When I look at how much I save vs. spend each month, I really start to feel like I’ve been spending too much money. My cash savings projections for the month is only $700* per month, but that’s after my maxing 401(k) contribution and $250 automatic savings to my car replacement fund.
That is only about 40% of my projected net income.
In January, I managed to save about $1,400 for a total of 50% of my net pay.
In February, $1,700 or 55%.
In March, $1,800 or 60%.
Then I go and save 100% of the net of my bonuses. 20% of the gross goes to investments and the rest is snowballed to cash savings.
I don’t know what my rent will be after June. I’m definitely expecting it to go up. Rent is more expensive when you sign a lease in the summer months versus in the winter months, but I didn’t know how long I was going to stay here when I signed the lease in February. If I had wanted to stay for 12 months, I could have gotten it for under $1,500 per month! That would be awesome. But right now, I’m paying about $1,550. I figure it’ll probably go up to $1,700 or more when the lease is up and if I don’t sign a lease at all, $1,900 – $2,100 per month probably. (I would only not sign a lease if I’m planning on buying and moving super quickly. I also won’t give notice until after I’ve closed on a place, so I will probably end up paying a month-to-month rate for the last month or two before moving, which is worth the peace of mind.)
Without my RSUs and this random strange place that extra money seems to find its way into my checking account (I really don’t know how this happens *every* month), I would only be saving about $700 per month towards my down payment. That would make it take 17 months to reach my condo down payment savings goal! But the RSUs** make a big difference. They are also a pretty reasonable part of my gross income for the year. With no raises or more RSUs this year and using an old 52-week low stock price, my RSUs account for just under 25% of my forecasted gross income for the year, or slightly less of my forecasted net. So not taking them into account would make a huge dent in my possible savings.
But then sometimes I feel like I shouldn’t anticipate getting them at all and then feel like those Wall Street people complaining about not getting their bonuses. (I realize that the $ value comparison is a bit of an exaggeration, but the idea is sort of similar…) It’s not like I count on them for spending, but I do quite enjoy them for saving. And if I didn’t get them, would I really let my monthly budget bloat up to the amount that it has (almost $3,800 including travel)? Probably not. But when my RSUs account for about 20% of my forecasted gross income, that is like the difference between a $80k salary and a $100k salary or a $104k salary and a $130k salary, which isn’t a small difference.
My employer sees them as part of my compensation for the year, so shouldn’t I? At the very least, I have used a 52-week low stock price in my calculations of what to expect. That way, when the stocks actually vest, I’m surprised instead of shocked/flabbergasted/upset/annoyed. Of course, that means I re-run the W-4 calculator after every RSU vest (which is four times this year and next!) and after a paycheck with a raise to make sure that my taxes are right. I tried using the current value for awhile but that went up and down so much that it drove me nuts. The 52-week high is a bit of a stretch since it never stays at that value for very long and any rolling average would be complicated to calculate, so I think I’m going to stick with the 52-week low in my calculations.
Readers, do you see regular RSUs or bonuses? How do they affect your savings or spending?
*This post was written before I knew how much my raise would be that goes into effect on my April paycheck. Most of the increase in my down payment savings account that you will see in this month’s net worth update isn’t related to this raise, but the amount saved from my paycheck towards my down payment is far higher than $700.
**RSUs stands for Restricted Stock Units. I have various shares granted that vest on various dates throughout the next few years. Basically, when I got the grant it stated that I get N shares over M time, with a specific vesting schedule. So at the time of the grant, the number of shares I will get are calculated. And then when they actually vest, those shares become mine. I have it set to sell-all, then some taxes come out of the brokerage account, and the rest is mine to use for whatever in cash.