Welcome to my first financial report! 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 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):
- September 2016 Income
- September 2016 Expenses
- September 2016 Investments & Savings
- September 2016 Net Worth
- September 2016 Savings Rate & Withdrawal Rate
- September 2016 Summary
- September 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 September 2016 (hopefully the first of a long series). I hope you’ll find it inspiring, and perhaps this will motivate you to start your own website.
September 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 September was a little higher than usual, thanks to expected work expenses reimbursement (spread over the last two months). Mrs. FFG is finishing her PhD (still a few months left), so hopefully we’ll finally have two *real* salaries coming in (and no more high tuition fees haha!) starting Mid-2017. This should lead to a considerable increase in our overall gross income. At the moment Mrs. FFG salary is pretty low, but she also earns some small grants which offset a bit the cost of her tuition fees (overall we’re talking of about $1K three times a year for the fees).
For the last three 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 are dropping drastically as she already took all of the *expensive* courses required.
But let’s focus on the current month first!
Total Gross Income September 2016: $5,909
- Previous Month: $5,978
- Difference: -$69
Total Gross Income Year to Date: $65,239
September 2016 Expenses
Expenses in September were MUCH higher than what we expected as we had to pay for some huge medical bills (fortunately all were planned). 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 months!
This is our usual rent payment, as we are still renting until June 2017.
- Previous month: $1,175
- Difference: $0
Bills & Utilities: $288
This includes most of our bills such as Internet, electricity, TV, cell phones and Netflix. This month budget category is better than the previous one as we are on a monthly payment for electricity and we just received our annual adjusted bill.
- Previous month: $328
- Difference: -$40
Auto & Transport: $329
This includes our car payment (we’re currently on a long-term lease), car insurance, fuel and parking.
- Previous month: $343
- Difference: -$14
Health & Fitness: $2,649
Everything medical and sport-related is included in this category. This is the big one for this month, as we had to pay for huge medical bills not covered by my insurance company (there’s still a last one to pay for next month).
- Previous month: $374
- Difference: +$2,275
Food & Dining: $546
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 really low because we spent 10 days with our family which helped in keeping costs low.
- Previous month: $901
- Difference: -$355
Everything related to flights, hotel booking, Airbnb and travel-related expenses. This month is quite empty as we are just back from vacation!
- Previous month: $1,548
- Difference: -$1,340
Shopping & Entertainment: $999
This one includes everything related to shopping, entertainment, gifts and discretionary spending. Due to our vacation, shopping and entertainment were unusually high.
- Previous month: $630
- Difference: +$369
Total Expenses September 2016: $6,194
- Previous Month: $5,499
- Difference: +$695
Total Expenses Year to Date: $52,874
Expenses were quite the same as last month (still really high) as we paid for our vacation last month and medical bills this month. Hopefully this will decrease a lot in the next few months (at least until Christmas time!).
September 2016 Investments & Savings
We’re currently investing and saving in two 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). Since this is post-tax money and as I am planning to up my contributions in the near future, I might have to check if I can reduce my payroll tax deduction.
A few months ago, we finally decided to open a dedicated account for our savings (mainly emergency fund):
- 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.
I’m well aware that we’re currently saving and investing way less than what we should … yet that’s a good thing since it can only be improved from now on! We were also hit with several big medical bills in the past few months (> $5K) which are now fully paid off, so we will be trying to up our investments and savings before the year ends.
I have quite a huge contribution room available in my RRSP with Wealthsimple (which is shared with the SIPP account contribution room), as we get to have unused contribution room from previous years added to current year. In fact, I could be adding up to $20,912 as of the beginning of year 2016 to reach my maximum contribution room. Mrs. FFG does not have any as her salary is grant-based and not giving any contribution room. One of my future plan is to catch up on my missing contributions and to fully fund my RRSP to take advantage of compound interests.
- SIPP Account (employer): +$89
- SIPP Account (employee): +$89
- RRSP Account (Wealthsimple): +$100
- Emergency Fund (bank): +$100
Total Investments & Savings September 2016: +$378
- Previous Month: +$378
- Difference: $0
Total Investments & Savings Year to Date: +$3,460
September 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 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 only currently a moving target as I’ll be working towards a clear number in the next few months. I’m already planning a detailed post regarding what would be a *correct* number for us.
Meanwhile, the good news is that we do not have any liabilities anymore since I paid off our $27,000 student loan debt, so we’ll be working to improve our assets now!
- SIPP Account (employer & employee): $8,743
- RRSP Account (Wealthsimple): $731
- Emergency Fund (bank): $901
Net Worth September 2016: $10,375
Net Worth short-term goal: 10.37%
Net Worth long-term goal: 0.52%
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 10.37% on my short-term goal and a whooping 0.52% on my long-term one.
September 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, and we’ll try to increase it at the beginning of next year.
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.
- September 2016 Savings: $378
- September 2016 Gross Income: $5,909
- September 2016 Taxes: $1,259
- September 2016 Pre-Tax Contributions: $178
Net Savings Rate: 378 / (5909 – 1259 + 178)
Net Savings Rate September 2016: 7.83%
- Previous Month: 6%
- Difference: +1.83%
Net Savings Rate Year to Date: 6.91%
This adds up to a relative small amount of around 7.83% Net Savings Rate … still far from our short-term goal of 15%. We recently started to automate our savings, as we’ve set up recurring transfers to our savings account and to my Wealthsimple account. We will be upping 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. The idea is that if your Withdrawal Rate stays really low, you would be able to sustain your assets for a long time. In fact, a 4% Withdrawal Rate is known as Safe Withdrawal Rate, as some studies have shown that in a 30-year period this would allow you to withdraw a certain amount each year with almost no risks of portfolio failure.
- 2016 Year to Date Expenses: $52,874
- September 2016 Net Worth: $10,375
Withdrawal Rate September 2016: 510%
September 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 zero”. For example, if you are earning $4,000/month, everything that you earn / spend / invest has to be equal to $4,000. 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 September 2016 went to:
- Gross Income (I): $5,909
- Expenses (E): $6,194
- Investments & Savings Post-Tax (S): $200
- Taxes (T): $1,259
- Transfer from Savings (TR): $1,744
As a zero-based approach, here are the details:
I – E – S – T + TR = $5,909 – $6,194 – $200 – $1,259 + $1,744 = $0
So here it is, a total which equals to zero! Unfortunately we had to transfer some money from our savings to get to zero as it was an unusually high expenses month. But hey, that’s why we do get some savings and / or emergency funds.
September 2016 Financial Goals
I have a few financial goals in mind regarding the last months of the year. I’ll be detailing month after month my progress on these goals:
- Increase our emergency funds.
- Increase contributions to my RRSP account with Wealthsimple.
- Save at least 15% of our income.
- Create more realistic monthly budgets.
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.