09 November 2015

How we are going to Live on a (Really) Tight Budget

Morning and afternoon tea is always something homebaked, like this Fruit Salad cake
A few weeks ago Joy posted some statistics in the forum pertaining to how much money is needed to live in retirement.

The following was taken from the ASICS moneysmart website.

"The table below will give you a rough idea of how much money you need to support a modest or comfortable retirement. It applies for people retiring at age 65 who will live to an average life expectancy of about 85."


Those figures stunned me, and not in a bad way!

We live on a tight budget. We don't carry any debt. If we want something we pay cash for it. If we don't have the cash we save up until we do, then we buy it.

Our lifestyle isn't extravagant but it's not stingy either. We don't go without anything we need. We mostly don't go without anything we want either. We do think about our purchases and our spending, and rarely have any spontaneous spending. That is mostly because there's not much we need or want that we don't already have.

Our clothing budget stays low because we take care of our clothes, making simple repairs immediately so clothes don't sit in a pile until they're thrown out.
We eat well. I cook from scratch (real scratch, not packet scratch). I grow a lot of the vegetables and some of the fruit we eat. I have a strict budget for meat and poultry and shop once a quarter for those foods, timing the shop around the best sale prices.

Chicken pot pie from scratch, a delicious and frugal family dinner
I am a bit of a power warden, reminding the family to turn lights, appliances and power points off (if they're not powering something essential like the fridge or freezer).

We catch water in buckets in the showers and I have a tub I use to catch water from the kitchen sink. This water is either tipped into the washing machine, used to water the pot plants, wash veggies or for cleaning. It doesn't go to waste.

So why was I happily stunned with those figures?

Well because as a family we're living well under them. We have started living on our 2016 budget (yes, it's kicked in a couple of months early) and according to those figures we are living on the Single Modest retirement income of $454 a week!

I love flowers in the house, but they're expensive. Just a few blooms from the garden in a vase makes me happy and saves $12! These Daphne sprgs smelled divine and scented the whole house, and they cost nothing.
Our weekly budget is $454.81! And that covers everything we need to survive and a few non-essentials too. Now bear in mind there are five adults living in our house. I am feeding five adults, there are five computers, three TVs, five people showering every day. And yet we can manage on less than a single modest retirement income and we are not going without and we don't feel deprived at all.

Here is our current Spending Plan:


As we are and will be living off our stockpile, the grocery budget has shrunk considerably.
There is wiggle room in this budget. I've factored in haircuts for both of us, pin money and a craft allowance. These are all flexible and non-essential. I can cut Wayne's hair and if push comes to shove I can either stretch my monthly trip to the hairdressers to every second month or just let my hair grow (or act as a model for Hannah so she can practise cutting!).

Making soap is another way I keep costs down. It makes a lovely gift too.
I've included an entertainment allowance. We rarely (maybe once a year) eat out so it's covered if we do, but the main purpose of this category is to give us time out when we need it. We tend to go camping (usually free camping) or on day trips and this amount will pay for petrol and camp fees so we can have at least a few days away during the year.  Entertainment also covers expenses birthday celebrations, anniversaries and any other fun things we do during the year.

There is a separate Holiday category. We are saving up for another big trip so steady, regular saving will help us get there in 2017. It's flexible, again if for some reason I've miscalculated our expenses I can shift  this money to another category.

Camping is our favourite type of holiday - find a pretty spot, set up the tent and then kick back and relax. Once you have all your gear your holidays are virtually free!
The one thing that isn't flexible, that is set in cement, is our Emergency Fund category. An emergency fund is essential and even on a tight budget we will continue to build ours. I've been asked if we'll be dipping into our emergency fund next year to cover any shortfall in our income. The short answer is no.

Our budget has been re-worked, we've gone over the figures and double checked them and unless there is a major emergency i.e. the washing machine blows up and there's not enough in Household Maintenance to cover replacing it, then we won't be touching it.

We will thrive on our current budget because we don't live extravagantly. We live a modest lifestyle and we are happy.  The bills will be paid, we have food to eat, clothes to wear, a roof over our heads. The present box is bulging with gifts for 2015, 2016, 2017 and I've started on 2018 (we have a couple of weddings in 2018 and the presents are ready and waiting).  There are veggies growing in the garden.

So yes, those figures for a retirement budget have made me very happy. I know we'll manage next year and I'm reassured that when we're ready to retire we'll be able to manage on a "retirement" income too.


