As a family of two living in Switzerland, budgeting expenses is something we take seriously. We wanted to delve into more detail on what our monthly costs look like and share that with the readers of this blog. To give you some insight into just how much it takes to make it work as a small family here in Switzerland, we tracked each penny spent during the month of January – from housing to groceries, restaurants, transportation, and more! If you’re looking for ideas on ways to save money while still having fun (because sometimes life needs enjoyment!), then come join us as we review all our spending habits for January 2023.

Why Sharing This Information

This year I decided to record and share our monthly expenses with everyone. There are a few reasons for me to do so:

1. Education. I want to help people understand that by cutting back unnecessary spending, you can fast-track your wealth building.

I used to focus a lot on earnings and not so much on spending. Therefore, as someone in her 20s, I spent as much as I earned (most of the time) on things like traveling, clothes, random activities, daily Starbucks, etc. I have one investment that was done on purpose to force me to save money every month because it is a long-term contract with obligations. Thankfully I did that; actually, I was ‘tricked’ into signing that investment without fully understanding it. Long story short, besides that small monthly investment obligation, I spent all I earned.

So when I reached my 30s, I didn’t have too many assets under my name, not to mention some savings or emergency funds, considering how much I earned in my 20s.

I strongly suggest you do this exercise: **calculate how much you have earned all your life till now. Add up all the savings, assets, and investments you have now minus the debts.That is your net worth. Use the sum of your net worth divided by the total amount of what you earned in your life. There you go. That is much you have kept. The rest was spent. Did you manage to keep 10% of it, 20%, or more?

2. Have more financial clarity

We have tracked our monthly expenses for a few years now but never get down to the details by category. I did not know if we overspent or underspent in certain categories. Without knowing the details, I am not able to change my behavior and optimize it. Even if we are within budget, we might have consistently overspent on certain categories which could be optimized. So by breaking the budget down into categories and tracking it, we were able to adjust our spending habits or adjust the budget if it did not work for us. Without financial clarity, one can never take actions to improve.

3. Give you a benchmark

If you are inspired by our expense tracking exercise, you can benchmark how much we spent vs. how much you spent and see if you can optimize certain categories. Or even better, give me suggestions for improvement. Ultimately each person’s lifestyle is different, the financial situation is different, and the financial goal is different; you should not compare yourself to us. You might have a way bigger monthly expense, and if that works for you and your family, given that you are financially responsible and it fits into your financial goal, that is perfectly ok. We will for sure adjust our expenses over time when the situation changes.

Categories

So now, let’s get into the juicy part.

I have split our expenses into 6 categories

1. Housing

Housing cost includes our mortgage interest payment and utilities cost (Nebenkosten, as they say in German). This does not include amortization because it is not an expense. Due to the price increase in heating, our housing cost went up by around CHF100 per month.

2. Food

This includes grocery shopping and eating out. It is very straightforward. When we were traveling, we counted the food expenses into our travel expenses.

3. Transportation

We have one car, so the gasoline, parking fees, and public transportation cost are under this category. We took a drastic change and sold the Audi TT in 2021. One car is enough for us. And at the moment we don’t need a sports car for fun mountain road driving🙂

4. Health insurance

This includes all our health insurance plus medical bills out of our own pockets. We have basic health insurance and some additional health insurance.

5. Reserved yearly bills

This is not the actual expense but saving for the expenses that will be incurred during the year, such as road tax and car insurance, and other fees.

6. Personal expenses

Everything we spend on ourselves is in this category. It could be shopping, gifts, wellness, education, and traveling. I still want to keep my personal lifestyle information from the public, so I combined the categories together under personal expenses. I suggest you break them down into several categories for tracking.

Actual Expenses

Here are the actual expenses for January, without taxes.

The transportation cost was quite low in January because both of us did not go out too much, nor did we need to go to the office every day. I think it is a low month. We don’t have costs for internet and telecommunication due to family benefits from someone who works in the industry 🙂 But we do need to pay tax for it, as it is considered income.

What Does It Mean?

This expense does not include tax. How much tax do we pay depends on:

• How much we earn
• Where we live, in Switzerland, each canton and village has its own tax rate.
• How much can we deduct? This depends on your personal situation.

Because the 3 factors are very subjective and can barely be changed, so I think it is meaningless to show the tax expense. In my personal opinion, I think our tax expense is way too much, given where we live, but that is the way it is, and I can not do much about it for now.

Here is a snapshot of the expenses, don’t forget, in order to build wealth, you need to increase the gap between earning and spending. Optimizing spending is just one part of the formula. The other, and more powerful part, is the earning. There is so much you can save beyond a certain limit; life is not fun. But if you can uncover your earning potential while keeping your expenses low, you are on the fast track to building wealth over time.

So what do you think? What can we optimize? Do you spend more or less in those categories?

If you are wondering why our housing cost is so low, check the articles:

A Step-by-Step Guide to a Real Estate Purchase in Switzerland

How To Find Undervalued Property in Switzerland – Tips and Tricks

3 Things You Need To Know Before Buying a Property in Switzerland