2017, a tale of two halves.
I am sure that for a lot of us in the personal finance blogosphere, analysing our yearly expenses might seem slightly extravagant, somewhat obsessional and maybe superfluous. Alas, I’m a details and gestalt guy, and my curiously obsessional side is satisfied only when I deep dive into my finances for the year gone. This year, I’ll also be comparing a few results to prior years.
2017 was the first year I was working mostly full-time. My official FTE is 0.8 – because I’m self-employed and finishing a PhD, I can’t really give more than 4 days a week to earning income. I use the balance of days to relax and write my thesis (browse YouTube videos, personal finance blogs and discover novel ways of procrastinating). I also did a little teaching at my University in 2017. Aside from being fun, one of the benefits is that as staff, I qualified for discounted health insurance (corporate policy). Teaching also keeps me current in specific skills should I want to pursue more academic work in the years ahead. Last year was also my first year living on my own since I moved to my city 5 years ago. So last year I went from subletting a tiny bedroom in a three bedroom, one bathroom house to renting a studio apartment closer to work. The upside seems infinite: It’s a 25 minute walk – or 10 minute bus ride – to work instead of a 1.5hr commute and there is massively increased quality of life not having to share a house your landlord! The suburb I’m in is also beautiful, at least by my standards!
A little fun, sans finance:
Beside tracking my finances this year, I also had the Strava and Polar fitness apps tracking my exercise – this was entirely automatic and super interesting to review at years end. I had a goal to exercise on average 4hrs per week. I didn’t quite get there but I’m pretty happy with what I achieved plus it was heaps of fun getting to the gym and running regularly – I even trained for and ran my first half-marathon!
- Ran a total of 743.3km over 91 runs
- Average of 1h 27mins of running per week
- Longest run 21.1km
- 70 gym sessions averaging 1hr 10 mins each
- Total of 3hrs 2mins of exercise per week
Ok, back to finance!
Over 2017, I increased my emergency fund from $9,862 to 10,662, set aside $1,231 for future spending (e.g. car servicing, insurance etc.) and added $2,121 in funds to my retirement account. A big thanks to the Aussie Government, who added $659 to my account by way of Superannuation Co-contribution and the low-income super contribution. These additions are based on the financial, not calendar year and I don’t think I’ll qualify for them in the upcoming tax year. I also started a personal investment account and invested $13,110 in the stock market (the portfolio did well in what has been one of the most sustained bull-markets in recent history, returning about 24% for the year – I’ll post about its one-year performance in April, after its anniversary).
Regarding short-term debt (i.e. debts excluding student loans etc), 2017 ended with slightly over $1,582 in credit card debt. By contrast, I accrued $202 in bank account interest ($50 less than the year before). Long term liabilities included my Student Loan ($32,305), Business Loan ($11,950) and other loans ($21,500). I haven’t yet had to repay my student loan, so it simply increased by CPI each year.
My net worth increased from negative $11,565 to positive $13,432.
That’s an increase of $24,997! I actually “Wow-ed!” out loud when I calculated that. (you can view an archive of net worth updates for 2017 here).
Average costs of living in Australia for a single, under 35.
Income & Expenses for 2017
Total income for the year: $62,221. This was up an amazing 46.3% from 2016. Yeeeeehaaaaa! Because the tax year in Australia is from July 01 to June 30, half of this amount is yet to have tax applied. Since owning a business makes taxes complicated, it’s hard for me to estimate what my true net-income would be. Suffice to say it could be a little lower than this figure.
Total expenses for the year: $46,125. This was up 4.4% from 2016. If you subtract inflation of approx. 2%, this isn’t too bad, especially considering my rent went way up. Net surplus for 2017: $16,086.
The chart below breaks down all expenses proportionately (plus it’s very pretty!).
Top 10 expense categories (these made up 96% of expenses)
|Housing||Food & Groceries||Auto||Healthcare & Insurance||Utilities|
|Entertainment||Clothing||Air Travel||Gym & Fitness||Profesional Development|
As the doughnut chart above shows, the top three categories by a country mile were Food (groceries and eating out), Housing (rent, utilities, furniture, kitchenware etc) and Auto (registration, insurance, fuel, maintenance and servicing).
Housing: This was mainly rent expense, a new washing machine and kitchenware. Living closer to work meant I could use the time saved productively – to relax and earn a little more income. This probably offset the increase in rent…or so I like to think! Nevertheless, housing expense was up 65% for the year
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 $6,932 on groceries and $2,816(!) eating out. I had a goal of reducing eating out for 2016 to < $3,000 and missed it then but got there in 2017. My grocery expense increased though, and the total spend was up 10.3% on a like-for-like basis (i.e. excluding alcohol, which in 2016 I treated as a seperate category). Excluding alcohol, I spent $9,748 on food and groceries. I live in what I’d define as an expensive suburb, but this still seems a lot. It works out at $6.67 per meal per day, assuming 4 meals per day.
Auto: Roughly in line with last year, Auto expenses consisted mainly of comprehensive insurance, rego and CTP insurance. I also had to replace the power-steering reservoir and hose.
Healthcare and insurance: Just the basics, this included a good health care plan (I can claim back up to $1500 in extra’s cover and generally max this out each year). This cost also included one trip to the after hours GP and one trip to the dentist for a cracked molar (yup, that actually happened).
Utilities: Rounded out the top 5. Water, Gas, Electricity, Internet, Mobile Phone…it all adds up. I was stoked during the year though to find an unlimited mobile plan for $25, saving me $15 every single month! I also get the cheapest ADSL 2+ broadband available in my area. We haven’t yet got the NBN but damn are those plans expensive!
The chart below shows my monthly expense vs. income for the year:
Month of greatest income: October $6,988
Month of least income: July $3,191
Most expensive month: January ($5,555) a five week month
Least expensive month: July ($2,978)
The Free Cashflow chart below shows super clearly where I took my hits for the year – January was the most expensive month and it shows. I had to get the power steering on my car fixed and decided to sign up to a gym for the year. On top of that, I had to stretch my earnings from December over 5 weeks rather than four. I have since built up a bit of a reserve so that the fluctuations in income can be smoothed out a little. The rest of the year though was pretty decent. My savings rate for the year was 26%. A definite improvement on 2016 but plenty of room to keep moving in a positive direction.
Again, I spent slightly more and earned slightly less than the average Aussie under age 35 living alone…but this time around I earned more than I spent – something which I hope becomes habitual because its the primary factor that’s going to help me save for early retirement.
The highlights this for 2017 are probably increasing my net worth almost $25,000 and saving a quarter of my income, after tax. To have a sober account of the year – the downsides were continued high expenses for food and groceries and as much as it pains me to say it, for my car. Sure my overall expenses haven’t increased much YoY, and they’ve actually fallen compared to 2015 but as much as I can, I want to avoid lifestyle inflation. As my income grows, I’m prepare to let it increase slightly, about 10% even if my after tax income doubles. The savings and investments I put away now will reap huge rewards 20 or 30 years from now.
As always, I’d love to read your thoughts in the comments below 🙂