I’ve just come out of my annual performance review and despite being told how well I’m doing at work, I received a really dismal 5% salary increase. I’m being brave sharing this as colleagues may well read it and perhaps received a better increase than me, perhaps not though. Be that as it may, this all got me thinking about the fact that I’m actually poorer now (in terms of monthly cash flow) than what I was a year ago. Is my personal inflation rate higher than average? How does this even work?
Being a blogger and avid budgeter, I really do know what I spent a year ago versus what I’m spending now and despite the official inflation rate of 4.8%, my expenses have gone up by more! In fact, my personal inflation rate seems higher than the official rate.
See the comments in my Tweet for some interesting links and articles on Inflation.
So even though the inflation rate is around 4.8% (someone clever can correct me), who feels poorer now than say a year ago in terms of cashflow, salary, groceries, water, electricity, insurance, medical aid, healthcare, etc?
— Brendan (@your_money_blog) March 5, 2019
It’s quite easy to calculate your own personalized inflation rate based on your spending and I think I’ll write about that soon. For now though I decided to look at some of my main main expenses to see how they compare.
Firstly, my Savings Rate
A large portion of my salary goes towards my home loan as I’m really try to pay it off as quickly as possible. I also contribute to my company provident fund (which incidentally is dropping in value), I have an Emergency Fund and I’ve just started my first investment with EasyEquities. Even though my bond repayments are “debt payments” and not strictly speaking part of my savings rates, I’m going to lump them all together for the purpose of this post.
So, the total percentage of my salary that is saved, invested and paid towards my home loan is around 60% (I run a tight ship!)
And now to my expenses…
Water, Rates & Taxes
As mentioned, I’m not taking my monthly loan repayment into account as that is a fixed amount along with an extra payment that I make. But, my water, electricity and rates have all increased; especially with the drought we had in Cape Town last year and the special levies that were added.
In fact, the last year has seen two new taxes from the City of Cape Town. These did not exist before.
- a fixed basic charge for water of R56,
- and Electricity Home User Charge of R13.44 (over and above my usual electricity costs)
Not only have I drastically reduced my electricity bill, I have also installed 2 water tanks and we still operate on extreme water savings at home.
My total rates bill for City Of Cape Town for February 2018 was R819.64 (excluding electricity as I have a prepaid meter). Total rates bill for February 2019 is R1230.94 – an increase of 50%!!!
My rates bill is a small percentage of overall expenses but a 50% increase is rather shocking!
The cost of fuel goes up and down each month so it’s hard to keep track of when you’re saving and when you’re spending more. However, looking at things as they stand right now a litre of petrol cost R13.90 in February 2018 and is currently R14.62. Next month will also see an increase in fuel levies of 29c per litre.
A good thing though is that I have managed to save money on my car insurance! (see the linked post for details) It really helps to shop around every so often and I’d certainly encourage you do!
As far as other car expenses go, I haven’t taken my car for its annual service so can’t comment on that.
This one is harder to estimate but looking at my budget for the past year I see that I have increased this by around 12% as I just wasn’t managing to stay within my budget.
My Medical Aid contributions with Discovery have just increased by 9% and my GAP Cover with Stratum by close to 30%.
Home Security (ADT)
I have a monthly subscription for armed response at my property and this time last year I paid R328.50 whereas I now pay R370.37 – an increase of approximately 13%.
My household insurance premium has also gone up, by around 9%.
Other expenses which I haven’t gone into detail with are:
- Internet & Data costs
- Pets & Vets
- Eating Out
I am almost certain though that each category listed above has increased by more than the official inflation!
I haven’t done a full personal inflation rate calculation but it sure feels that my expenses have increased by more than the 5% salary increase I received! Besides my car insurance drooping by a few hundred rand, everything else has just increased by 9% and more!
Is it just me who is feeling poor now than what I was last year?