It’s that time of the year again: Here is our 2021 spending report. A quick warning – our living expenses now that we are a family of four have gone through the roof. You might be a little shocked by how much our lifestyle here in Sydney is costing us each month. But I can assure you – we have not blown our budget and are not worried about our current cost of living. Read on to find out why.
2021 was a big year for our family – and that includes our cost of living. We completed our first full year of Early Semi-Retirement just as Baby Flamingo #2 turned 1. It was also our first full year as a family of four and it wasn’t a cheap year.
While we don’t usually share our numbers (as explained here) we make an exception when it comes to our family spending. I hope that our annual expense breakdowns are helpful to other families with young kids or readers who are planning to become parents soon. I have also written a very detailed post about the cost of having a baby in Australia recently. As you’ll see from our spending below, a lot of the cost of children is hidden – like in the higher rent for a bigger apartment and higher food spending.
Notes and Context
For some context (in case you are not a regular reader of the blog): We are a semi-retired couple and live in Sydney with our kids (two under three!). You can read all about our strategy here. Our kids go to childcare three days per week (Baby Flamingo #2 started in July). We are not super frugal but also don’t like to waste money on things that don’t add value to our lives. We spend a lot of money on things that bring us joy. Quality is important to us and we shop local where possible. We have a (flexible) family budget and track our expenses monthly.
A few notes:
- Rent: We rent an apartment in one of the most expensive (and nicest!) suburbs of Sydney. The cost might seem a little outrageous (for a FIRE blog anyway), but we get a lot of value out of our location, so we are happy to pay for it at the moment.
- Groceries / Supermarket: This category includes all of our supermarket spending: groceries, household products, some personal care items, baby stuff (nappies, formula, wipes, etc). We order online (Woolworths) a lot and do our top-up shops at Coles. Lately we have been very disappointed with Aldi’s quality lately, so we hardly ever go there anymore. We eat meat and fish about three times per week and buy organic beef and eggs and free-range chicken. On the other four days we have vegetarian/vegan meals.
- Eating out: We often buy breakfast when we are out with the kids and also get takeout a couple of times per week. We could probably reduce our spending in this category quite a bit but with no real holidays this year we have enjoyed treating ourselves a little.
- Transport, mobile phones, private health insurance: These are subsidised by our employers which is great, so the cost is probably lower than you’d expect.
- Taxes, donations, etc.: Investment-related costs, charitable donations, taxes, etc. are not included in this breakdown.
Our 2021 Cost of Living Breakdown
| Category | 2021 spending | Comments |
| Rent | $45,624.96 | |
| Groceries / Supermarket | $13,826.59 | see note above |
| Household goods | $4,635.20 | We bought some new furniture and appliances. |
| Personal care | $519.69 | |
| Utilities (electricity) | $1,731.25 | |
| Insurance | $2,021.20 | Renters insurance, salary continuance, liability, etc. |
| Mobile phone | $1,505.93 | |
| Home internet | $240.44 | We were using mobile broadband until recently and only got an NBN plan a couple of months ago. |
| Medical expenses | $3,511.80 | |
| Transport | $1,963.30 | |
| Entertaining visitors | $595.82 | Extra costs when we have family or friends visiting (eating out, excursions, etc.) |
| Kids – equipment, medical expenses, clothes, toys, etc. | $2,835.99 | |
| Childcare | $15,866.54 | |
| Eating out | $6,525.74 | |
| Alcohol | $719.30 | |
| Netflix, Spotify, etc. | $359.96 | |
| Electronics / Software | $406.72 | |
| Sports gear / Outdoor equipment etc. | $334.32 | |
| Misc. discretionary spending and clothes | $3,914.27 | Mr. and Mrs. F.’s “no questions asked” discretionary spending including clothes |
| Holidays | $1,185.97 | One short break at a nearby family resort. |
| Misc. expenses | $1,557.97 | Tax return costs, repairs, gifts, etc. |
| Total | $109,882.96 | |
| Total excl. rent | $64,258.00 | |
| Total excl. rent and childcare | $48,391.46 |
Comparison – Our Family’s 2021 vs Our 2020 Spending
Compared to 2020, our spending has increased significantly – from $83,506.56 to $109,882.96. The main reason is that we lived in our bigger, more expensive apartment for all of 2021. We moved here halfway through 2020 as our 1-bedroom had become way too small for a family of four.
Childcare is another big budget item for us these days. Two kids in childcare simply cost more than just one. This cost will go up again next year as Baby Flamingo #2 only started childcare in July (and only went one day per week for the first few months). I’m not even sure if I should include childcare in these annual breakdowns. Paying for childcare is simply the cost of both parents being able to work once you have kids and no family around.
