How Much Money Do You Need to Live?

I recently read The Year of Less by Cait Flanders.  The author and blogger documented her year of no spending, where she cut back, set strict rules on her purchasing and minimised her life and belongings.  It was an inspiring and enjoyable read (well, listen, I’m an audiobook fan), I highly recommend it.

So, one cold January afternoon, I decided to go on a personal mission.  I had to know how much money I spent last year.  I wasn’t looking at the regular household running costs (mortgage, utilities, council tax, broadband, TV licence and insurance).  I wanted to know what else I spent my money on, as, to be completely honest, I ended the year with not as much money as I would have liked.

I downloaded bank and credit card statements (Excel is my friend, and I used it well that afternoon).  I went back through my Amazon orders for the full year, looked at email order confirmations and, discounting gifts I’d bought, I created a monster of a spreadsheet.  Splitting my spending into categories, I calculated what percentage of my income I’d spent on each category.

I was shocked at what I discovered.  However, this wasn’t an exercise in beating myself up.  This was about being aware and mindful about my personal money.

What did I learn?

I spent a massive 71% of my income last year on variable shopping, travel, and expenses (you can see the full list at the end). That left a measly 29% to cover my household running costs (those big bills that keep a roof over my head), debt repayments, and savings.

I overspent.  I spent more money than I earned.  How did I do this?  Given my profession, you may think I should know better or even be immune to doing this.  Sadly, that is not the case.

Over-spending is very easily done.  

I dipped into savings a couple of times and I put a holiday on a credit card which I then balance transferred.  Both of these actions were done with little thought, and both meant I didn’t notice any big change, as neither impacted the cash I had available in my current account.  

In trawling through my Amazon orders and looking at the volume of other online purchases that regularly appeared on my credit card bills, I realised how often I mindlessly shopped.  When I’m coaching, I give clients tricks to use, like leaving items in their online basket for a minimum of 24 hours before buying, unsubscribing to all online shopping account newsletters; and asking yourself, “will I still need this item next month” before you hit purchase…yet, here I was reviewing my year’s online shopping. It was clear I was not practising what I preached.

What’s next?

In short, a year of mindful spending.  I’ve set a personal budget for 2025.  I’ve not set it as a percentage of income, being self-employed, my income can vary.  Instead, I’ve put actual monthly figures against each category.  Some categories now have Zero against them for the year ahead.

This is not about depriving myself.

As often happens at this time of year, I started the year by clearing out and decluttering.  In doing so, with the results of my spending last year running through my head, I realised how much I have.  

I have a lot. I have lovely clothes, a warm and secure home, food in the cupboards, hot water on demand, a large selection of books, and access to a multitude of free resources like podcasts, meditations, and the internet. More importantly, I have two fantastic sons, a small group of amazing friends, great clients, and a wonderful family.

I have everything I need.  

So, my budget this year will not deprive me of anything.  Instead, it allows me the opportunity to be more mindful and grateful for all I have.

What Can You Do?

I realise I went all in on this activity.   Was it worth it?  For me, yes, it was.  

If you’re comfortable with Excel and have a couple of hours to spare, go for it.  Download your bank & credit card statements to Excel, get sorting and analysing and see what you spent last year.  If this is too much, maybe just do it for a few months?  

Still too much?  Set some high-level budget amounts for your main spending areas, such as groceries.  Perhaps, if you have a particular spending habit (takeaways, coffee, clothes), then set a budget(s) to try to manage these areas.

Whatever action you decide is appropriate for you, I’d encourage you to be more mindful about what you spend.  Unsubscribing from vendor newsletters has genuinely helped me.  Likewise, the tip about leaving your online shopping basket for 24 hours before buying is a tried and tested method to curb shopping urges.   

Look around you.  At your home, family, belongings, the sunshine outside.  Take a moment each day to be grateful for all you have.  

The numbers

I’m not including my income, but here is my list of spending categories and the percentage of my income I spent on each category last year. Will I share this again next year to see how it compares? Perhaps!