The name of the game still is financial independence, so let’s see how I’m doing at one of its most important aspects: building and maintaining a gap between my income and expenses. Swiss Mustachian Post noticed I dropped off the 70% platinum podium place in his Blogger Savings Rate Index last month, but that doesn’t mean I’m not determined to climb back up.
If you want to know how long it will take you to reach financial independence or when you can comfortably retire, then your savings rate is by far the most important indicator. Not only does it show you how much money you manage to sock away each month, it will also provide you with a clear financial freedom date.
It shouldn’t come as a surprise to you guys that this is the main reason why I constantly log every little expense and all incoming cash. Over time, I’ve managed to cut out all unnecessary spending, apart from a couple of hobbies and a drink here and there with friends, with only one goal in mind: to quickly build my savings rate.
The past few months I’ve started sharing these numbers on this blog to show everyone that’s interested in achieving financial stability or independence that it’s possible to do so on an average worker’s salary. On top of that, everytime I publish these articles I keep myself accountable to a large audience that continues to motivate me or sets me straight whenever necessary.
As usual, you can find the breakdown of my June income and expenses below.
|Paycheck||€ 2,081||As expected|
|Cycling||€ 96||Renumeration for cycling to work|
|Dividends||€ 56||Another good month|
|Other||€ 250||Side hustlin'|
When tallying up all income sources in April, we can see a decent amount of income yet again. At over four fifths of June’s entire income, my monthly salary remained at its usual level, with a bunch of dividends and a little hustling on the side pushing the numbers higher like in previous months.
However, new for June is the “cycling” category. Indeed, I recently bought a brand-spanking-new road bike that I ride to work, as regular readers might know. As an incentive and to promote sustainable transportation I’ll receive almost one hundred Euros of tax-free money every month from now on from my employer and the Belgian federal government – awesome.
|Rent||€ 350||As expected|
|Utilities||€ 70||As expected|
|Telecom||€ 20||As expected|
|Groceries||€ 174||Three birthday parties|
|Restaurant||€ 17||Work lunch|
|Public transport||€ 25||Train tickets|
|Bike||€ 346||Equipment for my new road bike|
|Games||€ 5||Metro: Last Light|
|Subscriptions||€ 8||Google Play Music|
|Entertainment||€ 28||Beers with friends|
The outgoing money is less awesome though. It’s not often that I spend over one thousand Euros in any given month, but June is the second month in a row. Again the new road bike is the culprit because I bought some equipment to keep it in pristine condition. On top of that I bought a new cycling outfit because I now ride to work more often and don’t own enough clean jerseys to get through an entire week.
All in all, I’m not too happy about having two spendy months back-to-back, but these expenses will not only save me money in the future – mostly bike maintenance costs – but even increase my income quite significantly through the cycling renumeration.
In total I managed to save €1,425 or 57.39% in June. These savings were immediately invested in new hiqh-quality dividend growth stocks, such as Spanish utility Enagas SA (BME:ENG). With its thousands of kilometres of gas pipelines Enagas will contribute about €40 to my annual income from now on.
At the moment I have saved 64.2% of all my 2015 income, a 1.1% drop from last month’s number. That’s well below my 70% goal for this year and quite a significant pull-back from April’s 74.1% average number. It’ll be interesting to see if I manage to jump back over the 70% threshold, but I expect that to be difficult.
Even with the additional cycling income, my usual year-end bonus and a rather large tax refund, there’s not much wiggle room anymore. While I prefer a smooth 70% annual savings rate, you won’t hear me complain if I land on a solid 65% rate, especially because I now get to enjoy my new road bike. I already feel like I’ve won for life!
How were your June numbers? Are you still on track to reach your savings goal with half of 2015 under your belt?