HTR Research - Spending money

As promised, I am slowly researching where my money goes. To understand what I looked at, though, you need to know a bit about how money is used in our household. HTH and I both contribute the bulk of our salaries to what we call "Family Money". That is where we pay our bills and fund most family events - including everything from travel to dinner out. However, we each have a small percentage that we reserve as "Personal Money". This gives us each an account for things that we feel are outside of the family scope - by whatever definition we choose. We both try to scold each other for spending "personal" money on things that should be family money, but the rule is that we each choose what to do with that money. So, if there is anything that should reflect my personal values, it should be this money!

There is one caveat to my analysis, however. I have only done the easy part so far. I went back over 6 months of credit card statements (December-May) and looked at those numbers. When I am at work, I keep cash on hand to buy lunch and coffee - and I'm sure that gets spent elsewhere, too. I am not really sure how to estimate that amount of money yet. And, working at home 4 days a week now, I don't spent much of that anymore, so I'm not sure how to capture that information going forward. That is a project for another day.

For now, here are the top 5 categories presented as a % of my total spending from December 06 - May 07:

Gifts	29.32%
Travel	14.96%
Whistles	14.25%
Books	13.87%
Work - clothes, makeup, etc	9.38%
Total percent accounted for:	81.78%

Some observations: Christmas, Baba's BD, and HTH's 40th all fell within this time frame. Those events impacted my personal spending in both gifts and travel. The whistle category includes all of my new whistles and the kit for building 20 more whistles. That category would not normally be a blip on the screen. I'll be happy to see that #5 category drop off. Since money that I spent on personal clothes and hair cuts only accounted for 3.6% of my spending, that will be a nice savings! Quite frankly, the biggest surprise is that books scored as low as they did after this picture! :) But, all in all, I'd say that this is consistent with where my values have been in the last 6 months.

The good news for you is that this is a fairly painless way to look at spending. Almost all credit cards have 6 months of statements on line. I just copied and pasted the details into Excel and then categorized them. A quick subtotal for each group and total spend sum, and then the % was easy to come by. I picked the 80% total spending as a focus point based, in part on the Pareto principle which basically says that 80% of the effect is created by 20% of the cause. It is a great way to draw a line under the "vital few". In this case, the numbers seemed to agree with the theory. After these top 5, the categories fell off very quickly into the 5% or less range, so the statistician in me is OK with this choice as well.

So, that is my experience so far. I guess it didn't tell me anything new, but it is good to see that what I did actually matched what I thought I had done. Anybody up for trying it yourselves? If you do, let me know what you find. I'm curious!