We’re already a full week into June and I haven’t posted my income and expenses from May yet. Would something be the matter? Well yes, May’s savings aren’t what we’re used to! However, and as you all know, I openly share my savings rate, even when things aren’t as rosy. So let’s jump right into the cold hard numbers.
In last month’s savings report I expressed my hope that I would be able to break May 2014’s record, but alas. Things went a little different than according to plan, in large part because of my own accord. Nevertheless, I’ll gladly share May’s income and expenses with you guys. As you all know, I do so for two main reasons.
First, I remain dedicated to showing every one willing to listen that financial independence or freedom isn’t a pipe dream or fairy tale, but a real possibility for average people like ourselves. You don’t have to make a killing at the office and be a member of the 1% income group to save enough for a free-of-work lifestyle.
Second, I try to remain motivated by being an active member in our community. The fact that so many people follow and comment on what I’m trying to achieve provides a massive boost to morale, especially when it’s difficult to talk about your goals with friends. Over the course of 100 blog posts, I’ve noticed that you guys are the main reason why I have achieved as much as I have already – thank you.
Below you’ll find a detailed breakdown of both my income and expenses.
|Paycheck||€ 3,232||As expected|
|Dividends||€ 118||In line with this year's goal|
|Other||€ 207||Side hustlin'|
Boom, huge income! Because many Belgians, myself included, traditionally receive holiday money from their employer in the month of May, you’re likely to find May’s income numbers inflated when compared to other months. Although holiday pay slowly became an outdated concept because it was originally conceived as a way to get middle class households to enjoy a vacation once a year, I won’t say no to more income.
Besides, what’s more impressive to me lies in the fact that dividend income once again toppled a previous record high. Without any active participation on my part the assets I own are already generating about 6% of my usual paycheck in May. That’s pretty remarkable. Think about it, I started investing one year ago and already those investments cover one day of work in May. My Win for Life strategy seems to be working.
|Rent||€ 350||As expected|
|Utilities||€ 70||As expected|
|Telecom||€ 20||As expected|
|Groceries||€ 113||A little over my target of €100 per month|
|Car||€ 10||Shared a friend's car|
|Bike||€ 1,583||New road bike|
|Clothes||€ 12||Had a pair of shoes repaired|
|Subscriptions||€ 8||Google Play Music|
|Entertainment||€ 98||Two bachelor parties and drinks|
|Gifts||€ 12||Birthday present|
Ouch, that’s a lot of money going out – more than my usual salaried income! The culprit here is a brand-new road bike I purchased a couple of days ago. Since my employer and the Belgian government offers an incentive to cycle to work, I hope to regain my costs in the long-term by changing my commute routine.
Spending money to make money isn’t something I’d usually recommend, but in this case it made sense. Because I receive over €13 each day I bike to work, you’ll see my monthly income jump by an estimated €130 from now on. This in turn should provide a boost to my monthly savings.
Speaking of which, in May I managed to sock away 1,258 Euros or 35.4% of my income. That’s not as good as most other months, but still excellent all things considered. Taking the bicycle out of the equation would have given us an impressive savings rate of almost 80%.
Since utilities remain strongly underrepresented in my dividend growth portfolio and because I wish to take advantage of the wide economic moat utilities enjoy, I decided to purchase the British electrical grid operator National Grid plc (LON:NG) with my savings. Although NG’s dividend yield used to be higher, the 100 shares I acquired still boost my yearly dividend income by another €45.
To no one’s surprise, your savings percentage takes a big nosedive when you have to log big, one-off tickets like a brand-new road bike. However, I consider my bicycle an investment because it has the potential to make me more money than it cost me, even over a relatively short time span.
My overall savings rate nevertheless dropped by a lot too. Currently I’m sitting at a comfortable 65.3% savings on average for the entire year, but that’s below my 70% goal and well under April’s numbers of 74.1% on average.
A nine percent drop isn’t pretty, but I’m confident that I’ll be able to climb back up again over the coming months. That’s because on top of the extra bike earnings, I’ll also be receiving a relatively large cheque from the tax authorities because I overpaid in 2014.
As you can see, there’s nothing here to complain about! Savings were lower, but with a potentially huge upside: more future income. I’m happy as can be.
Were you satisfied with last month’s savings? Did you also receive holiday pay like most Belgians?