2015: January Monthly Expenses
Sorry I haven’t been posting for a while. I have been busy with the auditor life now that it is our “busy season”. Where everyday is a workday. Here is a quick little meme that I found to be very representative of what auditors are.
For my New Years Resolution I have made two financial goals this year:
- On average, have a savings rate above 50% of my take home pay.
- Reach a positive net worth of $50,000 milestone
In order to help me accomplish that. I will be recording each month a breakdown of my expenses. Any surplus of my money will be saved in a retirement account or invested. One thing I always advise is that money that just sits in a traditional savings account makes no money but money that’s invested or put into a retirement account makes money for you. Check out my Saving money towards early retirement article for what you should do with extra money to save.
Keeping a track of your expenses is also a great way to help you budget. As a challenge try keeping a record of what you buy in the next two weeks. Doing this you can see where a majority of your expenses goes. Whether it’s a variable expense or a fixed expense. While fixed expenses usually can not be changed you have the control to start shaving down those variable expenses. For an example, dining out is usually a big spending amount in your variable expense. However, you can start decreasing this cost by cooking your own food versus dining out.
Here is a breakout of my expenses and my income for the month:
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Just to clarify some things. Most people correlates take home pay with what you receive in your bank. However, what you receive in your bank is called your “Net Pay” which is different from your take home pay. Your actual take home pay includes all money you are considered using or get to use. So you would need to add back those deposits in your retirement accounts and savings account to be included as your take home pay.
Now to calculate the savings rate for the month. The calculation for your savings rate is simply the percentage of your take home pay that you’re not spending.
(Take home pay – expenses) / (Take home pay) multiplied by 100
My savings rate for January:
(4,162-1,660)/(4,162) x 100
Fantastic! Looks like I’m on track on hitting that 50% average savings rate for the year. Now here is a chart for my Net Worth Savings.
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Slowly but surely this will start to appreciate in value. Now let me see how are you doing?