Organising ongoing expenses

My wife and I have a household account that we use to pay all our domestic bills. All the usual direct debits come out of this account (food shopping is separate). I was updating the total costs for 2023 over the Christmas break and decided to have a look back at past records to see how things have changed. I have records going back to 2013, so there is eleven years worth of data.

Inflation link your expenditure

It costs 28% more to run the household today than it did in 2013. That sounds like quiet an increase but when you annualise it, it is only 2% a year. This is the level of inflation that Central Banks around the world strive to achieve to keep economies robust.

Our financial plans use an inflation base rate of 2% per annum. When organising your finances you need to also include a prudent cost in living increase because the price of things go up most years, not just sudden big increases like we have had recently.

Not all bills are forever

Your expenditure will change over time. Back in 2013, creche fees were a big monthly expense for us. They finished up thank goodness. We no longer pay for a landline either. That is not to say that this money is just saved now, new bills come about.

The ongoing costs of having kids becomes more expensive as the get older; mobile phones, LEAP cards, school canteen, grinds as well as the school trips they go on. The clothes they wear are more expensive than when they were kids and wore what you put on them.

New bills will also come about. Netflix and Spotify weren’t a cost back then and we increased our life cover over time to reflect the financial need in the case of disaster if either my wife or I were in an accident.

Shop around

Not all bills have gone up. Surprisingly, our health insurance costs have gone down. That industry has certainly become more competitive. Long gone are the days that VHI had a monopoly on the market and would increase their costs significantly each year. With a lot more options, you can tailor your insurance to your needs with the kids on a different plan to their parents.

While electricity costs have gone up a lot recently, the overall cost has increased in line with overall inflation of 2%. Utilities are a commodity nowadays, there is no need for brand loyalty, just go with the cheapest provider.  There are plenty of online comparison tools that will show you the best price for you and switching it easy. Providers like Sky (I am never getting rid of Sky!) always have offers that can reduce your cost, you just need to take a bit of time out to get them.

Steven Barrett

15 January 2024