As some of you following may know, my short-term goal is to reach a Net Worth of $100,000 (I think it’s definitely doable before 2019!). Even if I consider myself pretty frugal, the shocking truth of calculating and displaying my financial stats in public since last September revealed that I have still so much work to do to get there! I eventually reached my $12,000 Net Worth goal for this year just by a couple hundred bucks, which is far better than one year ago (I think it was like -$2,500). One of my financial goal for the end of 2017 is to reach $22,000 in Net Worth. With 12 months to go, the countdown has started and it leaves me with around $800 per month to save to reach this goal! We will see how that goes. But first things first, let’s talk about my December 2016 financial report.
If you have already read the following introduction section at least once, feel free to skip down to the juicy new content starting here: Financial Report December 2016.
Once a month I’m publishing a detailed report regarding my financial stats, in which I try to reflect over the past month – what went well or what didn’t go as planned. This also allows me to stay motivated towards the dream of being financially independent someday. My goal with these monthly reports is also transparency and I’d like my readers to emulate my successes and avoid my failures.
It feels kind of strange to publish all my financial details here, but it’s also a very motivating feeling. We have all pretty much different backgrounds regarding finances, but hopefully my detailed reports will motivate you to keep on pushing hard. Whether it is to start a website, or at the very least to start tracking your Net Worth, you can’t go wrong here as there are no bad choices! You can check out my favorite resources if you don’t know where to begin with.
My go-to tool to track all the data to generate these reports are extracted from my Mint account. I find it really easy to budget / analyze and visualize the trends, and I’m also a big fan of their iOS App! A nice feature is that it can be integrated very easily with Wealthsimple (where I have my RRSP account), giving me a complete overall view of my finances.
All stats on this report are combined for Mrs. FFG and I, and are in Canadian dollars, as I’m currently living in Canada.
As this is still one of my first detailed report, I’m trying to summarize as many metrics as possible, all of which I find relevant for my long-term tracking purposes. Here is a list of the sub parts of my report (you can click on each link to reach directly one specific part):
- December 2016 Income
- December 2016 Expenses
- December 2016 Investments & Savings
- December 2016 Net Worth
- December 2016 Savings Rate & Withdrawal Rate
- December 2016 Summary
- December 2016 Financial Goals
If you’re interested, all the reports I have written since I started this website are listed on my financial stats page!
So here it is, my complete financial report of December 2016. I hope you’ll find it inspiring, and perhaps this will motivate you to start your own website.
December 2016 Income
Our income in December was much higher than last month thanks to a three paycheck month and also because, as we reached the end of the year, I already have maxed up some government taxes for the current year.
Total Gross Income December 2016: $7,466
- Previous Month: $5,938
- Difference: +$1,528
Total Gross Income Year 2016: $84,563
I expect 2017 to be a lot more on the income side, as Mrs. FFG should have finished her PhD in a few months and should at least triple her income from this moment! As a combined amount for the both of us and as this is an annual number, this $85k amount seems a lot to me, but it’s a gross one. It also includes a lot of work-related reimbursement, which I would say account for at least 10% of my income (and also which appears in my expenses report). So all-in-all, quite a good year, but the best has still to come.
December 2016 Expenses
Expenses in October were quite the same as last month, but still way too high for what I would have hoped for. After tweaking our budgets for a couple months, I think that we can be aiming at $4,000 per month starting next year, for all of our planned expenses. This is still a *work in progress* but I’ll try to adjust my budget to make this work with such a figure. I’ve also noticed that my income and expenses reports are slightly wrong since I’m tracking my work expenses within my personal ones. For my next financial report, I’ll be separating my work-related stuff to have a better and *true* view of our overall spending.
This is our usual rent payment and it also includes some home furniture, as we are still renting until June 2017.
- Previous month: $1,175
- Difference: +$201
Bills & Utilities: $448
This includes most of our bills such as Internet, electricity, TV, cell phones and Netflix. Winter has finally reached Canada and as the temperature has reached an expected low value, our electricity bill has also reached an expected high one!
- Previous month: $469
- Difference: -$21
Auto & Transport: $442
This includes our car payment (we’re currently on a long-term lease), car insurance, fuel and parking. Once again, it’s a little bit higher than expected, as I had to travel a lot for work, so that’s mainly fuel-related expenses, which will be reimbursed soon.
