My savings rate and expenses – January update

I’m excited about 2017 as this is the first year where I’ll have a full year of savings rates and expenses tracked. It’ll be good to see how months compare y/y and how the whole year compares at the end of the year.

I’m hoping for growth overall from 2016 to 2017 and that shouldn’t be too hard since January and February are typically solid savings rate months for me as I front load my 401k contributions a bit and those were missed in 2016.
I generally front load my 401k so that a good % of the overall contributions flow in the first two months(especially February) but don’t max the whole thing. I would like to max out my 401k as early as possible but my employer does not do a true-up for the contributions so I have to make sure to keep contributing enough to get the full match on each paycheck.
I do have some goals set for 2017 that relate to savings rates including hitting a 50% at least three times during the year as well as overall savings rate goals.
I’m not sure January makes great progress on those goals as my expenses were a bit high due to some lag on expenses from Christmas as well as some personal expenses to improve my winter wardrobe and work clothing(awesome winter boots and gloves and some dress shirts).
Let’s take a look at how I did in January. First up is the gross income breakdown.

I saved 26.4% of my gross income this month. That’s a good deal below my bronze target of 30% of the year so that’s not an awesome start towards that goal. It’s also below the 28.2% I hit for the year in 2016 so I’m starting a bit behind in that regard as well.

Adding in employer contributions takes this number to 31.3%.

Taxes were actually lower than average since most of my contributions were through my 401k  which lowers the taxable income for the month.

This was a two paycheck month but it’s still lean when compared against other two paycheck months as January was one of the highest expense months I’ve had since I started tracking this.

Let’s take a look at the savings rate.

The savings rate for the month was 34.1% which jumps to 40.6% when you add in employer contributions.

The bronze goal for the year is to have this at 40% so I’m a bit behind right now due to the higher expenses this month. I’ve also got a goal to hit a 50%+ savings rate for at least 3 months so January doesn’t fill that requirement.

Now it’s time to look at where my money went.

I changed the way this graph looks and tried to arrange the categories based on where I think most my expenses will fall most months so we should usually see the pie get smaller after rent.

Rent is the big expense as usual followed by car expenses. I’ve decided to spend a little bit extra on my car payment as I’d like to get rid of the debt soon now that my girlfriend has debt of her own(new car) and we’re considering buying a house in the next one or two years. I made it one of my goals to pay more than just the minimum monthly payment on the car in at least 2 months and January fills that goal.

Groceries and restaurants were a big chunk this month – more so than usual as I spent a bit extra on some frivolous stuff at the store.

Gifts were mostly a drag from Christmas as my girlfriend did most of the shopping and I paid her back early January but there was also a birthday to celebrate this month as well.

Clothing was also higher as mentioned before and I added a few new categories to the graph like my side hustle expenses which make up a tiny fraction of costs.

The rest is generic stuff. One thing I was unhappy to hear when I got my first paycheck was that my work parking went up 17% this year and that’s reflected in the parking costs! There was an email that told us about this but it was hidden in a general announcement email so I missed that. One of the many downfalls of working in a boring city.

That’s it for January. Not a terrible month but expenses did get away from me. February will hopefully be a solid month as I should get my bonus in the next week or two which should help my savings rate for the month. I’ll send a lot of that money to my 401k to avoid a huge tax hit on the bonus paycheck.

I’ll be back next week with the next side-hustle update. I’ve continued to stick to my goal and have written or edited every day. The sales are still rather slow but I’m hopeful that January will actually be show positive income after expenses.

How was your savings rate in January? Any unexpected expenses come up or did everything go as planned?


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