2015 financial review here.
This post is of course, a little late. I’m posting my 2016 financial review primarily because in early January 2018, I’ll review my finances for 2017 and wanted a point of reference for the years prior. I believe reviewing your finances on a yearly basis is enough of a balance for most people to check that they’re going in the right direction and to implement changes in the year ahead. I did this at the start of 2017 but didn’t actually make a post for it, so it’s coming every so slightly late…now more for fun and interest than practicality!
The major expense in 2016 were taking an overseas vacation and starting my business. I saved an emergency fund from $7,218 to $9,862 and added $3,576.99 in funds to my retirement account. My net worth declined from $1,930 to negative $11,565, primarily as a result of starting my business. At Dec 2016, I held zero personal investments outside of my retirement account.
Regarding short-term debt (i.e. debts excluding student loans etc), 2016 ended with slightly over $2,400 in credit card debt. By contrast, I accrued $259 in bank account interest. Long term liabilities included my Student Loan ($31,539), Business Loan ($15,000) and other loans ($21,500).
Average costs of living in Australia for a single, under 35.
Income & Expenses for 2016
Total income for the year: $42,515. A chart showing source of income is below (other income represents a side hustle editing manuscripts)
Total expenses for the year: $44,189 Net deficit: – $1,674. The chart below breaks down all expenses proportionately (plus it’s very pretty!).
Top 10 expense categories (these made up 94% of expenses)
|Housing||Food & Groceries||Travel & Vacation||Auto||Health & Insurance|
|Clothing & Personal Care||Entertainment||Professional Development||Utilities||Gym & Fitness|
The category ‘Other’ includes Alcohol & Bars (not the sleazy ones! $768), Other ($628), Gifts ($527), Fees & Charges ($264), Investment Education ($52), Public Transport ($52),.
As the chart above shows, the top three categories by a country mile were Food (groceries and eating out), Housing (rent, utilities, furniture, kitchenware etc) and Vacation/Travel (flights, hotels, AirBnB, hire cars, public transports, meals, experiences, meals etc.)
Housing: This was mainly rent expense, house sharing with a woman who owned her own home. At the end of 2016 I moved to a studio apartment near the city so there is a bond and some furniture expense (sofa) in this amount too. Rent for 2017 will be way higher, but the improvement in living circumstance and proximity to work (2hr commute vs 30min walk or 7 minute bus ride), totally worth it.
Food & Groceries: A great way to save money is to reduce discretionary purchases. Of course, I’ve gotta eat, buy soaps, toothpastes, tin foil etc. but I reckon I can do better than I am. I spent $5,144 on groceries and $4,595(!) eating out. I had a goal of reducing eating out for 2016 to < $3,000 and totally didn’t get there. Finding the average grocery expense in Australia is difficult, stats are available for Food spend, but not food plus all other grocery items…if you know where to find this info let me know in the comments below! I suspect I am above average in my grocery spend :/
Travel & Vacation: I took my first major overseas holiday ever in 2016. Previously I’d been to Singapore with my girlfriend at the time, but never elsewhere. Living on a gigantic island like Australia can be a little isolating from the rest of the world, so it was wonderful to travel to Austria and Hungary for a few weeks. In fact easily the best few weeks of my life so far. It was expensive ($5,241) but totally worth it.
Auto: In 2015, I predicted my non-recurring Auto expenses were around $4,148. In 2016 total Auto expenses were $4,751 including an interior repair that shouldn’t recur. Damn I love my car.
Health & Insurance: There were a couple one off expenses in this area, which almost certainly won’t recur! My insurance plan went up quite a lot but a benefit was that I received a fair amount back in terms of rebates.
The chart below shows my monthly expense for the year:
Month of greatest income: December $6,121 ????
Month of least income: September $1,546
Most expensive month: December ($6,990) ????
Least expensive month: May ($2,253)
The Free Cashflow chart below shows super clearly where I took my hits for the year – my Vacation around June and business expenses which started in September and continued throughout to December. One of my goals for 2017 was to create more positive cashflows month in, month out! You can see also I spent more than I earned 5/12 months of the year and made only marginal gains in a further 4/12 months of 2016! Hopefully 2017 was a better year!
I spent slightly more and earned slightly less than the average Aussie under age 35 living alone…with a bit of fortune, a large chunk of those expenses will help me earn an income in 2017 and beyond. I also had some unreal experiences in 2016, traveling, blogging, finishing a Masters degree and starting my own business. I didn’t start investing outside of my retirement account but 2017 will be a more interesting year in that regard.
When I think about where I can cut down on my expenses without sacrificing quality of living (primarily, not living in a share house again) I can probably make some headway in food & grocery expenses, health & insurance and vacation and travel. I won’t be skimping on my health or insurance, but I changed to a less expensive insurance plan for 2017. In terms of travels, I still really want to be in Japan sometime in 2018 and think an overseas trip every two or three years is a real luxury. Aside from 3 weeks off in 2016, I still haven’t had a large chunk of time on vacation since starting my PhD & Masters degrees in 2012. So I can’t wait for 2018!
Would love to read your thoughts in the comments below 🙂