It is about time I reviewed my monthly expenses for the past year. I do this activity at the start of every year. There are two kinds of expenses I track. One is monthly expenses which sort of appear most months like food expenses, internet etc. Then there are those expenses that occur once a year or once every few years. Those are considered as annual expenses. In today’s post I will go over the monthly expenses of last year and how it compares with the budget I made at the start of 2023. Lets also look at inflation since my retirement. Later in the post I will inflate my monthly expenses and set a budget for 2024. Lets dig in then.

Monthly expenses for 2023

The budget for 2023 was Rs. 67,000 per month. Our average, monthly expenses were Rs. 42,310 which like every year, since our retirement, is below the budget. First lets take a look at where we were spending (see picture below).

The biggest chunk (48%), as it should be, was in food and consumables. That expenses includes not just edible items like rice, vegetables, milk etc but all household related stuff like soaps, cleaning agents, etc.

The second most expensive item was utilities and services (14%). Those include electricity, gas, internet, homeowner association fees, cell phone bills, etc. The next most expensive item was travel (13%) as is almost always the case :). This is good. There should be travel in retirement. Finally, kid’s expenses came to around 9%. Rest of the expenses are quite small to even mention. Next, lets examine the monthly expenses bar chart below.

The only month that over shot the budget was in October when we had a bunch of travel and family get togethers. Otherwise it was pretty routine. All the graphs thus far seem to be normal because we are just looking at the high level view. Lets dive deep and get to the nitty-gritty (see table below).

The first thing to observe is that the medical expenses went way over budget. Now this can mean two things. Either the budget was too low to start with. Or we had unexpected health issues. Well, it is a mix of the two really. We chewed through 5 months worth of budget in just 10 minutes :). What happened was that a lot of folks have been talking about the after affects of COVID lockdown etc and said we should get our Vitamin D levels checked. While we did not have any health issues, we thought it would be fun just to get the levels checked. We expected the results to be normal because we actually spend a lot of time in the sun.

We (me and my better half) went to a near by lab and enquired. Sadly they did not have a test just for Vitamin D. They only had a full package (with multiple tests) and the only package which contained Vitamin D test was, as you can guess, in the most expensive pack. We thought about it and decided to get all the tests done. Bad idea. All the test results were normal except for Vitamin D. It was quite low. Didn’t seem like all that sun tan helped much :).

The next major expense happened when our daughter fell down during skating and fractured her arm, which is when we realized medical expenses could be ridiculous. You can read all about it in one of my previous post. That expense chewed through another 6 months of budget. The remaining were usual expenses like dental checkup etc.

The next expense that went over budget was cell phone bills. This was also sort of unexpected but is related to our purchase of a farmland. The details of why and how will come in another post.

Inflation for 2023

I have been tracking my average monthly expenses for the last six years since we retired. So we have some information to check how our expenses are inflating in the long term. Take a look at the inflation table below

Year Expenses Inflation
2018 41,100 -
2019 42,871 4.31%
2020 41,633 -2.89%
2021 47,455 13.98%
2022 51,937 9.45%
2023 42,310 -18.53%
Inflation since 2018   0.58%

Compared to previous year, our expenses have come down by 18%. Of course we shouldn’t be reading too much into the year over year numbers. Because expenses could be high in some years and low in other years. We should compare this year’s number with something very old like 10 years ago. Since I don’t have that much data, I compared my last year expense with 2018 and it is almost zero. So thankfully we don’t have much inflation as of now. But things always change.

Budget for 2024

Like every year, I increased my budget by approximately 6%. Since it was Rs. 67,000 last year, this year the budget is increased to Rs. 71,000 an increase of Rs. 4,000. The reason for using 6% for inflation is because that is what I projected my inflation to be after retirement. But as you know from the table above, some years the inflation is lower and some other years it is higher. On average, hopefully, the inflation will hover around 6% in the long run.

Every year, at least one of the categories goes over budget. In 2020 and 2021 it was Food and Consumables. In 2022 it was Travel and in 2023 it was medical expenses and cell phone bills. So, of the Rs. 4,000 extra budget we have for this year, I allocated Rs. 1,000 for medical expenses, Rs. 200 for cell phone bills, Rs. 200 for entertainment and the rest to miscellaneous expenses (see the picture below).

That is all for today.