Are you ready to discover how much I managed to save in July and compare your results to mine? I sure am! The past few months have been quite interesting in that my overall savings rate droped significantly, so let’s see if I managed to climb back up to previous savings levels.
Why, you ask? Because the amount of money I save relative to my income is by far the best indicator to track my progress towards financial independence. Basically, the more you save, the faster you’ll reach a moment in time where you no longer have to work to support your life style. Awesome, right?
I don’t just write these savings reports to keep myself motivated, but also to show you guys how my financial situation supports the life I’m enjoying – believe me when I say I have a great life. And maybe you can even learn a thing or two to optimize your own spending and thus increase your savings rate.
This series of posts doesn’t discuss in detail whether you should rent or buy a home, or if you should go completely car free, but it tries to show you the financial consequences of the lifestyle choices I make. Establishing an accurate picture of your cash flow is the first step towards a frugal lifestyle after all.
As most of you know, I use my own Excel spreadsheet to keep track of all things money. Feel free to check it out and see if it helps you too!
Enough tittle-tattle – let’s get to the detailed breakdown, shall we?
|Paycheck||€ 2,069||As expected|
|Cycling||€ 96||Renumeration for cycling to work|
|Dividends||€ 43||Another good month|
|Other||€ 121||Side hustlin'|
July’s income remained relatively stable even though it’s on the lower end of what I’m used to. As you can see, cycling to work brought in another €96, thus paying for my new road bike over time. So far the spending money to make money experiment is going well, hurrah!
The dividends category, which contains my fully passive and free-of-work income, performed great again. €43 might not seem like much, but I’m happy with that number after just one year as a dividend growth investor.
|Rent||€ 350||As expected|
|Utilities||€ 70||As expected|
|Telecom||€ 18||Reduced compared to previous months|
|Home maintenance||€ 45||New chairs|
|Groceries||€ 105||Right on track|
|Public transport||€ 13||Train tickets|
|Bike||€ 30||Replacement inner tires for road bike|
|Healthcare||€ 20||Haircut, etc.|
|Subscriptions||€ 8||Google Play Music|
|Entertainment||€ 17||Beers with friends|
|Gifts||€ 73||Wedding gift|
Of course, I could be making ten times the amount I bring in now each month, but that wouldn’t render me closer to financial independence if I spend it all. That’s why I try to keep my cost of living as low as possible. As you can see in the table above, July was another good month even though I didn’t get up to the 70% goal that I set for myself.
July’s savings rate comes out at 67.5%!
All things considered, I’m really happy about my savings because of a couple of one-time expenses that pushed the numbers higher. When you substract two new chairs, a whole bunch of replacement inner tires for my bike and a wedding gift, you’ll find that I only had about €600 worth of recurring expenses – that’s just 25% of this month’s income.
However, financial independence isn’t about saving as much as possible or being greedy, but about maximising your happiness and adjusting your spending accordingly. Enjoying an expensive hobby isn’t an issue as long as you have your financial priorities straight, for example. Besides, you can have anything you want as long as you don’t want everything.
Of the €1,573 I managed to save the past month, I invested a large chunk into the American consumer goods business Procter and Gamble (NYSE:PG). At the moment P&G finds itself in troubled waters, but I’m sure management will be able to turn the tide. It’s hard to imagine they won’t when they have a portfolio with such highly visible brands to rely on.
The graph below shows the past performance for this year, but also a year-over-year comparison since I started blogging.
This year I’ve saved almost 65% of my income, up by 1% from last month. Think that number is insanely high? Think again!
Insanity is something completely different. I continue my frugal lifestyle month after month in the hopes of achieving a different outcome – a lifestyle in which I don’t have to work to keep a roof over my head, keep myself fed, and pursue my interests.
You too will be amazed to discover your own savings potential when you set yourself a clear goal and an accompanying plan. And I know many of you already are from reading your blogs and interacting with you in the comments section, which continues to be a huge motivator for me.
Incidentally, now that we’re half way into 2015, I hope everyone is closing in on their savings targets. I know I still have my work cut out for me to climb back up to the 70% range, for example. Will I regret not getting there by the end of the year? Absolutely not, my road bike – purchased in May as you can see in the graph above – just is too much fun!
Do you have similar expenses that you just can’t cut out?
Thank you for reading.