One year ago this month, I started manually tracking my expenses on an excel spreadsheet. It’s been an insightful practice, so I thought I’d share a summary of my expenses over the past 12 months and what I’ve learned from keeping track of them. But first, here’s a quick rundown of this past July:
All in all, this month was a success, with a lot of extra side income, below average expenses, and a resulting high saving rate. It was nice to end the “year” strong. No category was especially impressive, but there were no disasters across the board. And the extra income surely helped. Since I’ve already maxed out my IRA and don’t have access to a 401k, I’m stuck investing my money in a taxable brokerage. But that really isn’t too bad, as long term capital gains taxes are low (0% in most cases) and I won’t be selling till I’m old(er) anyway. Ok, now for the year in review.
The final numbers
First, here’s a look at total income for the year, where it came from, total expenses, net income (what I saved), and saving rate:
Let’s talk about income first. Admittedly, it’s not high. However, it’s nicely supplemented with a few thousand dollars of side income. It doesn’t seem like much as I earn a little of it here and there, but it’s nice to look back after 12 months and see how it’s added up. Because of some small inaccuracies and differences in taxes the “true” amount of side income might be closer to $3k than $4.4k, but regardless, it’s still significant.
Expenses for the year came out to just over $23k. This may seem “low”, but I live extremely comfortably and if anything splurge for no good reason a little too often. There’s really no reason to spend much more than this as a single person unless you have some unique and unusually high expenses. Anyway, we’ll take a look at these by category in a second.
The difference between total income and total expenses is net income, which is how much I saved in the past year. This is another number that’s nice to see. Each month it feels like I’m barely managing to save over a few hundred, so it’s really good to know that it’s added up nicely after 12 months. This resulted in a saving rate of 31%, which is way higher than average but much lower than I’d like it to be someday. Regardless, it isn’t bad for a grad student so I’m happy with it.
Expenses by category
I added up (by “I” I mean Excel) my spending in each category, and below I show that along with the average monthly spend in the category, percent of total expenses, and percent of total income:
Let’s talk about housing first. Thanks to my nicely priced but also just nice in general apartment, and a little bonus discount for renewing the lease, average rent was less than $600/month. It’s crazy to think about how had I rented a one bedroom apartment for ~$1500/month, as many people in my city do, I would’ve ended up saving absolutely nothing in the past year. Making an effort to rent an affordable apartment was a $10,000/year decision that I’m glad I put some thought and time into. And splitting utilities with Joe and the Third Roommate makes those categories much easier to handle as well.
Running and medical dental were both more than I imagined they would be, but money I put into those categories is an investment in my health (especially considering many medical expenses are to deal with running injuries) that will probably pay off in a big way down the line.
Chartibable donations are the subject of a guest post that I still have faith will eventually come, but this is a category I actually hope to expand at some point. I’d rather spend my money here than in “Miscellaneous”!
Like rent, another category I’m happy with is the cell phone category. Those $177 over the past 12 months covered a new battery to make my old phone much more usable, and a year’s worth of cell phone plan. If you still don’t have a Cell Phone Plan For Intelligent People, get on it!
Since I already talk about food way too much around here, I’ll skip groceries and restaurant. Travel expenses were a little heavy but those should be better in the coming 12 months, and honestly would’ve been way more without the help of some serious credit card rewards. The miscellaneous category is always a mystery and tough to completely eliminate.
- Keeping track of your expenses forces you to think a little bit more closely about what you’re spending and why you’re spending it. For this reason, I think I’m going to keep doing this even though I’ll stop posting these boring updates.
- There are more automated ways to do this, like with Mint, but honestly with all the cost splitting and stuff that goes on between roommates, I find that it’s pretty much just as easy to manually do it on the spreadsheet. If you want a copy of the spreadsheet for your own use just let me know!
- It’s nice to be able to look back and see a full view of the past year. Always good to get some feedback on something you’re working at.
- If you do this, you’ll always see areas for improvement. In general, this is a good thing! But I think the best approach is to realize where improvements can be made, try to make them, but at the same time don’t stress about it. Like with anything you put some thought and effort into, you’ll get more efficient over time.
With that, we say so long to the monthly expense reports. On to bigger and better things!