Our supermarket spending has gone up a little bit compared to 2020. Again, that was expected when we added another baby to the mix. Our spending on electricity has gone up as well, partly because we were home so much last year and partly because prices have gone up. The same applies to our insurance policies. They are the same policies as in 2020 but the cost increased by about $500. I feel that inflation in some key areas has been driving the cost of living for families up a lot lately.
Our Top 3 Household Expenses vs The Rest
One thing that surprised me a little is that our top 3 expense items – rent, childcare and groceries – account for a whopping 68% of our total spending:
This top 3 will change once we buy a house (and have lower monthly mortgage rates than our current rent) and when our kids start school.
Why I’m Not Concerned About Our High Family Spending
While I know our spending looks high I find our latest breakdown reassuring. The number I care about is our expenses excluding rent – $64,258. We want to buy a PPOR in the next few years and pay it off before we fully retire, so we won’t be paying over $45,000 per year in rent long-term. This expensive apartment we currently live in really is a bit of a luxury expense.
So excluding rent we spent $64,258.00 in 2021. If you deduct the childcare costs (which is just a temporary expense, obviously) from this number our actual spending was just $48,391.46 – way lower even than the ASFA Standard amount required for a comfortable retirement ($63,799 for a couple at the time of writing).
So even though we spent well over $100,000 last year, we are tracking along nicely and can continue enjoying our fabulous semi-retirement lifestyle while we look forward to hitting FIRE and the possibility of retiring in the next 10 or so years.
I’d love to hear your thoughts. Was our 2021 spending higher or lower than you expected? How has your family’s spending changed during the pandemic?
So good to see that not everyone scrimps by on baked beans and toast. Thanks for you transparency, love your content!
Thanks Jamie! I have to say that our 2 year old actually LOVES baked beans, so we definitely have a lot of baked beans and toast in our house 😉
We also have 2 young kids, 3 and almost 5. Our spending is a bit higher than yours, we rentvest in Maroubra. Can’t wait for our oldest to start school!
I love Maroubra, such a nice beach. Yes, not having to pay for childcare will definitely be a big relief I’d imagine – although that’s probably around the time the kids (and their activities etc.) start costing a little more. They are definitely not a cheap investment, but the one that brings us the most joy by far! 🙂
Awesome to see real life expenses for a family in a similar situation.
I feel your pain – childcare and rent in Sydney are daytime robbery! Once you knock these two categories out of the way your expenses will be pretty low.
Thanks!
MM
Definitely, the cost can be a little eye-watering. It’s all about choices though!
Thanks for sharing your numbers. Many families including ours (family of 3 with a 5-year-old), can relate to those numbers. Do you also track your savings rate?
Care to share your house buying plan with your readers (especially tips and tricks)? We’re also saving to buy a house sometime in 2023 (probably not in Sydney due to cost, but in some regional areas such as South Australia or Regional Victoria).
We just reach the flamigo FI few weeks ago so now we are saving for a deposit for our family home.
I haven’t tracked our savings reate since we semi-retired, it’s probably only around 5% or so, we are not saving to invest anymore and are more focused on working less etc.
I don’t have any tips or tricks when it comes to buying a PPOR I’m afraid – we’ve only bought an IP so far.
Congrats on reaching Flamingo FI! 🙂
Thanks for sharing. Looking at your numbers your transport cost is very low. Just to confirm do you own a car? Also is this amount lower due to Covid and traveling less?
Yes, we own a small car but hardly ever use it. Correct, the expenses for transport are pretty low because we just haven’t travelled much due to Covid and working from home.
Thanks for putting that up as we are also a family of 4 with children aged 7&4 & found the comparisons very similar.
Good to hear! Did you find that one child not going to childcare anymore made a big difference or do the costs just change (school equipment, activities, etc.)?
Thank you for sharing, we are a family of 4 with older aged kids (9 and 10). Our expenses are very similar in comparison. Rentvesting beachside in Melbourne, so ~5k less, but our grocery bill costs more with older boys.
Thanks Michael! Haha, I can imagine that food costs will increase when they get older, they are already eating more than my husband and I at times!
So nice to see how another family just like ours spend and that being frugal is not the only way to fire. I would be curious to see how do you manage to spend only &13.8k on groceries per year? Our spending the equivalent is double at $28k per annum. Would be curious to see a typical weekly shop please . Perhaps we can learn how to manage this category better.
Thanks for awesome content!
Being super frugal is definitely not the only way to FIRE. And what’s the point if your frugality makes you miserable anyway?
I actually thought that our grocery spend was on the high side as it includes a lot of baby stuff like formula.
We only buy meat/fish three times a week, so I guess that saves a bit of money. Do you eat a lot of meat? Also, does the 28k include eating out? How many mouths do you have to feed?
I might post our weekly Woolies order sometime.
Would love to see a weekly woolies order! This is by far our category we most need to cut down.
Yeah we have 2 kids and spend about $18k per year on child care and $15k per year on groceries. So pretty typical.