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28 comments:

  1. Very interesting to read. Thank you for sharing your budget. We are trying to save as well. We're debt free and my husband is still working

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    1. Hello, Congratulations on being debt free, that is such a huge bonus when it comes to saving.

      I was very happy to realise we're already living on a retirement income, so by the time we do actually get to retire we will be fine. We live happily live simply and modestly, but we honestly don't go without anything we need or want really. And if there is something we want we just save up for it.

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  2. Hi, Well done living on that amount.Are your children are financially independent?
    I know you run a garden, but do you have anything put aside for that like plants, soil,sprays or fertilizers,snail bait, mulch? Sometimes those things can eat into your budget, but once you have them they last for years.
    Not sure I understand only $78 for the year for the patrol?

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    1. I don't use commercial fertilizers or sprays, or buy soil. I do have some snail bait I use sparingly if I absolutely have to, as you say it lasts for years. I don't buy mulch either, I get it from a friend. I seed save and have a good collection of seeds for the things we eat, enough for at least three years of normal planting, and of course that will be added to as I collect the seeds this season. If I did need to buy anything for the garden it would come from the Household Maintenance category, or if it were a bigger purchase i.e. to replace a lawn mower then it would come from the Emergency Fund and be replaced over time. The $78 is Excel doing its weird thing - it obviously should be $780.00.

      Our children are now all officially adults and all are financially independent.

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    2. Thankyou for your explanation. My hat is off to you.

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  3. Great post! Thank you Cath for your wisdom and willingness to share. I am going to save this post for future reference :)

    xTania

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    1. I ran it by Wayne first, hence the delay, I was going to post this a week ago. I've gone over and over and over it and there is nothing we need or want that isn't included, and as I mentioned, we don't feel deprived. I don't expect anyone else to have this budget, but I hope it shows that with forward planning (building a stockpile of groceries, some savings and an emergency fund for example) and being debt free, then you really don't need a lot of money to live a very good life.

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  4. LOVED THIS! Being from America I am not sure what :Patrol" is? also M1 and M2? I need to do this-you have given me motivation:)
    Becky

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    1. So glad you're motivated Becky:)

      Those are just my shorthand:

      Patrol - our Nissan Patrol 4WD. This is our "camper" and get-away vehicle. We head bush whenever we can for some 4WDing and camping, It's not an everyday drive,hence the much lower fuel budget.

      M1 and M2 - Wayne's and my mobile (cell) phones.

      Good luck with your budget review :)

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  5. Dear Cath, I applaud your forward planning! It is encouraging for me to see (and realise) the possibility of trimming the budget even more in the future. My husband will be retiring in the next few years, and I'm considering living on a tighter budget next year as a rehearsal for that time. I will be following your progress through the year with great interest! Kaye xo

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    1. Oh a practise run is essential Kaye, you'll have a much better understanding of exactly how much you need to live, to live comfortably or to live a little more luxuriously if you want to. Then you can start planning and saving so when the time comes moving to your new budget won't be a problem, it will just happen. We're looking at 2016 as our trial run for retirement (who knows, if we breeze through we may be able to retire a little earlier than planned).

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  6. Hi Cath.
    Health Insurance was'nt mentioned in your figures.
    Isobel

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    1. Isobel we don't have private health insurance and haven't had it for over 20 years. I have a real problem with the way private health insurance is administered in Australia and find it overly expensive, restrictive and a complete rip-off. If or when our Government can take control and make private health insurance viable then we may consider it. Until then we save our money and if we need private health treatment we pay anything that isn't covered by Medicare, as we did last year when Hannah had her tonsils out (in a private hospital by a private specialist).

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    2. When I worked as a health professional hospital in a rehabilitation hospital (physical rehab, not drugs!) we looked after a patient who had had a stroke. Every 4 weeks he was uprooted and shunted off to a new private hospital where new staff had to get to know his case because each hospital only allocated funding for 4 weeks rehab for stroke patients. It is purely business for them. Stroke being an 'emergency' illness, had he been public, he could have stayed at a public rehab hospital with continuous care for as long as he needed. For free. Hate to think of how many thousands this guy paid in private insurance only to be shunted here and there and paying extra for it too.
      Also, being a parent of a child with a serious cardiac condition, we have found the public system absolutely brilliant. If we had private cover we'd have been slugged ridiculous amounts over the years between all his surgeries, tests and appointments. All we pay for is the medication (mostly under PBS) and the paediatrician, who Medicare rebates us for. I'd rather keep the money under my mattress and pay for private health benefits out of my pocket when we need it. Pay the house down instead and free some cash!

