How Much Do You Pay Yourself?

March 1, 2016 8:53pm
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So you might have guessed that I’ve been in kind of a personal finance mood the last couple of days. Yesterday I posted about investing and the value of time, which led to another random question that I started musing in the shower this morning … how much am I paying myself each month?

Overall I like to think that our budget looks pretty ok. True that it still has way more debt than I would like, but we also make a conscious effort to save and put money away for retirement, so what exactly does that picture look like???

Turns out it looks something like this…

20160301_budget1

To be honest, it only took me about 10 minutes to gather all of the data for this exercise – it probably took longer for me to format the graphs just the way I wanted, though I suppose your mileage may vary if you happen to have a lot of credit cards to sort out or something. For what it’s worth, I keep a spreadsheet handy with how much of each of our debts goes to principal vs. interest to help us decide which to pay down next…

It should also be noted that my figures above also include employer retirement contributions like matching and whatnot, so it’s not solely income – more like income plus benefits – if you’re looking for something like Debt-to-Income ratio or a housing ratio, though for what it’s worth our numbers seem to be well below the recommended limits for both (debt – 19% vs 36% limit; housing – 16% vs 28% limit).

Although I thought that this was a good start, distilling it down even further really got me to the meat of what I wanted to see…

20160301_budget2

 

This chart takes the previous and groups everything into one of three categories – day to day expenses, debts, and savings – and so it’s easy enough to see here that right now about 21% of my household money is currently being saved aside for another day. Granted that 21% makes up multiple goals – emergency savings, Christopher’s college fund, and retirement – but I think it’s interesting and arguably a little more motivating to look at the monthly progress every now and then instead of simply net worth – debts vs assets which can be a little daunting!

Now to make that green slice a whole lot bigger as the light blue slice fades away… 🙂

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