I’ve decided to participate in 20’s Finances’ The Dollar Challenge, which is an interesting study that asks what do people spend their money on as a percentage of their income. In other words, for every 1 dollar earned, how is it spent? So here we go.
On an average month, my take home pay is used up in the following ways.
1. Housing: 31.8%
Mortgage isn’t cheap in a city like Vancouver, and the additional costs of electricity, strata, and property tax doesn’t help. But it’s still better than renting IMO.
2. Transportation: 3.6%
Gas, tickets, auto insurance, all inclusive. I have a pretty fuel efficient car and live really close to work. I do take public transit sometimes to go downtown.
3. Food: 5.0%
Includes groceries, eating out, snacks, restaurants, and other costs associated with food. My employer offers us free breakfast once a week so that saves me a bundle right there. Food is cheap if you know where to buy it.
4. Insurance: 0.9%
This insurance is for personal items at home in case of fire/damage. Apartment building insurance is covered by my strata, and car insurance has already been included with transportation above.
5. Personal Care: 0.1%
Tooth paste, soap, tissue paper, deodorant, etc. I’m not a financial services representative who work with clients, or do anything like that so I don’t try to look good unless there’s a special occasion. I haven’t bought any new clothes for over 6 months because all my current clothes fit just fine.
6. Entertainment: 2.7%
Games, movies, etc. I don’t usually go out to party, attend sporting events, or go on vacations. Last time I left this city was 2008.
7. Savings: 52.2%
Everything that doesn’t get used elsewhere goes here, which usually ends up going directly into my investment accounts. My savings rate use to be under 50% when I wrote about my 50/50 balanced budget. But since then, I’ve gotten a promotion at work so most of the extra money I’m making now goes towards strong, dividend paying stocks which will naturally increase my income in the future, which will increase my savings, and the cycle continues…
8. Others: 3.7%
This is internet, cell phone, debt payments, and other minor expenses.
Thanks for joining the challenge! I love your idea about dividend stocks. 🙂
Wow I'm jealous of your savings rate!
holy smokes, you save over 50% of your take home income…me too I am so jealous.
I see you commented on The Dividend Girl's blog.
Have you looked at her debt ratio?
I've tracked a bit of your debt. August 2007 it was $15184.
Never mind between 2007 and 2010.
Feb 2010 – $31358
Mar 2010 – $36585
May 2010 – $37475
Sept 2010 – $41712
Dec 2010 – $47221
Jan 1 2011 – $58300
Jan 18 2011 – $64218
Feb 2011 – $68988
Mar 2011 – $71773
Apr 2011 – $74971
May 2011 – $84365
June 2011 – $79060
Oct 2011 – $85168
Nov 2011 – $87123
@ 20's Finances,
Thanks, can't wait to see the results.
Don't worry. My savings rate is expected to drop once I get back into the dating scene.
Some of my revenue comes from investments, and compound interest helps a lot. I'll make a post in the future about my dividends progress.
You are doing truly amazing. If manage to keep it up you soon reach the point where you and all the future generations would not need to work : -)
Just try to keep your expenses down. Good work!
Your savings rate is off the charts! Well done.
Your array of expense allocations omitted one of our most expensive items – taxes!!! There is income tax (federal and provincial), GST, PST, HST, carbon tax (not really a tax just a cash grab), health tax (so called provincial health insurance), driving tax (disguised as provincial auto insurance, and licensing), beverage tax (the deposits on containers, bottles etc.), electrical appliance and technology tax (the fee you pay when buying a TV or Computer), property tax, ad nauseum. So recalculate your percentages to isolate these taxes and you will be shocked at what the various levels of government take. If you “tax effect” your purchases beforehand, then the economy would really seize up, because by the time you pay your legalized extortion fees, the cash becomes more valuable than the object being bought.
Good point Derek. We often forget about the implication of taxation in our everyday spending. I think all together about 30% of my gross earning goes towards the 3 level of tax jurisdictions.
But it is important to isolate all the transaction taxes which I suggest will push the overall governments’ takes well beyond 55%. Income tax, federal combined with provincial, varies in Canada from 39% in Alberta to about I believe 61% in PEI, it is 43.7% where I am. But add 12% of gross purchases (HST) to that plus other nuisance taxes, fees etc., then it is well on its way over 50%. The marginal utility to you and I regarding money spent by governments, all too often in areas that are ultra vires their mandates, diminishes quickly upon closer review. There are too many vocal groups clamoring for special treatment i.e. $. Taxes are the laying claim to the assets of others via the political system. I support a meritocracy instead of this quadrennial sell off by politicians ‘buying’ votes via political commitments within their political platforms. The average citizen unfortunately responds more to $$$ promises than the logic of government, which should withdraw from many areas they currently operate within. As one sage lawyer suggested to me when I was upset at the outcome of an election, stating…” it takes about 5 to 7 years of office for any… Read more »