One of the main reasons I started a Blog was to publicly record all of my Income and Expenses each month.
There were two main reasons why I decided to do this:
- Accountability - Just knowing that I'm going to be writing down all the pounds and pennies that I spend each day is reason enough not to go crazy with my spending. It also encourages me to invest as much money as I can to boost my monthly saving rate. The act of writing everything down will motivate me to spend less and save more. I have a Goal of saving more than 50% of my monthly wage every month and spending less than £950 per month for the rest of 2014.
- Evidence - I want to prove that anyone can become financially independent, including someone like me on a fairly average salary (under £30,000 pa). You'll be able to see what I spend every little penny on, every month. You'll also see what I earn every month and what percentage of that I'm able to invest with. I want this Blog to represent a real-time document of how someone can go from earning less than £10 in one year (2013) in dividend income, to earning enough passive income to cover all monthly expenses and spending.
I will rarely have the same wage every month as I have a commission based job. I might also be eligible for bonuses at certain times of the year, which will impact on the total of my wage. My wage figure will be the net sum I'm paid after tax, national insurance, company pension, salary sacrifice for pension, and student loan. I will only include one figure for my wage but I will mention if my commission is high/low and I will also let you know if I've triggered a performance based bonus.
The first two expenses are fixed amounts. 'House Bills' is an account where my fiance and I pay into each month to cover mortgage payments, council tax, water, TV licence, telephone, electricity, and broadband. 'Food Account' is another joint account we use to pay a fixed amount (£100 per month*) into for food shopping.
*Update - Miss FFBF and I have decided to challenge ourselves to cutting this amount in half (£50 per month) from now on and see how we get on. I will be due to pay my £100 in May to level out our joint payments, and I'll make my first £50 payment in June.
Here's a breakdown of my Income and Expenses for the previous month:
Income from April 2014
|Car Buy Out
Interest from Savings
Expenses from April 2014
April was a huge month for me on a few levels. My wage was a lot higher than normal as I triggered a performance based bonus. I will only achieve this type of wage a couple of times a year so it's nice to finally benefit from some of the hard work I've been putting in at work.
Dividend Income was much better this month. I hadn't recorded my forward projections correctly which mean I received an expected dividend payment from HSBC on 30th April 2014 (I have updated my Dividend Income post, and Dividend Income page). This is my biggest month for Dividend payments so far, and my Divi's will be increasing significantly from May onwards so I'm looking forward to that too!
Ebay was pretty low key for me as well. I only sold 1 x item in April. I see Ebay as a nice little extra. I'm only selling things I no longer need or use.
It was another good month for Topcashback for me, much higher than average, and very welcome.
The stand out as you can see was selling part of my ownership in my car to Miss FFBF, I explain it in a bit more detail Here. The decision to sell part of my car was influenced by these monthly statements, and the Goal's I have set for myself for 2014. We have talked about having 1 car in our household for at least 18 months now, but I just couldn't commit to it before. This Blog has really helped me take certain decisions because if it pays off or if it goes completely 'tits up' I have something great to write about that might help others.
Right, now onto Expenses. I've had another successful month of keeping this figure low. My Mortgage/House bills figure has been reduced by ditching Sky (from £520 to £495 per month), and my groceries have remained low (under £15 per month). My eating out figure is similar to last month, and this will tend to be less than £10 in a 'normal' month for me. In March I paid for lunch for my family, and in April I went out to dinner once. Miss FFBF tend to stop in and eat most of the time, and we eat out maybe every 2-3 months or so. I'll have a more definitive figure at the end of the year now I'm recording everything.
As I mentioned at the start of the post, the 'Food Account' amount will change in June to £50, so I'm looking forward to seeing how we rise to the challenge of halving our grocery shopping.
I had my car's MOT during lent which set me back £40, and the petrol was past the point of no return on the gauge, so I had to top it up with some fuel. I was planning on driving to the Hospital (18 miles away) during April as well so I decided £10 would cover it. Hopefully there won't be many petrol expenses from now on.
A one-off big expense came in this month and that was Oil for the house. We only do this once a year, and we try to wait until the Spring time to order it when the prices tend to be a bit lower (once we've passed winter). We were walking around in extra clothing and turning lights out more than we normally do over the last few months to make sure we could make the spring, and we did! The £213 really inflated my expenses for April, and If I take that figure away, I'm looking at £709 spending a month. I also had my car's MOT this month! This is proof that I have the capability to reduce my monthly expenses below £700 on a normal month. I both shocked and delighted with this outcome. I didn't realise that would be possible for me. It just goes to show how valuable it is to record your expenses and income. It helps you to understand what's possible, and for me in particular it begs the question from Ludacris or DJ Casper on 'Cha Cha Slide'* (depending on how cool you are)..... "How low can you go?"
Can I break the £700 spending barrier in May?
With all of the above taken into consideration, I was able to save and invest a whopping 83.9% of my monthly income for April. One of my Goals for this year is to save 50% of my monthly income over the course of a year, so this puts my in a fantastic position for the year. Selling part ownership of my car had a big part to play in this figure for sure. If I were to remove the income I received for it, and the subsequent money I invested with it (all of it!), I would have achieved a 68.5% saving rate, which I would have still been happy with. I did a bit of deliberation over whether to include the car sale or not in my income, and the turning point for me was when it came to how much I invested. The figures wouldn't have added up without it because I invested it all, and I am proud of that too. I think most 'non frugal' people wouldn't have sold the car in the first place, but if they did, they might have decided to spend it all on something else or save just a 'part' of it.
I'm fully aware that I might not ever achieve this level of saving % again (for some time anyway), but I do take a lot of satisfaction for the amount I've been able to improve my portfolio in April with this sale. I'm really interested to get your thoughts on this too.
After 2 months of recording my expenses I'm averaging exactly 78.2% for 2014. I don't think I'll be able to continue this level of saving throughout the year, due to me not having a car to sell every month, but I enjoy it for the next 4 weeks! As I mentioned earlier, I'm now in a great position to hit the 50% saving mark, and I'm starting to realise that I'm capable of saving/investing much more than 50%.
*For those of you that are interested, I'm a DJ Casper 'Cha Cha Slide' guy. Cheesy music all the way for me!
How did you find April? Was it a successful month for you? Are you still on track for your annual Goals? More importantly, are you a Ludacris or DJ Casper fan when it comes to "How low can you go" lyrics?
Labels: Income & Expenses