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Our family has never really followed a strict monthly budget. There are way too many spending variables for our family to stick to a budget.
However, that doesn’t mean we are not conscious about where our money is being spent every month. You see … for our family … it is more about deciding what is worth spending money on. Those things that are worth it to us … like healthy foods and vacations.
So instead of being stressed and pinching every penny, we prefer to enjoy life and spend money on things we “want to afford”. That means if we want a house (which we do), then we are going to have a mortgage payment … and that is okay. Not to mention all those utility expenses that come with a house!
This way of thinking also means that if we don’t value something (like cable television), then we can cut that expense.
And even though we are okay with spending money on certain things … we also want to save as much money as we can … so we can use it to generate more income.
For every dollar we can keep and save … it is another dollar out there that is working hard for us earning more and more dollars.
So … instead of sticking to a strict budget, we try and buy just the things we want to afford.
Every month, we make sure to live below our means … no matter what.
And just so we don’t get off track … we have been starting to watch where our money is being spent at the end of every month.
So how did we do last month?
Where Did We Spend Our Money in July (2017)?
At the end of every month, we like to look at where our money is being spent. That is why we broke our transactions out into several high level categories.
Our long term goal is to push our savings category higher and keep every other expense as low as possible. Months and years of doing this will lead to an increase in our net worth.
Here is a high level breakdown of where we spent our money in July. We also keep a more detailed breakdown of these categories … but we will keep it all high level here.
These are the high level categories of spending … listed in percentage order.
Housing – 27.7%
I pretty much say this every month, but housing will always be about 20% – 25% of our monthly spending. This means it will always fall towards the top of the category list of monthly spending.
Housing spending in July was actually a bit higher than normal as we paid additional principal on our mortgage. For the past several months, we have been spending an extra $20 to $30 on our mortgage principal. In July, we had a little extra cash so we bumped it up even more.
The only other housing expenses we had in July (other than our mortgage) was some maintenance costs for weather stripping. We had a couple exterior doors that badly need new weather stripping. Hopefully this investment will save us on our heating and cooling expenses long term.
Food – 23.0%
Once again, food was towards the top of the list in our spending. And as always, we are okay with that.
The best investment we can make is not in dividend stocks or building a business. It is actually taking care of our bodies and living healthy. So if we spend extra money on buying whole foods that are organic … then that is something we are okay with.
I would like to point out though that this month we spent a little bit more than we were used to on food as we ate out at restaurants more. I think we should spend much less in August and September on food.
Savings – 17.0%
The good news is savings came in at #3 on our list for monthly spending. The bad news is that we didn’t hit our 20% – 25% target.
In a perfect world, savings would come in at 25% of our income and be at the top of our category spending every month. Why? Because we want to invest as much of our income as possible into income producing assets like dividend stocks. In fact … we have a goal to invest around $1,400+ a month in dividend stocks until the end of 2017.
So far, we are a bit behind on these goals but need to keep pushing forward.
Utilities – 13.8%
Our monthly utility spending jumped in July compared to the past several months. Why? Because we spent a lot more money on keeping our house cool last month with the heat wave going on.
Everything else in this category remained constant. The majority of these utility expenses are just the price we pay for owning a home.
Transportation – 10.4%
After a high spending month back in June, our transportation costs leveled off in July. We made our normal car payments and had to fill up with gas. But there were no maintenance, insurance, or other miscellaneous transportation expenses in July.
Other – 4.5%
The “Other” category is basically a catch-all for remaining monthly expenses. It covers any kind of gifts or clothing we may buy … which usually isn’t a bunch.
This category also includes expenses for our 3 children. They all participate in their own activities and sports which can really add up.
Compared to last month … we really knocked these expenses down, which was helped by the kids being out of school and not in as many activities. I expect to see a good uptick in this spending in August and September.
Business – 3.6%
The recurring theme here is that I am still not earning much income from my online business ventures like this blog. And because of that, any “business” related expenses need to come out of our personal finances.
One day very soon, I plan to move these expenses out of personal finances into business related expenses. Once our health and fitness blog starts earning some money!
This is going to be a big focus going forward … to help remove our business expenses for our blogs from our personal spending.
Medical – 0.0%
Most months, we don’t have medical expenses … which is what we want. This month was no different.
Our philosophy is to spend more on healthy foods which will help to prevent higher medical costs down the road.
Investing the Savings
Now that we know where our money was spent last month, I wanted to discuss what we plan to do with our savings.
We are not content letting our money sit idle in a savings account.
There is no reason to be lazy with our savings … when we can invest in dividend growth stocks.
Those are some lofty goals and the only way we can reach them is to invest more. And part of the way we are focusing on investing more is to save more of our income.
So the more we can save, the more we can invest. And the more we invest, the faster our dividend income will grow.
When it comes down to it … the path to financial independence is rather easy.
- Save More Money
- Spend Less
- Invest the Difference
Our family has always been able to live within our means … actually a little below it every month. As long as we continue to have savings every month … we are spending less that what we earn.
But to us … living below our means is just not good enough. We want to live WELL below our means. To the point where our savings is at least 20% of our spending. Ideally we would like our savings rate to be above 25%.
By saving (or investing) at least 25% of our income, we can really begin to accelerate our dividend income stream. And while we are continuing to invest new money into dividend stocks each and every month … we want to do more.
July certainly wasn’t a horrible month when it comes to savings … but we have the opportunity to do much better the remainder of the year.
Do you track your monthly spending? How was your July spending?