Thanks for your spending breakdown. Compared to ours it is way lower in nearly every category.
I don’t think we have an extravagent lifestyle (our eating out category was one of the only ones lower than yours, and our groceries bill is similar) but yet we still manage to spend (and I shudder when typing this) nearly double what you did!
The one of the chief culprits is insurance – health, house & contents, car x 2. We are at a different lifestage than you (empty nesters, nearing Coast/Flamingo FI) so I would expect some difference, but it seems like your insurance is super low. Do you save instead of insure? Just interested to understand where the difference might lie.
However, thanks again for your transparency. It will make us do some soul searching about where our spending is going and, if redirected, what alternative benefits the money could bring (e.g. faster FI number, more experiences but less stuff etc)
Hi Dave,
So you spend over $200k per year? That does seem pretty high. We only have one cheap car, so that helps. And when we eat out it’s usually take-away (no fun sitting in a fancy restaurants with young kids…).
Our health insurance is employer subsidised, so these costs will go up for us eventually. We don’t own a PPOR, so we just pay for renters insurance which is cheap.
Hi Mrs F
Not $200k pa thank goodness!
I wasn’t clear in my first comment – I was comparing it to your breakdown excluding rent and childcare.
So, on a like for like basis, we spend approx $85ka pa
But it’s still high, and insurance is a key part of that … we need to rethink this.
Thanks for an awesome site … it’s been really helpful in our part time retirement planning – which we are about to embark on within the next 12 months (earlier hopefully).
Thanks, David
Haha, I’m relieved you are not spending $200k per year!!
$85k sounds a lot more reasonable. If you own your home your number would include home insurance, rates, water, etc., plus personal/health insurance and two cars… I think it can all add up quickly. Feel free to send me an email with your breakdown, it would actually be interesting to see where your money goes.
Good to hear you are so close to semi-retirement!
I’ll happily share our breakdown – and happy for it to be available to the Flamingo community as seeing yours has been really helpful for me, so I hope mine will add another data point for others when looking at their expenses / saving / FI numbers
I’ll get something to you in the next few days.
Hi Mrs Flamingo
First,y great blog, very interesting and engaging. I a man readign from Ireland so not overly familiar with the Ozzie set up re super etc, so maybe missing some context
Re you $100k+ Annual Expense – Curious if your two part time salaries cover this? It seems like a high cost that would need decent gross annual salary to meet.
Also for the future house, how do you plan to fund the purchase – obtaining a mortgage would be based on multiples of your salary, so again if part time salary, does this not limit your options here?
Hi Gary, thank you! 🙂 I always love hearing from our international readers!
To answer your question – yes, our part-time jobs cover our annual expenses. We are currently working part-time in our former full-time professional jobs. So these part-time salaries are higher than a salaries for standard semi-retirement part-time jobs (gardening etc.). Our equivalent full-time salaries were a little bit above average for Sydney (not much though!). It is just a really expensive city with higher salaries (which are eaten up by the high cost of living).
We won’t buy a house in Sydney, so our part-time salaries will be fine to get a mortgage. This is one other reason we held on to our jobs in a part-time capacity for now instead of changing jobs.
I hope this makes sense!
Excellent thanks for the update and makes sense (excuse the typos in my first post, I couldn’t edit afterwards).
I have met my FI number last year, but to step off the rat race treadmill of corporate work. I could not cover my expenses, which is about €4.5k p.m.
For now I have moved to a 4 day week, – it will make the next 3 years more bearable, I hope at that point I will then have saved up a buffer to then be able to manage on a barista level salary, coasting through to drawing down my pension.
I actually have a countdown on my desk noticeboard. 40 months to go 🙂
Hello.
I’m curious to know more about your strategy for buying a home and paying it off before full retirement.
Presumably lump sums from your (outside-super) asset pool will be used (initial deposit & perhaps later lump(s) to reduce/end the mortgage), plus a portion of recurring income during semi-retirement.
Once lump sum(s)’s taken out do you expect enough income generation from the remaining asset pool?
Reason for asking is that I am toying with a PPOR strategy myself and I am worried about double counting what my assets can do for me re: lump sum debt payments & income generation, especially with Australian housing costs.
(I am also around 10 years older than you…)
Hi Penny, I am actually working on an article on this very topic at the moment. It’s a tricky choice to make. We definitely don’t want to “steal” from our nest egg to buy a place to live. The idea was to buy and pay off the PPOR without touching the nest egg. However, now that prices have gone through the roof a much larger deposit is required, so there is no easy solution to the problem.
Cool – I look forward to the article!
If you can figure out a way to pay off a PPOR during semi-retirement only using P/T salaries and passive income *and* while raising 2 kids you will be doing great!
I don’t have the kids, but on my single income and even with a 20-30% deposit it’s hard to make the PPOR purchase numbers work on a P/T salary & passive income without cracking the nest egg in future (for planned or unplanned income shortfalls, etc).
