Breaking Down My Finances
In this article I want to break down my income, expenses, savings, and net worth so I can give you a glimpse into my own personal finances. This post will be broken down into the following topics:
My Income
My pre-tax income from my “9-5” job is a little over $112,000 a year. I also rent out a unit in my primary residence home, and this brings in another $6000 a year. After maxing out my traditional 401K and factoring in taxes, my take-home income is a little over $76,000. I’ve ignored any dividends I earn from stocks because the amount is not significant compared to my salary and rental income. For those of you wondering, I’m in my late 20’s.
My Expenses
| Yearly Total | |
| Income (Post Tax) | $76,000 |
| Expenses | |
| Housing | $19,200 |
| Transportation | $5,000 |
| Groceries | $4,800 |
| Dining | $3,600 |
| Shopping | $3,600 |
| Pet | $600 |
| Personal Growth | $500 |
| Travel | $3,000 |
| Savings | $35,700 |
Housing – My biggest expense is my mortgage and the associated property tax. Bundling that up with utilities, such as gas, electricity, water, and trash, as well as factoring in some additional principal payments, my total “housing” expense comes to about $1600 a month ($19,200 a year). I spent some time calculating the cost/benefit of purchasing a home versus renting; in the area, I live, it made more sense to own than to rent.
Transportation – My personal vehicle is paid off, however, I still need to pay about $2400/year for gas (I have a 30-40minute commute & love driving to various parks for bike rides and hiking). In addition, I pay for $1300/year for my sister’s low-mileage lease while she attends med-school. Factoring in $1300/year for car insurance and maintenance, the transportation total comes out to $5000/year.
Groceries – I spend about $400/month, or $4800/year, on groceries for two people. My wife and I see our health as a long term investment so we love to buy fresh, organic fruits and vegetables. We also take advantage of seasonal fruits; for example, this summer we’ve bought 1 watermelon and a bag of cherries every week! In addition, we also buy some more expensive foods such as raw walnuts and almonds, kimchi, and fish.
Dining – My dining and restaurant expenses are about $300/month ($3600/year). Because of the coronavirus pandemic, this number has dropped significantly, but in a typical year, my wife and I enjoy eating out at least twice a week.
Shopping – This category includes buying anything that doesn’t include food (shampoo, clothing, electronics, movie tickets, video games, etc.). I usually average about $3600/year on shopping.
Our Cat – Simply put, pet insurance, vet visits, pet travel tickets, and cat food costs about $600/year.
Personal Growth – I allocate about $500 a year for personal growth. I make it a goal to try to expand my knowledge and this budget is for the purchase of books and audio books.
Travel – I usually allocate $3000 a year for traveling; anything I don’t spend I roll over to the next year. If I want to go somewhere far, I usually will take a smaller trip in the year so I can roll over the remainder of this budget to fund the larger trip.
Savings
After subtracting expenses I’m left with about $35,700 – which is about 46% of my take home pay. I usually allocate 10% of this amount to risk free investments, such as U.S. treasuries or certificates of deposit (CDs). The other 90% I allocate into a diversified personal brokerage account. Currently, my main investments consist of large capitalization U.S. growth stocks.
Net Worth
As of today (mid-2020), I have a little over $200,000 saved in my pre-tax 401K account. I have about $60,000 in equity in my primary residence. Additionally, I have about $30,000 in stocks and CDs to bring my total net worth to $290,000.
Takeaways
I haven’t always made the amount I currently do, and I didn’t always have good savings and tracking habits. As my income grew, and as I started learning how to invest and how to stick to a budget, that’s when I really began to see my wealth slowly start to accumulate. If I were to go back in time to when I first started working, I would have created a budget earlier, and I would have tried to learn more about how to properly invest in the stock market.
Having a budget & expense tracker has allowed me to fine tune my spending habits and cut unnecessary expenditures. It has also helped me get a clear understanding of where I am relative to my long term savings goals.