Prioritizing My Spending

All Time Sleeping Average: (Target) 7h30m / day (Actual) 7h28m / day (126 night average)

3 Day Sleeping Average: (Target) 7+h / day (Actual) 7h48m / day (8h28m, 7h28m, 7h28m)

I mentioned in the previous article that I ensure that my budget allows for my dividends to my mother to adhere to the financial criteria of never exceeding 2/3 payout ratio. I also mentioned that “I also have a Regret Averse Fund to allow me to indulge in experiences so I don’t regret not going “crazy” on experiences I really want to try while I feel like doing and capable of doing in terms of age.”

But two questions emerge as a result:

  • How is my regular budget spending aligning with my priorities in life?
  • What constitutes experiences which belongs to the Regret Averse Fund instead of regular budget?

Here’s a current breakdown of my regular budget:

Budget Breakdown - 2015 Oct 11As for the needs vs wants ratio of each category:

  • Rent (42.86% premium) – Versus finding a roommate, I’m paying a premium of 42.86% to allow my mother and myself a relatively comfortable environment. If the premium was treated as part of the dividend I’m paying my mother, my payout ratio would be 46.73%.
  • Food (18.67% premium) – Versus eating the most basic stuff and without starving, I’m paying a premium of 18.67%.
  • Misc. (23.89% premium) – Versus the compulsory spending, I’m paying a premium of 23.89% for services I don’t need anymore (such as subscription to Sure Dividend, a domain and credit card annual fees).
  • Mum (0% premium) – The money I spend treating my mum for lunch during weekends or the amount of dividends I currently give her is so modest that I don’t treat it as a premium.
  • Transportation (0% premium) – I stick with the cheapest option, which is the MTR, so 0% premium.
  • Gvt Student Loan (0% premium) – At ~1% interest rate with a 10 year repayment period, I am in no hurry to repay earlier than scheduled as this is essentially nearly free float I can use to invest.

In conjunction, what are my priorities in life?

  1. Basic living needs
  2. My physical health
  3. My spiritual health
  4. My mother
  5. Investments
  6. Entertainment

My actions after reviewing my budget? I’m going to stay put for all spending amounts:

  • The premium on rent is worth paying as my mum has every right to live in an environment without external roommates while the payout ratio is still under control.
  • The premium on food is worth paying as long as the food is healthy and tasty (nourishing physically and spiritually).
  • The premium on misc. is winding down as we speak (my subscriptions for Sure Dividend and the domain name is soon to expire in a few months. I’m also able to permanently waive my credit card annual fee soon in a few months as well)

As for “What constitutes experiences which belongs to the Regret Averse Fund instead of regular budget?”, I will primarily focus the Fund for experiences that is under “Entertainment” (very good to have experiences that aren’t must haves), but also account for one-off upgrades in lifestyle that is beneficial to me physically or spiritually (eg. buying fitness trackers or heating systems).

So I’ll be looking forward to my Fitbit Charge HR and Fitbit Aria 😉

Every other category is accounted for in my regular budget and my savings.

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