Choice published an interesting relook at retired costs of living and took a hit at AFSA standards as being too high today – https://www.abc.net.au/news/2022-03-17/nest-egg-table-on-how-much-to-save-for-retirement/100914200 and https://www.choice.com.au/money/financial-planning-and-investing/superannuation/articles/our-new-retirement-standards
Wow great to see all the expenseS laid bare. All the US blogs I read have much lower costs for so many things (except health insurance of course). We spend a core of 55000-65000 and the variance is entirely travel related. No mortgage. Our grocery bill is much lower than most people though. Family of 4 with boys 13,9. We spent 5200 a year until Aldi arrived and spent 6500 now cos I hide the middle aisle purchases in the grocery bill. We eat meat once a week and fish once a week but my partner is an excellent shopper. He bulk buys the specials and rarely pays full price. We also have fruit trees, herbs and a few leafy greens. We also have chickens but they are not laying currently so cost heaps in chicken feed. We don’t feel deprived with food at all and really feel like we eat pretty well. I imagine if you ate organic it might double the price of things. With the avocado glut this year we eat smashed avo every day and lots of nuts. We do eat fruit and veg seasonally and refuse to pay more than $3 a kg for fresh produce. Luckily there is always something cheap enough and we make a feature around what is in season. I have a group of harvest recipes I pull out when we have an abundance of a particular fruit. We also waste nothing. Sunday night is often vege soup night made from the odds and ends in the fridge. If fruit is a bit soft it goes In a smoothie or a crumble. Anything unpalatable goes to the chickens. We eat out rarely and get takeaway once a month so a lot of eating at home. I imagine if you are very busy it’s hard to get the specials and have an idea in your head (or on your device) what is a good price for things but I reckon my partners skill saves us thousands a year.
Here’s a tip for the 20-30s folks. Relocate to work in US for 10 years and you will qualify for social security pension (SSP), even if you choose not to live there, when you retire. This will reduce your annual expense requirement by 50%. So if you are an Aussie and you qualified after working there, your average SSP payout is US$3k per month on retirement age. You come back and live in Sydney and you have US$6k per month, if you add your spouse, or US$72k per year, which is A$100k. And maybe with A$100k per year, your FIRE number would just need to be 50% or 25% of your Australian number.
Awesome article, great to see the expenses of other families. We are also a family of four with two kids (9 and 8). We live in Singapore, and the Zerglings go to a bloody-expensive international school. We look at 9,500 USD monthly fixed-costs (about 14,000 AUD/mo), and I mainly live of my passive income (about 12,500 USD/mo). I’m in my mid-40s and semi-FIREd in 2018, after 23 years of a lot of work (was mainly running my own companies). I own two Australian stocks in All-Weather Portfolio: Dexus, a commercial REIT, and BHP, the mining giant. Keep up the great work, love your content! Cheers from Singapore, Noah
Hey, the info is very useful!
We are a family of 3 (my daughter is 1.5 yo) planning to move to Sydney next year in April and we are now doing our research to understand the cost of living to negotiate the package.
Are the expenses in A$ or USD?
Thanks a lot!
Simona
It’s in AUD! 🙂
As a comparison, below is our spending for a family of 4 in 2021 (kids aged 5 & 3).
Costs are based on 2 x cars, mortgaged house in South Sydney suburbs + mortgaged investment property.
Unsurprisingly, childcare + mortgage + groceries account for almost 60% of total expenses
Health insurance is about $300 per month
Car Expenses (Rego/CTP/Servicing) $2,884.41
Childcare $18,508.66
Clothes & Shopping $7,863.82
Fines/Fees $2,198.97
Food – Eating Out/Take-Away $5,653.34
Food – Groceries $14,286.45
Home (IKEA/Kitchenware/Homewares/Electronics) $10,787.59
Home Maintenance (Bunnings!) $2,492.38
Insurances (Car/Health/Home & Contents) $5,790.98
Medical/Health $12,669.20
Mortgage Repayments $47,434.51
Other / Misc $2,824.80
Personal Care $754.80
Phone & Internet (2 x mobile plans/NBN/Netflix) $2,141.67
Recreation (Swimming Lessons/Hobbies/Days out) $2,142.73
Transport (Petrol, Tolls, Opal) $4,223.75
Utilities (Elec/Gas/Water/Council Rates) $5,095.55
Total Expenses $147,753.61
Noob reader here from UK so hard for me to translate the numbers, but what impact did inflation have, how did your 22 numbers compare to 21? 23 estimates? Here in UK my costs went from approx. 40k 2 years ago to around 55k now and sadly that’s after cutting out on lots of fun stuff. Our biggest rises were London rent, 30% higher than 2 yrs ago, and the energy bills up about 40% too.