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  7. Hi Cath, I'm not sure this is a typo as you often discuss the $300 a month grocery budget but do you feed your family of 5 for $100 a month (or $20 pp per month) ? Do they contribute to the food cost?? Thanks, Jeff.

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    1. Jeff for the next 15 months our income is going to be drastically reduced, hence the much lower budget all round, including our groceries. My regular grocery budget is $320 a month for the 5 of us but because of circumstances it's been reduced and we'll be living off the stockpile.

      The kids all work for me to the equivalent of their board each week (and I'm a stingy employer) and they bank the cash equivalent from their real wages into investment accounts. All three are effectively working two jobs. In return we feed them and let them use our power, gas and internet. They do their own cleaning and laundry and help out around the house.

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  8. Wow I just read your article.Your notkidding when you say a really tight budget!!Noway could the average person live this frugally,my question is what happens when stockpile runs down,then surely the grocery budget goes up.Also your house and car maintenence costs seem too low,unless your hubby is a good handyman of course.We are on pensions and are very careful and have no debt but we would not be able to survive on this meagre amount I take my hat off to you Cath,Do you make your kids pay board -they should,even if you bank it for thier future use.

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    1. Anyone can live on a tight budget if they really want to. We don't do a lot of things that most people consider "essential" so there's a huge chunk of money we're not spending. Yes, our kids pay board, not in cash but by working for me (on top of regular chores because they're a part of the household). They pretty much all work two jobs and Hannah is still training too. Whether they live here or make their homes somewhere else they will have expenses. What we have done however is insist that they put the equivalent of their board into savings.

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  9. Thanks for inspiring us daily Cath! Do you mind if I ask who is your mobile provider? We are currently on contract which will be ebding soon. Need to start saving for our wedding to Fiji in 2 years time! Any tips with living with 2 toddlers and trying to save would be much appreciated. Thank you! Lameese

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    1. I'm with Vodafone, $29 a month which doesn't technically exist any more but I refuse to switch - it suit me just fine.

      Wayne is with Telstra, $30 a month and again I think his plan doesn't exist but I'm not changing it. It gives us heaps of data which we use when we're travelling. And that is why he's with Telstra, it gives us a slightly better cover when we're away. Because we are often quite remote mobile cover is handy, otherwise we're relying on UHF and in really remote places sat phones which are hideously expensive. Fiji is so beautiful, your wedding will be lovely, especially if you can pay for it and start married life without that debt. Congratulations, you have a plan so I'm positive you'll succeed.

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  10. Thanks Cath, some of your figures match my household's. So that is encouraging to me. As my husband is retired and I am looking at retiring in 3 or 4 years after I reach Age Pension age as I do not have enough of my own Super to support me before that time.
    Can you please tell me, if it is not too personal, what is AMRA? It has me intrigued.
    Patricia
    I belong to 2 Guilds and I budget for that. One of groups does a lot of charity work er stitching. That is always fulfilling.

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  11. Wow! I am super impressed by this budget! Both my teens have just started working so that will take the pressure off a bit. I didnt see a any mortgage payments, are you debt free? We are currently working towards that.

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    1. We are debt free and have been for a long time now, it's a nice feeling, you'll love it :)

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    2. My apologies, of course you are! It's in your blog name ;) I found you through Wendy's My Abundant Life blog. I'm so happy to have found some like minded frugal people.

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  12. Hi! Wow!! I thought we lived pretty simple but you sure have us beat! We fit pretty much in the top modest budget and there are just the two of us.. Could do better if we really wanted to probably. Way to go! I love reading frugal blogs. Nancy

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    1. Welcome Nancy, we live a very frugal life but we don't go without anything we need or really want. We are blessed with no desire for anything extravagant or fancy and we're happy and content with our good life :)

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  13. Thanks for posting this! Awesome to see where we are less in some things but some other expenses we need some work on. Definitely groceries need a big overhaul in our family! Thanks for all the tips!! Lyn

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  14. What an awesome job you do Cath just wonder how you get a stock pile happening when your on such a tight budget my current grocery bill is down to $150 per week from $220 per week it's a struggle !!!!

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