Coming a few days later, March’s month end covers up to the end of the tax year. So how’s it going?
Inuse the 5th if March as the year end as that way all my numbers are easily set-out for calculating how much to give to the tax man come either the 6th of April when I’m owed money or the 31st of January the year after if I owe money. It keeps things simple I think – even if some of April’s spending is lumped in with March. Talking of spending…
Last month saw an attrition of £6,250 – who knows what on? But it included payment for our new carpet (around £2,000), payment for our (working from) holiday, plus we’re off on holiday to London next week and that involved costs that were paid out in March. The car was dragged through its MOT as well and although we aren’t spending as much on petrol these days, maintenance is largely independent. Childcare costs were more or less stable with the Master in school (after-school club fees of around £10, times per week) and the Little Lady getting some of her fees paid for but still costing £700 a month – the cost to us jumping almost 20% from April onwards as the rates jump up.
Annual Spending was £60,250. The Lady thinks that we live like peasants who scrimp and save and do cheapo things like turn off lights when rooms are not in use, turn off the heat when we aren’t in the house and eat leftovers instead of putting them in the fridge and letting them get mouldy.
However, it’s hard to say that spending £60,000 a year makes you either frugal or prudent. So where is all that money going? I for one would like to know.
Culprit 1. £15,000 on childcare (25%)
A quarter of our budget goes on childcare. Enough said. Although I will point out that if you have the option of struggling with costs or stepping down a gear and moving back to near grandparents/people who care for you – then it’s pretty appealing.
Culprit 2. £14,000 on household costs (23%)
Living in a house is costly. Mortgage interest was £2,400. Car costs were £2,500. Council tax was £2,4000. The new carpets were £2,100. It all adds up. But there’s still a bit hole.
Culprit 3. £10,500 on travel & entertainment (17.5%)
Say no more
Culprit 4. £5,500 on eating out (9.2%)
Sometimes it’s good quality food, more often than not it’s crap. Average spend is £15 a day and we all work from home – we can’t blame commuter life for this.
Culprit 5. £8,250 on shopping (13.7%)
This includes alcohol which is maybe why it’s so high. But it does seem high even without that.
Getting to the bottom of any of these is just inviting an argument with the Lady. I don’t really want to do that but my expectation that our spending would drop is unfounded – maybe another name for lifestyle creep is just “life”. On the other hand, a lot of our 2022 discretionary spending is already paid for – the London trip in April and Netherlands in July. With kids in school, these are the best times for holiday/travel. In October we’ll probably visit Ireland which will be cheaper – or just holiday in Scotland which cuts down on travel costs. The thought of getting on a plane doesn’t appeal to me right now (the high cost at every point, inconvenience, hassle of it all, chance it’ll be cancelled, economised luggage alongside the carbon guilt!)
Income was stable from work but due to the government hitting workers harder in the new tax year – part of their “work out to help coffin dodgers out” where national insurance is raised for useful members of society. This also includes a hike in dividend tax of 16.6% for me. So I paid myself a handsome dividend in March to take me to the limits of the higher rate tax band (for Scotland).
Over the year, our after tax salary was greater than spending but not by a massive amount. Still, I’m no longer paying into my pension, so on a cashflow basis we are doing well enough.
Despite all that spending, our net worth just cracked £1.2m. That’s up over £50,000 on the month or 4.5%. This was in part due to some very favourable investment performance – I’ll not go into details but something paid off big time.
ISAs have left the £200,000 mark far behind. Pensions just cleared the £600,000 mark and that’s before my final salary pension gets its annual bump up. Curiously though, the pensions share of our net worth edged down towards 50%. Pensions are a tricky subject and you both need them to retire but don’t need them to retire early. I’ve previously had too much money in pensions, so it’s good to see that fraction edging lower. For comparison, FIRE assets are about 40% and housing equity make up 10% of our net worth.
VCTs had paid £750 in dividends and were pretty flat/down on the month – but their prices often lag the market. I also invested in a number of VCTs in the month to manage the tax bill.
My EIS investments did well with West Solent Solar paying out about a 10% return – and future returns should be just as good if not better.
Annual growth in net worth worth was 13.3% – I’m happy with that. And even better, FIRE funds reached an all-time high as well.
The Personal Withdrawal Rate was 5.2% – helped by our high net worth and hindered by our spendthrift ways. For FIRE funds that rate is 13.2% – and if I really wanted us to retire it would need to be about 5%. So we can’t afford to retire just yet (not because we aren’t rich but because we spend so much).
Dividends totally £2,030 for the month without the side hustle. £2,000 was sort of a target of mine and it’s good to see that we’ve hit it.
I actually have a job interview lined up. I don’t know if I want to take the job. It’s a staff position and I don’t want to go back to the grindstone. But the work would be interesting and the company appears to be good – we’ll see what happens.
We’re on holiday next week so don’t expect much output.