rent are definitely the main drivers of the overall increase in my expenses this year.  Being able to look across and explain the jump is comforting since I know that I'm not doing anything outrageously different this year.  One good thing I could use budgeting for is to see how large an effect inflation has for me personally.  In case you aren't familiar with the CPI, the number that is published reflects prince changes in a basket of goods for the "average" consumer.  What should go into this basket and who falls under the category of average?  This is up to much debate and inflation affects us all differently.  If I keep my spending habits roughly similar but my food expenses go up throughout the year, I can actually see how much food inflation is affecting my expenses.  I may be able to project these increases into the future and better plan for inflation in the future.

Budgeting can show the story behind your spending habits and taking the time to review them can give you some insight on how prices change over time.  I would highly recommend keeping track of what you purchase for your own information and reference.

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