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Our family does not follow a strict monthly budget. There are always too many variables at work for us to stick to one.
That doesn’t mean that we are not conscious about where our money is being spent every month. 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.
Instead of being frugal 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.
It also means that if we don’t value something (like cable television), then we can cut that expense.
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.
So … instead of a budget, we try and buy just the things we want to afford.
And during each month, we make sure to live below our means … no matter what.
In order to stay informed, we have been tracking 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 June (2017)?
As mentioned earlier, we like to look at where our money is being spent. Which is why we broke our transactions out into several high level categories.
Our ultimate goal is to push our savings category higher and keep everything else as low as possible. Months and years of doing this will lead to a boom in our net worth.
Here is a high level breakdown of where we spent our money in June. 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.
Transportation – 30.8%
June was a very expensive month for our transportation expenses. We had an extra $1,000+ tied up in car insurance (paid every 6 months), registration fee’s (paid in June every year), and maintenance (both vehicles needed oil changes, etc). The good news is that these expenses don’t show up every month … so July should be much better.
The bad news is that these expenses show how expensive having 2 vehicles can be. It would be a huge sacrifice for our family to drop to a single vehicle … but it is very tempting …
Besides the extra expenses … we paid a little extra on our car loan #1. I estimate we have about 20 more car payments left (paying a bit extra) and this vehicle will be paid off. I can’t wait!
After buying a new car (car loan #2) earlier in the year … we are eager to get our first car loan off the books.
Finally, we spent $193.06 on gas for both our vehicles in June. Not much getting around this expense, but we did earn 2% cashback on our Discover credit card for all gas expenditures. That is a little extra income back in our pockets – $3.86.
Housing – 17.9%
Our housing expenses will always be at the top of the list … as long as we have a mortgage. We have a 30-year fixed rate mortgage that will always be a monthly expense … until we pay it off or sell our home.
Besides our normal mortgage payment, we did have some minor home maintenance expenses last month that were out of the ordinary.
We have also been rounding up our mortgage each month to the nearest hundred dollars. It is only an extra ~$21 or so, but that money goes directly against the principal.
It would be good if we could add another hundred dollars or so each month on top of what we are doing … but then we wouldn’t have as much money to invest. And investing is our #1 priority at this point.
Just like owning vehicle(s) … houses can be expenses too! But we are not ready to start living in an RV or anything like that.
Savings – 15.2%
Well … this wasn’t as high as we had planned for, but at least it is still towards the top of our list. After a record month for savings back in May, we took a step back this month.
The whole purpose of reporting our spending is to find more ways to save money (and eventually invest it). So this is the category we look to each and every month when it comes to our spending.
Our long term goal is to save a minimum of 20% of our income every month … which takes a little sacrifice.
Note – This category is called “savings” but in reality it could be considered “investing”. We have a goal to bump our annual dividend income earnings up to $3,000 by 2018. In order to reach that goal, we need to invest new money into the stock market each month.
Food – 13.7%
What is the most important investment you can make? Nope, not dividend stocks (which I think are awesome) or real estate. The best investment you can make is in your health.
And I believe that starts with the foods you eat. In order to invest in your health … you need to eat high quality foods that are nutritious. That normally means spending more money on organic, fresh foods instead of cheaper processed foods.
I would much rather our food expenses be higher than what we spend on housing and transportation in a month. What is the point of working hard to invest and build sustainable income streams if you are not around to enjoy it one day?
Utilities – 9.3%
Our utility costs were a slight tick up in June compared to last month. While several of these costs fluctuate a little from month to month… most of the time the overall utility spending remains static.
As we move into summer, we are spending less and less on heating our home and more on keeping it cool. In a couple months, that will change and our heating bills will rise and electricity costs will come down.
Besides electric/water/heat, we have a few other bills in this category like cell phones and cable/satellite.
Our cell phone bills, cable and internet, etc. don’t change month to month. We cut back on our cable service a year ago and now can save over $1,000 a year. That is one of the best money saving steps we have taken so far.
Other – 8.1%
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.
Business – 4.1%
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 – 1.0%
Most months, we don’t have medical expenses … which is what we want.
Our philosophy is to spend more on healthy foods which will help to prevent higher medical costs down the road.
This past month we had a doctors visit co-pay and we purchased some supplements.
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.
Last year (2016) we earned over $1,900+ in dividend income. This year (2017) we plan to earn over $2,400 in dividends. In 2018, we plan to earn over $3,000 in dividends.
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.
We are living 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. It would actually be better if it were 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.
June 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 June spending?