2021 January Expenses – Actual to Budget numbers
In order to make our investment goals and hit the targets we have set for retirement (see last week's post about our Financial Planner and Retirement plan here), we need to hone in on our expenses AND review regularly because hubby's work is still not back to full time. He has had no superannuation for nearly a year and his wage is at around 70% of normal wage.
This reduction has meant we have eaten into our emergency fund a little (about 15%) so need to keep 'massaging' day to day expenses to keep our eye on our medium to long term goals.
It's kind of good that we can't travel as we would be torn between long term goals and travelling! Usually, our travel expenses are around $10k for 4 adults (2 teenagers classed as adults) so until we can travel overseas, we are concentrating all efforts on keeping expenses on track and stretching as much as possible with our investment plan. Car Trips are our go-to at the moment.
We are currently running at 8% to total 2021 budget which is roughly on track (1 month = 8% of total year 1/12). We have gone over in a few expenses and have not put aside for our normal 'YEARLY expenses' so I do need to keep on top of expenses more regularly as I won't have the YEARLY account to pull cash from when needed for these specific expenses. Usually, we just work off 'bucket' accounts and expenses just come out of those accounts. Things like school fees, insurances and car expenses. Some of these don’t come in until September so we will have to work on these next quarter or maybe around June.
Usually, clothing, gifts and sports/activities would have come from our YEARLY expense account however, this account is at zero at the moment so taking from January income. We also subscribed to Disney recently as we thought it would be good entertainment whilst the kids are at home for the Christmas holidays. This will be cancelled before the month is up.
2021 Retirement Investment Goal
So all this extra reviewing of the budget is because of the 2021 investing goals. My ramblings are below and a new graph to play with!
Financial Planner Table for this year, with Stretch goal!
I have set up some tables to track our investment goals split into the separate areas. I like to also include our employer's superannuation contributions as it plays an important part in our retirement fund and at the end of the day, it is OUR money 😊.
One thing to mention that all these amounts, relating to super contributions still need to be taxed at 15% so the amount that will clear in the share portfolio will be 85% of these values.
I have also included the principal part of our home loan that we pay for our home and our investment property. We had to go with P&I (principal and interest) when we refinanced last year so we are kind of forced to pay down our investment property (principal payment). It's OK at the moment as the investment property has approximately $10,000 in the offset account to help pay for the extra each month on the loan. Tip: the offset account for the investment property is linked to our PPoR home loan so it helps keep the interest down in our home loan.
The rent contributes about $3,000 off the loan and the loan is $3,300pm so the offset account reduces by about $300 per month. Then there is of course insurance and council rates that come out each year. Normally if we receive any tax refunds we put that towards this offset account to help with the payments. This means we don’t budget in our personal budget for anything related to our investment property.
The biggest STRETCH goals in the below graph are the 'Concessional Contributions' (the $50,228 from above FP table). At present because hubby's job is a bit wobbly, there are no salary sacrifice contributions budgeted for him. I have already moved $10,000 to my super as I had it saved intentionally for investing. The FP did plan for at least hubby's employer contributions, but so far he has had ZERO contributions this financial year! Apparently, it is coming BUT I am a bit of a pessimist with these things, so I am not holding my breath!
I will keep tracking as the year goes on to see how we go. Even if there are a lot of grey areas, I strongly believe that FOCUS on the end goal (retiring by 2028) is key and persistence is necessary. However, all this will be done with COMPASSION for myself and my family (my word for 2021).
At the moment I think I will do these updates monthly to keep me focused.