Frugal Friday | Percentages
Fuel poverty is considered to be when you spend more than 10% of your net income on gas and electricity. It’s worth checking just what percentage of your income is spent on fuel. The same applies to telecommunications, including television, it seems the average is between 2% and 5%. Housing is the highest at up to 50% normally. Rents are rising and privately rented homes being the most expensive. The government is forcing up rents for social housing and so that will mean less money being spent in the shops over the next year at least.
You might like to check the real cost of running the car as a percentage too and do include everything especially appreciation. I did well on that one! Council tax is also on my list and that takes quite a chunk of out most people’s incomes and that can be 5% or more. Water is also essential and comes in at between 1% and 3%. Like water we all need food and I have been spending less on food since I have been writing thrifty and frugal blogs! A average amount that a family would spend on food would be about 10% of their net income. The typical amount would probably be higher. According to a recent survey a typical family spends around £3,000 a year on food, not counting takeaways and eating out. A typical income for a family is around £30,000 a year where both parents are working. This demonstrates how important that second income is to a family. There are other things like insurance that can be regarded as essential but I have left those out because everyone has different needs.
Many people regard alcohol and eating out a essential but they are luxuries and they should be looked at if you’re short of cash. The average spend on alcohol was said to be quite low in the survey but we know that isn’t true. Many people are spending far too much on alcohol while some people spend nothing. It’s not that unusual for people to spend 10% of their income and more on alcohol. Why don’t you check?
The evil weed
Despite smoking being banned in public places and work places in the UK, many people still smoke. This can take 10% of income and more easily. If you smoke, what percentage of your income goes up in smoke? I’m not condemning, I was the world’s worse; with the emphasis on was! If I was still smoking, it would cost me over £3,000 a year! Ouch!
Hopefully you don’t need prescriptions for medication but it can be expensive. In parts of the UK there is a standard charge for a NHS prescription of £7.40 and this can mount up if you’re sick. It’s worth buying a pre-payment certificate for £29.10 for 3 months or £104.00 for 12 months. That works out to £8 a month and so if you need more than 1 item a month, it would be cheaper.
Saving and investing
Most people try to save after paying for all the essentials, if only for a holiday. It is worth working out what percentage of your net income goes to saving and investing and also what percentage of your income comes from savings and investments. Savings are paying terrible interest at the moment but every little helps. I will be putting more money into Zopa soon and possibly NSANDI certificates that are index linked plus 0.5%. I get around 6% lending money with Zopa and so that is at least higher than inflation and a real return.
Finally, you might like to check what percentage of your income goes on holidays and pursuits outside of the home like sports. You can also check odd things like hair cuts and see if you can save money there, perhaps by learning to cut the kids hair? I just remembered gambling and the lottery; I do play but don’t spend too much. Gambling shouldn’t be more than 1% of your income, including bingo and the lottery! Look for value when gambling, which is better value, a night out at the bingo or watching Dale Winton on a Saturday night?