Welcome to my second financial report! October is already gone and as they say “Winter is coming” … at least here in Canada! Only two months to go until the year is over and I can’t believe it’s already been six weeks since I started this website! It feels like I achieved so much, but at the same time I still have so many ideas/posts that I want to share with you guys. But first things first, let’s talk about my October 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 October 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):
- October 2016 Income
- October 2016 Expenses
- October 2016 Investments & Savings
- October 2016 Net Worth
- October 2016 Savings Rate & Withdrawal Rate
- October 2016 Summary
- October 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 October 2016. I hope you’ll find it inspiring, and perhaps this will motivate you to start your own website.
October 2016 Income
Both Mrs. FFG and I are paid biweekly, and I also have twice a year a variable bonus (in February and in July). Our income in October was once again really standard.
For the last two remaining months of the year, I’m forecasting an increase in income, as we will be getting a three paycheck month (December). Also, as Mrs. FFG is reaching the end of her PhD, tuition fees have dropped drastically as she already took all of the *expensive* courses required.
But let’s focus on the current month first!
Total Gross Income October 2016: $5,920
- Previous Month: $5,909
- Difference: +$11
Total Gross Income Year to Date: $71,159
October 2016 Expenses
Expenses in October were much lower than last month, but still way too high for what I would have hoped for. I’m still unsure about the amounts I have budgeted in my spreadsheets for some categories. So this is still a *work in progress* on my side and I will be tweaking it for the next upcoming weeks/months!
This is our usual rent payment, as we are still renting until June 2017.
- Previous month: $1,175
- Difference: $0
Bills & Utilities: $324
This includes most of our bills such as Internet, electricity, TV, cell phones and Netflix. This category is a little bit higher than the previous month as we are back on a new monthly payment for electricity and it was recently adjusted for a higher payment.
- Previous month: $288
- Difference: +$36
Auto & Transport: $331
This includes our car payment (we’re currently on a long-term lease), car insurance, fuel and parking. Our car lease is due on May next year so we’ll be planning in the next few months to replace it (or buy at term? We’re still debating).
- Previous month: $329
- Difference: +$2
Health & Fitness: $107
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: $2,649
- Difference: -$2,542
Food & Dining: $1,039
This budget includes everything related to food, such as dining out and drinking out as well as groceries. Ideally, I would like to keep this one under $800/month. This month was so much more expensive than the last one as we had many friend’s birthday parties, and I had quite more than the usual eating out with friends.
- Previous month: $546
- Difference: +$493
Everything related to flights, hotel booking, Airbnb and travel-related expenses. This month was still quite expensive as we booked our flight for Christmas time with our family!
- Previous month: $208
- Difference: +$692
Shopping & Entertainment: $552
This one includes everything related to shopping, entertainment, gifts and discretionary spending. This month was nearly half the amount of last month, mainly due to our September vacation shopping. I also included in this category some business-related stuff, like some WordPress plugins I just bought, specifically a social sharing plugin: Social Warfare. I’ve been trying quite a lot of plugin for a few weeks and I finally found a great one with true professional sharing features (checkout my resources page for more details).
- Previous month: $999
- Difference: -$447
Total Expenses October 2016: $4,428
- Previous Month: $6,194
- Difference: -$1,766
Total Expenses Year to Date: $57,302
Expenses were much lower than last month (I’m still convinced that this is way too high for two people) but we just bought our flight ticket for Christmas and we even started buying Christmas presents. So, hopefully, expenses will stay low until next year and I would like to reach a maximum of $4k expenses per month from now on.
October 2016 Investments & Savings
We’re currently 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 opened a Registered Retirement Savings Plan (RRSP) account with Wealthsimple, in which I contribute $50 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 $50 per paycheck.
This month was not really that great as I did not add anything else (except my regular contributions) to my Wealthsimple account and only a small $50 to our emergency fund.
- SIPP Account (employer): +$89
- SIPP Account (employee): +$89
- RRSP Account (Wealthsimple): +$100
- Emergency Fund (bank): +$150
Total Investments & Savings October 2016: +$428
- Previous Month: +$378
- Difference: +$50
Total Investments & Savings Year to Date: +$3,888
October 2016 Net Worth
My long-term goal would be 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. I’ve already started a detailed post regarding what would be a *correct* number for us in my post schedule for the upcoming weeks, so I’ll try to finalize it soon.
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!
- SIPP Account (employer & employee): $8,898
- RRSP Account (Wealthsimple): $829
- Emergency Fund (bank): $1,051
Net Worth October 2016: $10,780
Net Worth short-term goal: 10.78%
Net Worth long-term goal: 0.54%
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 10.78% on my short-term goal and a whooping 0.54% on my long-term one.
October 2016 Savings Rate & Withdrawal Rate
I’m not sure yet how much we should be aiming at in terms of savings, but as a first start, we’ll be aiming at 15% Net Savings Rate in the next few months (hopefully we’ll be there starting January!).
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.
- October 2016 Savings: $428
- October 2016 Gross Income: $5,920
- October 2016 Taxes: $1,242
- October 2016 Pre-Tax Contributions: $178
Net Savings Rate: 428 / (5920 – 1242 + 178)
Net Savings Rate October 2016: 8.81%
- Previous Month: 7.83%
- Difference: +0.98%
Net Savings Rate Year to Date: 7.55%
This adds up to a slightly better amount of 8.81% Net Savings Rate … which is again still far from our short-term goal of 15% (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’m still planning to up both these contributions in the next few months.
As a big fan of spreadsheet, and crunching numbers, I recently came across a new 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.
- 2016 Year to Date Expenses: $57,302
- October 2016 Net Worth: $10,780
Withdrawal Rate October 2016: 532%
October 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 October 2016 went to:
- Gross Income (I): $5,920
- Expenses (E): $4,428
- Investments & Savings Post-Tax (S): $250
- Taxes (T): $1,242
- Transfer from Savings (TR): $0
As a zero-based approach, here are the details:
I – E – S – T + TR = $5,920 – $4,428 – $250 – $1,242 + $0 = $0
So here it is, a total which equals to zero! This month was really kind of a *normal* one as nothing special happened regarding our expenses and our income was quite steady. It still feels good not having to dip into our savings anymore!
October 2016 Financial Goals
As explained last month, I have a few financial goals in mind regarding the last weeks before next year. I’ll be detailing month after month my progress on these goals:
- Increase our emergency funds. OK! Even if this was only for $50 I’m still glad I have increased this one. I’ll try to increase it on a regular basis from now on.
- Increase contributions to my RRSP account with Wealthsimple. NOT OK! I’ve postponed this one until next year. On a positive note, I still have until March to increase my contributions for the current year.
- Save at least 15% of our income. NOT OK! We barely made it to 8.8% this month. That’s still ok as this one is a long-term goal.
- Create more realistic monthly budgets. OK! I’m getting better every new report I’m writing as I find myself having not that much difference between what I planned compared to what really happened. Still some work in progress but definitely better than a few months ago!
And that’s it for my detailed financial report for October 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.