2020 has been off to a whirlwind of a start for the world.
The coronavirus outbreak has shaken many peopleās lives, and is playing a huge role in the turbulence that we are seeing in the markets these days. As the world scrambles to contain the severity of this black swan event, the current and future impacts have yet to be measured. To what extent it will affect the markets remains to be seen.
Black swan event: An unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity and their severe impact. These types of situations are so out of the ordinary that standard models and forecasting tools cannot account for the unpredictability. (source: Investopedia)
With the volatility in the worldās financial stability right now, this is another reminder that the number one best survival mechanism for maintaining financial stability is controlling your spending and making sure you are always saving as much money as possible.
FEBRUARY 2020 MONTHLY EXPENSES
MY THOUGHTS ON THIS MONTH
Life: Overall, February was a busy and very fun month! I spent a few days in New York for work, followed by a lovely and amazing weekend in Santa Barbara. This month was also the first wedding dress fitting session for my BFF, Le-tato š°š».
Finances: As for my finances, I came in under-budget for most of my categories this month ā. I knew that I would be going to Santa Barbara for a long weekend, and I value spending on experiences, like trying out different restaurants and activities, while I travel. To balance for this, I reduced spending in other categories (i.e. dining out and unnecessary shopping) in order to continue maximizing my potatotential savings while also getting to enjoy life. Itās all about balance. I also spent less in many recurring household expenses (i.e. pet food and house supplies), which ended up being pushed into March.
NECESSITY VS LEISURE COSTS
Taking a deeper dive into my expensesā¦
My Necessity costs are too high. From a quick glace at the chart above, I noticed that my Necessity costs make up almost all of my monthly expenses. This immediately tells me two things:
Either I am too lax with what I consider a ānecessityā, or
My Necessity costs are too high, which leaves me little wiggle room to save more money, unless I cut out more from my Leisure costs (which would be just taro-ble)
Taking a closer look, it seems like itās more of #2. My āNecessity, Variableā costs (red category) for January and February have been uniquely high due to medical expenses. This trend will continue through March and finally drop down in April. So I know I can plan for the āNecessity, Variableā costs to drastically decrease over the next few months.
NET WORTH
My net worth dropped this month. In January, my net worth grew 0.9% due to a combination of my cash savings for the month and the stock market continuing its upward trajectory.
However, in February, my net worth dropped 0.7% due to the stock market plunge that took place during the last few days of February, so my retirement investment accounts (401k and IRA) both took big hits, since most of my investments are in stocks. The net worth drop was offset by the cash savings for the month, and I am still net positive from the beginning of this year.
Current stock market volatility. As for the retirement investment accounts - am I worried right now? No. While itās naturally unsettling to see my investments see-saw during these volatile market times, this isnāt money I plan to use until I retire. In the long run, the market will recover and continue its upward trajectory as it always has. The market has survived numerous black swan events and still continues to grow.
The coronavirus will be one of a few less-favorable events that my retirement account will see through its lifetime. Times like this are exactly when we should not act emotionally with our stock investments. I plan to continue my contributions as status-quo because stocks are currently on sale and, as Jack Bogle says, we need to always āstay the courseā āš».
REVIEW OF NECESSITY COSTS
Home: $2,555 budget vs $2,511 actual. Includes rent and house supplies. The costs for this month was primarily rent. I budgeted to purchase more house supplies but didnāt end up needing to until March.
Groceries: $350 budget vs $299 actual. Includes all food prepared or cooked at home (meal-prepped breakfast, lunch, dinner, snacks). Normally, I do run closer to my budget amount. I came in slightly lower this month because I was in New York for a few days out of the month for work so did not have to pay for meals during those days.
Insurance: $260 budget vs $302 actual. Includes insurance for car, rent, pets and umbrella. This is probably the most frustrating portion of my necessity costs. Itās primarily my car insurance, which is extremely high. Albeit, this month was higher than normal due to policy adjustments related to my condo sale at the end of last year. Nonetheless, this will be one of my priority areas to reduce in - I plan to shop around for auto insurance quotes soon.
Utilities: $206 budget vs $170 actual. Includes internet, electricity, gas, trash, water and sewer. My electricity bill was lower than average since the weather is warming up, and I no longer need to use my heater!
Medical: $2,100 budget vs $1,728 actual. Includes doctor visits or medicine. As anticipated, my medical expenses were estimated to be about $2,000. The only reason my actual spending came in short is because I didnāt end up purchasing the medicine until March 1, so my March medical expenses are about to be extra litty titty next month šš¢!
Personal: $80 budget vs $71 actual. Includes toiletries and grooming (i.e. hair cuts) costs. I got my haiiiiiir cut.
Pets: $65 budget vs $0 actual. Includes any costs related to my 2 purrtatos (food, littler, medical, toys). The food and litter that I purchased for these floofers in January were enough to cover Februaryās supply. No toy purchases this month though, because they already have a lot at home š¤·
Gas: $120 budget vs $99 actual. Includes car gas. This is pretty typical for my monthly car gas expenses.
Car maintenance & repairs: $0 budget vs $131 actual. Includes car maintenance (i.e. servicing) & repair costs. My service light turned on, so I took my car in to have it checked. Try to get your car regularly maintained. It costs money, but itāll save you more in the long run.
REVIEW OF LEISURE STOCKS
Dining out: $240 budget vs $79 actual. Includes buying takeout (for myself) or eating out with friends and family. Since I was in traveling to New York for work one weekend and in Santa Barbara for another, I didnāt have much time to eat out with friends. I did not eat out at all this month when I ate by myself! āļø
Streaming subscriptions: $28 budget vs $28 actual. Includes subscription for Netflix (shared), Spotify and Adobe Photoshop. These are essential monthly subscriptions that I use regularly!
Entertainment & shopping: $50 budget vs $94 actual. Includes any fun or hobby purchases, shopping and gifts. I went over this month because I forgot that my Squarespace renewal fee for my old food blog would kick in this month. I also bought a new camera memory card reader for my iPad and a cute coffee mug ā while I was in New York.
Education: $20 budget vs $11 actual. Includes self-development costs (education, books, online classes). I always budget $20 per month for online courses or books. I finally bought this book that Iāve been eyeing for some time: A Random Walk Down Wall Street. Iāll post a review of it once Iām done.
Travel flights: $300 budget vs $0 actual. Includes flight costs for personal travel. I am visiting Boston in March, but I managed to use my credit card travel reward points to cover the costs š
Travel hotels: $300 budget vs $188 actual. Includes lodging (i.e. hotels, AirBnb) for personal travel. Hotel costs related to my Boston trip in March.
Travel dining out: $400 budget vs $248 actual. Includes any food related costs (i.e. restaurants, bars) during personal travel. Santa Barbara had some very top notch places to eat at.
Travel activities: $250 budget vs $361 actual. Includes any activity related costs during personal travel. Coupled with the food, what better way to enjoy Santa Barbara than to drive a little buggy car and finish off with a spa massage š¤ I did spend above my budget, but Iām not as strict on these expenses since I am conscious to save elsewhere, and these arenāt recurring costs.
Some links in this post are from our sponsors. Please see our disclosures here.