Last year, we spent 12.3 percent of our income on food to eat at home and 2.4 percent on restaurants and coffeehouses. That’s higher than the national average of 7.8 percent for at-home food, but for restaurants it’s less than half the national 5.1 percent.
How do I know this? Because Betsy keeps records of all of our expenses (and because I looked up the U.S. Bureau of Labor Statistics figures).
No matter how small, every expense in our household gets filed away, either with a receipt or a slip of paper. At the end of every month, Betsy hauls them all out and enters them into a ledger along with our checkbook and credit card expenditures. She spends several hours doing this, and comes up with monthly expense totals in about 10 categories.
“This pleases me, because I like to see everything there,” she says. “It gives me a sense of control, of knowing where our money is going. It’s all about orderliness and an attempt at organization in a chaotic world.”
Some people use computer programs, but Betsy thinks that doesn’t save much time because you still have to enter every expense. “And I’m a paper kind of person,” she says.
I have written previously about radical frugality, or the ways in which we avoid unnecessary expenses and live well on a low income. Keeping expense records promotes frugality in the same way that keeping food logs can help people lose weight, Betsy says.
“It gives us a tool for being restrained and keeping a handle on our consumption,” she says. “It’s not necessary for simple living, but it’s useful to know where our money is going. If we see that something is more than we can afford, we can change our ways.”
At the end of the year, Betsy compiles our total expenses in each category, and I figure out percentages with a calculator. It’s interesting to compare these to the national averages. For example, in 2014 we spent 6.7 percent of our income on transportation, far below the average of 17.6 percent.
Housing takes the biggest bite out of the national expense pie at 33.5 percent. Ours (including property taxes, utilities and insurance) was 25.2 percent last year. But if you include our home improvement costs (12.7 percent) and yard expenses (6.2 percent, from taking down some big trees), we spent more than average on our house last year, even though we have no mortgage.
While the average household spends 4.8 percent of its income on entertainment, we spent only 2 percent last year. That’s an area where we could loosen up a bit. The average for clothes is 3.1 percent, but we spent only 1.2 percent.
Sometimes, Betsy’s record-keeping saves us money directly. When our car’s battery died this past winter, she was able to locate the receipt and found that it was still under warranty and we got a new one for free.