Earned Income Savings Percentage: February 2008 (102%, YTD 42.93%)
The good news for us in February was that we were able to move a significant portion of our earnings to savings.
In fact we were able to move 102% of our EARNED INCOME for the month of February to savings/retirement.
Before you look at those numbers and blow them off, let me provide some details.
Like most households our monthly household expenses are cyclical. Some months we have more expenses than paychecks, etc.. To smooth out our financial reports I don’t include the balances of our checking accounts in our list of assets each month.
I do this for a couple of reasons:
First, we are normally very efficient at not letting our excess cash sit around. Anything over our normal monthly expenses we quickly transfer to our online savings account. A couple of clicks of a mouse and our money working for us as soon as possible.
Second, our bills are due throughout the month. To make our updates as simple as possible, I make our monthly updates as if all of our bills are paid. To be able to pay off our bills the week I make the summaries, I don’t report the slush I keep in checking.
Here are the results: (earnings are pre-tax)
The first two months of 2008 have been quite a transition for us. With so many changes at the beginning of this year: New baby, wife pulling back to part time, etc… We wanted to be sure we had the cash flow to cover our expenses without having to dip into savings.
To do this, we cut back our savings in January and early February until we were sure that we could pay our bills. The excess we then sent to savings at the end of the month.
We may continue to have this see-saw patten for the first part of the year with some months being more cash intensive than others.
The important number is the year to date(YTD) savings percentage.
With January being the last month that my wife was able to collect a full time pay check for 2008, I expect our savings percentage to slow decline over the course of the year.
On one and a half incomes, our day to day living expenses will consume up a greater proportion of our earned income each month.
Although this will be a challenge for us, I believe that it will help us in the long run as we learn to become more thrifty and manage our expenses wisely.
Hope you enjoy the journey as much as we do.
