Report: Alternative Income & Expense (2023) – Beragampengetahuan

Since June 2020, this series of blog posts that shed some light on my income and expenses has been rather fun.

Thankfully, I have plenty of data, and I already know pretty well how things are in the back of my mind, but nothing beats writing a blog post to improve clarity.

Income and expense reports can be very boring, but the main idea is to determine if we can purely live off alternative income.

The Imaginary Scenario: FIRE-itis

Financial Independence, Retire Early (FIRE) is a movement of people devoted to a program of extreme savings and investment that aims to allow them to retire far earlier than traditional budgets and retirement plans would permit.

Let’s assume that the hypothetical FIRE-itis is an imaginary disease that causes the infected to pursue early retirement immediately, regardless of their financial readiness.

If this were to happen to us, how ready would we be?

To perform this exercise, I would need detailed income and expense data at my fingertips.

Since I am tracking my income and expenses with You Need A Budget (a personal budgeting application), I already have all the data that I need.

Many people end up not budgeting their money or tracking their income and expenses because it is too troublesome.

However, this helps tremendously in understanding financial habits and identifying areas where we can save or cut costs.

It also gives us a clear picture of our spending patterns and enables us to make informed decisions about our money.

Using the income and expense data that I have collected brings us to the next section.

1. Sources Of Alternative Income

This section will only include alternative income derived from sources not from full-time employment.

1. Dividend & Interest — This category includes interest earned from bank accounts, returns obtained from money market funds, payouts from Singapore Savings Bonds, distributions from REITs, yield from robo advisors, and more. I wouldn’t list everything I’m invested in, but you can think of this category as basically interest and investment income.
2. Business — This generic category will include all my side hustles, including digital products, affiliate marketing, ad revenue, and other income-generating activities. Not forgetting that income tax would need to be paid for this particular category.
3. Crypto — Crypto income has persisted throughout the bear market, and I have only included income that I have off-ramped to my bank account. This income is mainly driven by activities such as staking and providing liquidity. If I didn’t transfer it to my bank account, it isn’t included.
4. Others – Miscellaneous income sources such as government payouts that don’t belong in the previous three would be added to this category.

I will not be doing a detailed breakdown of the numbers for each category, but I’ll include the monthly numbers below so that we can see how they compare to the expenses.

There will be a lot more charts for expenses because that is more interesting.

2. The 3 Major Categories Of My Expenses

Throughout the years, I have constantly tweaked my budgeting categories to suit the changes in my life.

For the year 2023, these are the three major categories groups for my spending trends.

1. Monthly Expenses (Green)
2. Variable Expenses (Dark Blue)
3. Buckets i.e. Stuff That Matter (Light Blue)

This is what data tells us about how unpredictable real life can be.

As expected, there are ups, and there are downs.

My total spending for all expenses is $37,165 per year or an average of $3,097 per month.

Let’s take a look at these three categories in detail.

a. Monthly Expenses ($1,409/month)

Monthly expenses are literally things that I spend on every month.

These events happen either daily, weekly or monthly.

Let’s take a look at the chart before I dig deeper into the categories.

The biggest category is Food, Home & Miscellaneous (Yellow), where I spent a total of $9,154 for the year. Food and groceries would make up the bulk of the expenses incurred in this category, and the amount is meant for two persons. My wife and I both work from home, so I would pay for all her meals. Sometimes, I would order food deliveries, too. Previously, I had spent $5,000 on GrabFood or FoodPanda in 2022 and decided it was time to make some drastic changes. Once in a while, there might be tiny expenses, such as a light bulb that needs replacing, and it would come from here as well. It is important to highlight that CDC vouchers have helped to cushion this category extremely well. Nevertheless, I think that for two pax, this is a rather good number that I am happy with.

The second biggest category is Bills (Dark Blue), where I spent a total of $5,178 for the year. All monthly bills and subscriptions are in this category, and the numbers tend to be rather predictable, but there are quarterly U-Save and S&CC rebates for town council fees, electricity, and water bills. These are particularly helpful because the electricity and water bills can spike quite a bit when there are two people working from home all the time. Meanwhile, there is also fibre broadband for internet access, SIM-card-only plans, entertainment subscriptions (YouTube, Spotify, Netflix), GrabUnlimited subscriptions, and insurance payments.

The third largest category is Transport (Mid-Blue), where I spent a total of $1,351 for the year. Ride-hailing apps such as Grab and Gojek, as well as EZLink top-ups, are tracked here. Occasionally, I would arrange rides for my parents via Grab or GoJek as well.

I would group the rest into Others since they aren’t as impactful individually. These things that I spend on that don’t have big-hitting numbers include date nights (haha), charity, grooming (haircuts) and one-off miscellaneous things that don’t fit into any recurring category. Although we are homebodies, we make it a point to go out and eat something nice every now and then.

To summarise my monthly expenses,

• Food, Home & Miscellaneous — $9,154 ($763/month)
• Bills — $5,178 ($432/month)
• Transport — $1,350 ($113/month)
• Others — $1,221 ($102/month)

My total spending for monthly expenses is $16,903 per year or an average of $1,409 monthly (versus a budget of $1,700).

b. Variable Expenses ($375/month)

In comparison to monthly expenses, variable expenses cater to events and needs that occur periodically and don’t necessarily occur every month.

However, it is essential to budget money for these categories on a monthly basis such that when I need to spend on them, I already have sufficient money set aside to be used.

These categories are crafted using transaction data that I have collected throughout the years of tracking expenses and are specific to my needs.

This chart illustrates my situation perfectly.