- Previous month: $489
- Difference: -$47
Health & Fitness: $152
Everything medical and sport-related is included in this category. Nothing special happened here this month, besides our usual pharmacy shopping and fitness memberships.
- Previous month: $86
- Difference: +$66
Food & Dining: $798
This budget includes everything related to food, such as dining out and drinking out as well as groceries. We’ve been able to keep this one under $800/month for the last two months so that’s a great improvement compared to early 2016 (which was more like $1,100/month).
- Previous month: $729
- Difference: +$69
Everything related to flights, hotel booking, Airbnb and travel-related expenses. I’ve had quite a busy month at work and this reflects on my travel budget, but keep in mind that I would be reimbursed for these expenses.
- Previous month: $1,300
- Difference: -$557
Shopping & Entertainment: $987
This one includes everything related to shopping, entertainment, gifts and discretionary spending. I also usually include in this category some business-related stuff, like the logo I just ordered on Fiverr for Finance For Geek. More to come on this topic in a few weeks, as I’ll be detailing my first three months of blogging!
- Previous month: $353
- Difference: +$634
Total Expenses December 2016: $4,946
- Previous Month: $4,601
- Difference: +$345
Total Expenses Year 2016: $66,849
Expenses were relatively high for the last couple of months in 2016, mainly due to our flight tickets for Christmas time, some work expenses and some *way too high* spending habits. I’m still planning to reach an average maximum of $4k expenses per month for 2017.
December 2016 Investments & Savings
As of December 2016, we’re still investing and saving in three different ways:
- My employer Simplified Pension Plan (SIPP), which offers a 100% match of my contributions, up to 2% of my salary (pre-tax). I’ve been contributing to get the maximum match from my employer since I started working in the company (that’s basically free money which you don’t get if you don’t contribute!)
- I also recently (last summer) opened a Registered Retirement Savings Plan (RRSP) account with Wealthsimple, in which I contribute at least
$50($100 now!) per paycheck (post-tax).
- I started an emergency fund in an High Interest Savings Account (HISA) with our bank (only a little 0.75% interest rate) in which I contribute at least
$50($100 now!) per paycheck.
I finally decided to up my contributions to both my RRSP and HISA accounts. So, starting from this month I’m contributing $100 in each of these accounts. I’m glad I took the plunge and hopefully I’ll try to up this amount during 2017 to finally reach a nice savings rate!
- SIPP Account (employer): +$122
- SIPP Account (employee): +$122
- RRSP Account (Wealthsimple): +$300
- Emergency Fund (bank): +$150
Total Investments & Savings December 2016: +$694
- Previous Month: +$478
- Difference: +$216
Total Investments & Savings Year 2016: +$5,060
$5k is probably a way too low amount for us as a saving target for a year, but for the first six months of the year we were still paying back our student loans (which amounted to around $27,000) so hopefully we’ll be able to double this saving amount in 2017!
December 2016 Net Worth
My long-term goal is still to build up a Net Worth of $2M returning 4% a year or $80,000/year in gross income.
We are still nowhere close to reaching such a long-term goal, however I’m pretty sure that we will be seeing some huge improvements in the next few months if we keep ourselves disciplined. This is still a moving target as I’ll be working towards a clear number in the next few months.
As we do not have any liabilities anymore since I paid off our $27,000 student loan debt, we’re still working on improving our assets now (slow and steady)!
- SIPP Account (employer & employee): $9,545
- RRSP Account (Wealthsimple): $1,358
- Emergency Fund (bank): $1,304
Net Worth December 2016: $12,207
Net Worth short-term goal: 12.20%
Net Worth long-term goal: 0.61%
My short-term goal is to reach a Net Worth of $100,000 which should be a first good *baby* step. We’re currently at 12.20% on my short-term goal and a really low 0.61% on my long-term one. It seems like an unreachable figure at the moment, but I’m looking for the big picture here. I’ve always performed better with a goal in mind, so there’s no exception to my personal finances!
December 2016 Savings Rate & Withdrawal Rate
In terms of savings, we aimed at a 15% Net Savings Rate, which should be reached starting February, and then we might try to up it to 20%!
Regarding our Net Savings Rate calculation, here is the breakdown of the formula that works for us:
Net Savings Rate = Savings / (Gross Income – Taxes + Pre-Tax Contributions)
My pre-tax contributions (employer) are included in both sides of the equation to have a better view of our *real* savings rate.
