My Annual Expenses Explained
In my last post, I went over my monthly expenses. In this post I will go over my annual expenses so you too can plan your annual expenses along those lines. For the year 2018, I budgeted an annual expense of Rs. 3,60,000. That comes out to Rs. 30,000 per month. Annual expenses are those expenses that occur less frequently than a year. So things like property tax, buying a car, painting your house etc will come under annual expenses. My annual expenses planning is shown below.
The first column is the list of expense types. The second column is the number of years for which the amount was planned. This column does not make much sense for some expenses, but for others, it is approximately how often I plan to buy the thing that will trigger the expense. For example, I intend to buy a new laptop and desktop every 5 years on average. The third columns is the amount planned for the expense. The final column is the per year spending which is basically the third column divided by the second.
Now lets go over the details, shall we? House expenses include such things as paintings, plumbing work, property tax, and other general maintenance for the house. I should not be exceeding a sum of Rs. 2.70 lakhs on house expenses over a 5 year period. Bedroom expenses include things like mattress, beds, shelves, desks etc which should not exceed Rs. 2 lakhs in 10 years. Kitchen expenses include expenses towards things like washing machine, fridge, microwave, stove, water purifier, dinner table and chairs and such with a budget of Rs. 2.50 lakhs for 5 years. You probably understand how things are going to be for the Living room expenses. That is the end of the green section.
In the yellow section, we have Entertainment expenses which include TV, music system, media center PC etc. Electronics are phones, tablets, cameras and such. Finally, Projects include anything we spend on our projects. Currently, our projects are home automation and organic terrace gardening. Whatever we spend on buying things like electronics, plants, seeds, wires, pipes etc go here. We are allowed to spend up to Rs. 20,000 per year on our projects. That marks the end of the yellow section.
The red section is pretty obvious. I plan to spend about Rs. 1 lakh every 5 years to upgrade or buy new Laptops and Desktops. I budgeted about Rs. 10 lakhs every 10 years to upgrade or exchange Vehicles. Finally, I am allowed to spend about Rs. 10,000 per year on my Gym equipment and any other fitness related accessories. The usual Misc section covers all other expenses that do not fall under any other expense types. Examples of these expenses that I incurred in the past include things like passport renewal fees, drill and related tools etc. I made up this number just so that the total expenses per year will come out to be a nice round number like Rs. 3.6 lakhs, that again when divided by 12 (to calculate monthly expenses) conveniently produces another round number.
Like with the monthly expenses, the color coding in annual expenses is the same. Green section is for things that are non-negotiable. The yellow section contains those things that are good to have but not really necessary. Finally, and as usual, the red section will take the biggest cut if I were to ever be in a cash crunch. I plan to revise the numbers only once a decade. Currently the decade is from 2011 to 2020. I can use up to Rs. 36 lakhs for various things in those 10 years. Currently my laptop, desktop upgrades, cars, scooter, TV, music system, phones, tablets, beds, mattresses, tables, chairs, couches, gym setup etc have all been accounted for. Any expense that happened before 2011 is not included. Here are my annual expenses for the last 8 years.
As you can see, I have burned through Rs. 22 lakhs so far, mostly thanks to the vehicle purchases, repairs and upgrades. The next most expensive item is the entertainment expense since I purchased a huge TV, surround sound to go with it, a media center PC, large capacity hard disks etc. In spite of all these expenses, my average is around Rs. 20,430 per month so far. Do note the Allowed column above, which tells me how much more I can spend for each item at the end of the current year (2019). That column automatically updates every year so I can keep an eye on things which have gone over budget (automatically marked in red). That is it about my annual expenses. What do you think about my planning. Are you over or under those numbers? Share a comment below.