Broadly speaking, there are bigger themes here, such as Family (birthdays and events), Household (appliances, repairs and servicing), Annual Subscriptions (Disney Plus, FoodPanda Pro), Medical (medical and dental checkups, supplements), Grooming (contact lenses, toiletries) and Finance (tax and home insurance).

The Lunar New Year occurred in January, which made up half the expenses. A medical appointment and replacing the air conditioner unit ($346) in my master bedroom resulted in a month with extremely high expenditures that dwarfed the others.

From February onwards, expenses were rather spread out throughout the year, with a maximum of $563 in July and a minimum of $19 in December.

Another notable expense was the Prism ceiling fan ($198) that I installed in March 2023.

Unfortunately, in June 2023, old and damaged wiring ($486) shorted the system, causing my air conditioner additional problems.

When the age of an apartment exceeds ten years, problems are expected to happen, which is why budgeting funds in advance is extra important.

My total spending for variable expenses is $4,500 per year or an average spending of $375 monthly (versus a budget of $300).

c. Buckets ($1,314/month)

While monthly and variable expenses provide the funds needed in our daily lives for sustenance, the oddly named buckets (inspired by The Bucket List) capture things that matter to us at different phases.

These could change as years go by, and these six items are currently as follows:

1. Myself
2. Wife
3. Family
4. Business
5. Travel
6. Invest

The outlier here is the Invest category because I would budget money for it, but it isn’t reflected in the chart below because it isn’t an expense.

In a way, it wouldn’t be too far off to consider these five buckets as discretionary spending.

Travel (Yellow) is the top-ranked item here, with activities almost every month and a soul-enriching total expense of $8,601 for the entire year. Resorts World Cruises and trips to Johor Bahru, Kuala Lumpur, Bali, Vietnam, and Thailand constituted most of the damage. However, this somewhat significant number can be considered to be meant for two pax, as I paid for my wife’s share as well. If we were to think about it this way, $358 per person per month doesn’t sound excessive at all. Besides, I can even use air miles to redeem for free flights.

Family comes next at $2,138. This usually takes care of the nicer things that I do for them, such as gifts or vacations.

Lastly, we have the categories for Myself ($2,137), my Wife ($1,939) and Business ($948).

To summarise my monthly expenses,

• Travel — $8,601 ($717/month)
• Family — $2,138 ($178/month)
• Myself — $2,137 ($178/month)
• Wife — $1,939 ($102/month)
• Business — $948 ($79/month)

My total spending for bucket expenses is $15,762 per year or an average spending of $1,314 monthly.

For Monthly and Variable Expenses, I have years of data that can help me project fairly accurately how much I would need to budget for them on a monthly or yearly basis. These categories aim for survival and sustenance at a very comfortable level of living.

However, there isn’t a fixed number budgeted for the six categories in this section because the dynamic allocation depends on how much alternative income I generate each month.

The higher the alternative income, the more money that I would be able to budget into these six categories.

d. Categories Excluded

In particular, for monthly expenses, there is one important category that should really belong under expenses but is inconspicuously missing: allowances for my parents.

This was excluded so that the numbers are a better reflection of specifically our lifestyle needs.

Besides, I have catered special arrangements in addition to allowances to boost their retirement income, such as monthly distributions from CPF LIFE and Fixed Income Investments.

Other than this, I have also excluded categories created for administrative purposes to manage my budget that don’t affect the tracking of income and expenses in any way.

Not So Obvious Nuances In My Data

Looking at the data, there are perhaps things that aren’t obvious.

One good example is the CDC Vouchers Scheme, which offers digital vouchers for use at participating hawkers, heartland merchants and participating supermarkets.

Because it is not as intuitive for elderly parents to use and spend digital vouchers via mobile phones, I would give them cash in exchange for helping them spend them.

This would essentially front-load my Family (Variable Expenses) at the start of the year and subsidise my Food and Home (Monthly Expenses).

The end outcome is still the same because it’s money from my left pocket to my right pocket, but it would be reflected differently in the charts.

Similarly, the more money and time I spend on Travel (Bucket Expenses), the less I spend on Food and Home (Monthly Expenses), Bills (Monthly Expenses) and Transport (Monthly Expenses).

The math is simple. Since I can’t be in two places at once, my apartment is empty when I’m travelling.

Hence, my expenditures on these three categories (such as meals and transport) will be tagged under travel when I’m overseas.

Ending Thoughts: Alternative Income & Expenses (2023)

Below are my alternative income and expense numbers for the year 2023 in a simple table to recap everything in this article.

Key takeaways for myself –

• My spend rate is 55% of my alternative income generated in 2023
• Allocating a $3,000 monthly budget (for two persons) is still a really comfortable number
• This can include a good amount of quality-of-life experiences like dining out and travel
• If we don’t travel at all, the average monthly spend drops down to $2,380
• There haven’t been any major surprises to budget categories since my last FIRE trial update
• Re-investing a portion of spare funds will lead to further increases in alternative income (i.e. compounding)

Tracking transactions is usually the deal breaker for most people when it comes to income and expense tracking because it can be incredibly tedious to some.

As for myself, I have already gotten used to it since I have been doing it for well over a decade.

If we were to overcome this hurdle, the data collected would definitely paint a very insightful picture and tell a truthful story of our financial health, whether we like it or not.

With the relevant data, we can then determine where we really stand in terms of being financially resilient.

This can be particularly useful for you because Singaporeans seem to require a much higher annual income in order to feel financially secure.

On a side note, doing an annual report can be quite tedious! Maybe I should be doing a quarterly version instead if I’m disciplined enough to write about it.

Alternative Income & Expense Reports

Kevin started beragampengetahuan when his net worth languished at negative $25,755. His desire to turn things around led him to build passive income from investments and side hustles that pay for his daily expenses and vacations. You can learn more about Kevin here.