- December 2016 Savings: $694
- December 2016 Gross Income: $7,466
- December 2016 Taxes: $2,070
- December 2016 Pre-Tax Contributions: $244
Net Savings Rate: 694 / (7466 – 2070 + 244)
Net Savings Rate December 2016: 12.30%
- Previous Month: 9.41%
- Difference: +2.89%
Net Savings Rate Year 2016: 8.87%
The last few months, our Net Savings Rate kept increasing and we’re slowly on our way to reach a 15% savings rate (should probably reach this one starting next year). We only recently started to automate our savings, as we’ve set up recurring transfers to our savings account and to my Wealthsimple account. I’ve already started to up both these contributions and this should help to reach such a goal by the end of February.
As a big fan of spreadsheet and crunching numbers, I’m also measuring an interesting metric, which is Withdrawal Rate. Its purpose is to track the ratio between Expenses and Net Worth, which measures how much one is spending versus his Net Worth. As expected with our low Net Worth, our Withdrawal Rate percentage is way too high and would basically only allows us to live for around 2-3 months if we use the well-known 4% Withdrawal Rate metric.
- Total Expenses Year 2016: $66,849
- December 2016 Net Worth: $12,207
Withdrawal Rate December 2016: 547%
December 2016 Summary
I really like the concept of zero-based budget. In a nutshell, it is really simple as you just have to get to “income minus outgo is equal to zero”. This is a way to figure out where everything you earn is going. Not knowing this is what makes a lot of people’s money situations complicated. Keeping this in mind, let’s summarize where our gross income for the month of December 2016 went to:
- Gross Income (I): $7,466
- Expenses (E): $4,946
- Investments & Savings Post-Tax (S): $450
- Taxes (T): $2,070
- Transfer from Savings (TR): $0
As a zero-based approach, here are the details:
I – E – S – T + TR = $7,466 – $4,946 – $450 – $2,070 + $0 = $0
So here it is, a total which equals to zero! Despite a three paycheck month, we didn’t manage to up our savings rate as high as I would have hoped for (only a little 12.30%). Still, it feels good not having to dip into our savings anymore, even more when it’s Christmas time. Now onto a fresh new start with 2017!
December 2016 Financial Goals
I’ve been posting updates for the last three months on some goals which I had set myself last September for the remaining months of the year. Since I started a new recurring post series (see the post on my goals for 2017), I’ll be detailing these specific goals (and some more personal as well) on a completely separate post starting early February. So this is the last time I’m including them here! Anyway, here are the progress I made on these goals for December 2016:
- Increase our emergency funds. OK! I finally reached around $1,500 for our emergency fund. Even if I only contributed a little $50 per paycheck for 2016, I’ve already adjusted it for 2017 and doubled my contributions to $100 per paycheck.
- Increase contributions to my RRSP account with Wealthsimple. OK! It seems like both my HISA and my RRSP accounts are tightly linked on my mind, because I also finally doubled my contributions to Wealthsimple. I originally thought I would adjust my contributions in 2017, but I somehow managed to increase to $100 per paycheck since early December. This definitely feels great to have reached a combined $200 savings per paycheck (excluding my employer pension) and hopefully this is only the beginning!
- Save at least 15% of our income. NOT OK! We made it to 12.30% this month. That’s a good percentage, but for the last three months we barely made it to an average of 8.8%. Hopefully with my new upped contributions, and some work pay bonuses coming in the next weeks, we’ll be able to reach 15% quickly (as in a couple of months).
- Create more realistic monthly budgets. NOT OK! It’s been already three months in a row that I fine-tune my expected budgets versus what has really been spent. I do not think that this goal is achieved because I’m still having some trouble figuring out how to manage my work expenses which represent a lot of my income / expenses. I might remove them from both side of calculations for the next financial reports I’ll publish, this will make things so much easier.
And that’s it for my detailed financial report for December 2016! I hope I’ve inspired you with this report (my complete list of reports are listed on my financial stats page), and that you had as much fun looking at mine as I had looking at others! Remember that it’s not a race though, even if the journey seems like a marathon sometimes.
It took me a few months before starting a website, but this really helped me to focus on my long-term goal of reaching financial independence. Everyone has to take the first steps if they are willing to reach financial freedom, and I’m convinced that everyone with the right resources and some reading can reach its goal.