I started on the Financial Independence journey two years ago when I had a colleague tell me how much he’s been saving up for his retirement. That was an eye opener. Although I couldn’t save much in 2017 for varied personal reasons, I had decided that 2018 is the year when I had to start saving. And what a year it’s been!
To be fair, I always had a PPF account ever since I started working and had been saving in it for tax purposes but I’d never fully utilize the 1.5L 80cc limit. 2018 is when I clocked the limit in its entirety. Not just PPF, 2018 has been great financially considering other aspects too.
Savings in 2017 failed for me because I looked at savings from left over of what I had spent the entire month. Taking advice from FI bloggers from the US, I created a rough spending budget and saved right after money hit the bank. It forced me to save and spend only from the budgeted amount left. While I had saved just about 15% in 2017, I managed to save about 70% in 2018.
As for expenses, I hadn’t taken into account two categories while creating the budget — donations and gifts. Since I’ve been tracking every spend made in 2018, I was surprised how much I spend on gifts and donations. I’m not planning to cut down on donations as I’m comfortable with the amount, it’s just that this is the first time I’ve maintained a log of donations. Whereas for gifts, it certainly needs to go down. I can see that I’ve even sent random gifts to people I know from Twitter. That needs to stop as it hasn’t really improved my relationship with them either. Here’s how I’ve been spending by category:
I don’t live in downtown but suburbs. It turns out what I saved on the rent I ended up spending in transportation as there’s limited energy you have when you socialize after work. I need to find a solution for this in 2019.
What’s surprising to me is I’ve socialized more in 2018 than I did in 2017 and I still didn’t cross my budget in any of the month. My budgeting app, Money Manager, carry forwards the amount left over in any category. I should also thank VCs subsidizing my socializing costs 😝 I’ve shamelessly made use of more offers on food and dining this year than ever. Clearly, the efforts paid off. And to top it off, I didn’t waste time to figure out these offers, just made the right friends who keep track of these things. In the chart above you might see that I’ve only spent 2% on socializing, that’s because I created the category only about a month ago. Initially I was adding everything under food and realized, that I’m not able to filter out my groceries and my dining out with friends kind of spends.
I didn’t travel at all in 2018 due to personal emergencies and what not, personally the year has been terrible but just because I’ve been able to stick to my budget, I’ve finally kick started my FI journey.
I’ve already created a new budget for 2019. Since I’d already created one in 2018, I just had to tweak it a little based on my learnings from this year.
Gifts down. Socializing more. I’ve also added a new category for my hobbies. This year, I started running, cycling, gardening (indoor farming), and photography. The reason I created a new category for hobbies is because I anyway spend some amount of money on it, now at least I’ll be able to budget it out and spend guilt free as long as it’s in the budget.
I’m going to top up my emergency fund a little. I’m going to add 0.5x the current fund size. The reason for doing this is, readers from my blog might remember that I had a personal emergency in August. One big shock and even 1 year’s worth of expenses aren’t enough.
I plan to blog here more in 2019 about twice in a month. I was in fact maintaining the frequency until a few months ago. A lot changed in the last few months. I moved to a different role within the same company and have been spending more time learning the ropes of the new role. Writing about my personal finances keeps me in check and brings clarity, so I’ll continue doing it on this blog.
How was your 2018 and what are your plans or goals for the new year?