I am back to tracking my monthly expenses for the year 2020. For January, I decided to track my month expenses and income again right down to the penny. The last time I did this was back in 2018. Since then, I have been able to pretty much ballpark a range where my expenses would be each month. Throughout the year, my monthly expenses would fluctuate between around $950’s in the winter to around $1100 max during the summer. This is not counting additional expenses caused by emergencies like appliances breaking down (which I had happen) or Holiday gifts. However, it is now the start of a new decade and I would like to get a nice fix on where my general monthly expenses are at.
January 2020 was a good month to start this since it is a low expense month. To top it off, I literally did nothing this entire month. Well, technically I did some things. I bought 3 new stocks and passed the $10,000 milestone in forward dividend income. But really, with the stress caused by a change in management at work and the workload doubling until addition hires are made, I literally just relaxed on my days off. So, expenses were as minimal as they can be. This gave me a good idea what a month would look like if I exercised maximum frugality.
In addition, I have received some pay raises over the last two years and would like to compare my expenses to my higher working income. Also, there is my dividend income which I like to compare to my expenses. After all, if I am going to become financially independent this passive income will have to cover all my expenses. Therefore, I am glad that I tracked my monthly expenses this January. The results were very interesting and satisfactory.
For January 2020, my expenses for the month totaled $915.09. That has got to be a record low. I don’t think many other people living here in New York City can say they had a monthly expense list that low. My biggest expense was my rent which totals $507.72 each month (I live in a nice studio apartment by myself). Next, my second largest expense was for food and supplies which was $240.00. My utility bills combined totaled $50.39 ($29.21 for electricity and $21.18 for gas). Internet was $75 for the month (got to work on this) and my cell phone bill was the usual $30 per month. Overall, even with a few small miscellaneous expenses, this was a very inexpensive month.
When calculated with my working pay, I managed to have a 63% savings rate this month, I get paid twice a month from work. One paycheck covers all my monthly expenses with hundreds left over. The second paycheck goes towards stock investments and other savings. If you add my dividend income for January to my working income my savings rate would jump to 70%. Dividend income really is an important game changer in one’s personal finances and wealth.
My January dividend income was $595.80. On a January type month, this would cover my rent, my utility bills, and my cell phone bill. My projected February dividend income is close to $700 and my projected March dividend income is over $1,200. A quarter ending month of dividends would fully cover any given month’s expenses. With my portfolio generating a yearly dividend income of $10,091 going forward, this averages out to about $840 per month in dividend income.
With a current average of $840 in dividends per month, on a low-expense month like this January, my dividend income would cover approximately 91% of my expenses. That is so awesome! On my more expensive month’s (summer months), which let’s say would be a high expense of $1,100, my average dividend income would cover approximately 76% of my expenses. For the first time, I am beginning to taste financial freedom. I realized after calculating my expenses that I am getting close. Such a nice feeling of accomplishment.
Tracking my monthly expenses versus income right down to the penny for January 2020 was a great idea. It revealed to me how close my dividend income is to covering all my expenses. The goal of financial independence is in sight, even if it may take a couple more years. Even when my expenses are fully covered, I won’t stop there. I will make sure I build a sufficient stream of passive income for whatever the future may hold and for achieving other life dreams. That is the beauty of financial freedom!
So, are you close to your financial goals? Do you track your expenses or set up a monthly budget? Also, does your dividend or other passive income cover most or all of your expenses? Let me know in the comments below!
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