To consume or not to consume, that is the question.
If you, like the author of this blog, is pursuing a route towards financial independence, the answer to the question will increasingly be not to consume.
How low you can bring your monthly expenses down will be very individualistic, and how much is left when the month is over, will also greatly depend on the size of your monthly income stream.
Knowing what goes out, how much and when will always be something you should try to control so that it stays YOUR FINANCES. You choose what you want to spend your money on and when you want to spend it. It is your money, your choices and your responsibility.
Some time back, I did a clean up of our family’s budgeted expenses and cleaned out a lot of the fixed costs. Please find the post here if you are in need of inspiration; My 19 steps to sanitize the family budget.
There is no getting around the fact, that the other side of the equation – the income stream, and how it is and should be invested is more interesting, at least for me that is the case. More background on our net worth journey can be found here; The F*ck you account – net worth update #2. However, one cannot turn the blind eye to where the money goes on a monthly basis.
In the Minimal5 family, we are targeting a savings ratio of somewhere between 50 to 60%, in order to accumulate as much wealth as we possibly can in order to potentially in the near future be able to gain the financial freedom to increasingly dispose over our own time.
If you are a regular follower, you will know that we bring in around 12.000 UDS a month after tax, so a 60% savings rate will leave roughly 4.800 USD a month for all our expenditures.
This month, we are currently at 3.863 USD spent, with roughly 10 days left on the month.
August saw a total of 4.449 USD total spend, so for the last two months, I am very happy with our financial discipline.
For the last 12 months, the accumulated spending has been roughly 73.500 USD, so a bit higher then the last couple of months, and only a savings ratio of around 50%. Still an OK result I think, as we have only really in the last 6 months activity pursued a more disciplined and minimalistic lifestyle.
Apparently we spend around 27% of that on housing, which we will have a hard time doing anything about, so taking cost out will have to be done on the other cost items. This is something we are trying to address on a daily basis, by keeping our costs down, eating in as much as we can, and not buying things we don’t need. Inspiration to how you can do this can be found here; My top 9 products to help keep costs down.
Below is the movements in our account, which I follow regularly. We are currently at an almost all time low, because we bought chunk of shares again in the start of this month. The large swings up and down you can see in the chart are earnings income, and purchases of shares basically. Other then that, account is pretty much stable. I like that. Stable.
So while you wait for next months paycheck, take the opportunity to reaffirm yourself with the cost side of your financial situation, investigate the markets and short list the potential new stocks you have been scouting out, and plan out the future couple of months for any big time expenditures that you need to be aware of.
Do be mindful, that not all will make it to the other and become financially independent. But if you are reading this blog, you are most likely on a good path.
Ad Astra – Minimal5.
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Please check out these excellent ressources for adopting a financially independent & minimalistic lifestyle;