Income & Expenses - June 2014



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:

  1. 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.
  2. 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 (2022?).

Income

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. 


Expenses

The first two expenses are fixed amounts. 'House Bills' is an account where Miss FFBF and I pay into each month (£470 each) 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 (£50 per month) for food shopping. 


Here's a breakdown of my Income and Expenses for the previous month:


Income from June 2014
Wage £1,763.96
Dividends £113.79
Ebay £4.98
Interest from Savings £8.40


Total Income £1,891.13




Expenses from June 2014
Mortgage/House Bills £470.00
Food Account £50.00
Mobile £8.22
Petrol £0.00
Birthdays £1.00
Groceries £39.02
Alcohol £5.99
Toiletries £4.32
Eating Out £6.99


Total Expenses £585.54


Yes this is my full list. There aren't any categories missing from both income or expenses. It was a quiet front on the expenses front, as I was determined to make some ground on the big spending month I had in May. We'll come onto that in a moment, but let's start as always by looking at Income.

June's wage was just above average for me, not by a great margin, but slightly more than my monthly average. Nothing major to report here.
My dividends were the highest amount I've ever had as a DGI, and I've hit a personal benchmark of getting a 3-figure number. I did a little bit of maths, and worked out that this months dividends are 6.4% of my monthly wage. Not a huge number I know, but it's now flagged another figure I would like to aim for, which is getting 10% of my monthly wage covered by dividends. I think this might come at some point in 2015, as I mentioned in my Dividend Income post for June, this is likely to be my biggest dividend payment of 2014. I must say though, it feels awesome to get £114.80 for doing 'diddly squat' this month.
It was a quiet month for Ebay and I didn't get any payments for Topcashback in June. My savings account is paying a quite pitiful £8.40, especially considering the amount of money I have in there. I will continue to keep the interest I get from this in the account to slowly (can't emphasise that word enough!) benefit from compound interest, and to have as a reserve for Dividend investing or other forms. I will not be contributing to this account at all for the time being. 

Now onto expenses:

I was really keen to keep the expenses low for June, as May were high, and I felt like I was yet to put down a marker of what was possible for me with regards to minimal spending. I was able to benefit from the new improved 'Mortgage/House Bills' amount of £470 per month, and 'Food Account' amount of £50 per month. 

So, how did it go with trying to live on £50 a month for food? 

I have to say it was quite tough. As you can see, my grocery shopping did go up to £39.02. I did splurge on some extra food for myself. My weight training has really picked up over the last 6-8 weeks, and I'm finding my appetite and strength are growing with it. I don't want to restrict myself on calories as I need fuel to replenish the calories I'm taking out from heavy weight training. I have to confess to getting a bit obsessed with Ben & Jerry's Ice cream recently. I love that stuff! 
Miss FFBF and I are going to give it another go on £50 per month (each), but our gut feel is that it's just a little low for the food that we want to eat.  I think we might settle on a figure around £60-70 per month in future, but we'll stay on £50 per month for now and see how it goes. I'll keep you posted!

Outside of food there isn't a lot more to report on....... I drank alcohol once, I went out for one meal, I paid for one birthday at work, I had one average smart phone bill, I bought some toiletries that were on offer and I didn't spend any money on petrol. That's it! If this was a typical months expenses for me, I think I would be FI a lot sooner. If I were to take this months expenses and multiple it by 12 = £7,026.48 for a year of expenses. Annual one off spends alone would prevent me from keeping the figure that low, but £585.54 per month is still a nice bench mark to set myself for future months. Hypothetically, if that were to be my annual expenses I would need £176k in an account receiving 4% income to cover the costs. Which I think is a fairly achievable figure. 

I also looked at the £114.08 I received for dividends and what it covered in my expenses, just out of interest. If you take away the 'Mortgage/House Bills' expense, the remaining total comes to £115.54, which my Dividends for June almost covers. I found this really encouraging. It's nice to see how my dividends are growing and steadily gaining momentum. Three months ago, I received just over £5! They're now making noticeable contributions towards my expenses and I hope this can continue to improve. I wonder where they'll be in 6-12 months....... it's all very exciting!

I have a goal for 2014 to ensure my expenses stay below £950 per month averaged out over the year. Here are my Expenses to date:

Month Expenses
March £856.36
April £922.86
May £966.20
June £585.54
July -
August -
September -
October -
November -
December -
Total £3,330.96
Average £832.74

As you can see this is looking very good so far (thanks to June!). I'm around £118 per month ahead at the moment. 
I think if I were to take into account average spending and saving now that I'm a bit more experiences, I would estimate that I can keep to a figure around the £700 per month mark over the course of the year. I'm very confident about hitting this goal now I've got through an expensive month like May. Let's see how accurate turns out to be........


Now onto saving rate. I have a goal to save/invest at least 50% of my income every month for the remainder of 2014. This month was another solid one for me. Although I didn't buy any shares, I still managed to save 69.5% (£1,314.32) of my wage for June. This has been my lowest Saving % since I've been recording this data, but it's still comfortably above the 50% goal I set for myself. When I set the goal initially, I didn't really know what I could get in this department as I didn't record expenses, so I've really surprised myself in this area. My average for the year is now 74.7%. I didn't think I would be capable of saving 75% of my income on a monthly basis, and there's still a part of me that can't believe it. If I'm able to be around 75% for 2014 I WILL BE DELIGHTED!!! 

I received a lot of questions on how I save and invest money every month from my Income & Expense report in May, and I hope I was able to answer everyone's questions in my Monthly Budget Planner post. I want to clarify another point on this using the figures above. (The point below might not make sense if you haven't read the post)

You'll see that I received £1,891.13 income, and spent £585.54. If you minus the expenses from the income you get = £1,305.59. So, how the hell was I able to save £1,314.32????? Good question!
I count my expenses on a calendar month (ie June). I get paid in the first week of the following month, and most months I have left overs from the previous months wages. For example, right now I've finished recording my expenses for June, as we're in July, but I still have left over money in my current account and my spending account (AKA 'drug, alcohol & hooker' money) from the income I received in June. The left over money I have now will be added to the investing/saving figure I use in July. The lower my expenses on a given month, the more money I have to save/invest for the following month. On pay day (usually between 2-5th of every month) I take all the left over money out of the accounts and save it for the following month. 

Does that make sense??? I hope it does! I'm sorry if it is a little confusing to follow, but it makes perfect sense to me. :-)

Well that pretty much wraps up my month. I'm really pleased with the outcome and excited to see my wages in a couple of days so I can go Share shopping. Thanks again for spending the time to read all of this, and for your kind words of support. 


How was June for you? Are you on track with your goals now we're half way through the year? Do you have any idea what I'm talking about with my planner??? 


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