It’s that time again – my savings update. This month I put a lot of effort into developing a spending tracker so I can accurately calculate my savings rate. I had previously been using a theoretical savings rate based on my budget. However, as we all know, sometimes we go a bit off course and I need the data to reel that back in. I now have that data but first the figures in a spreadsheet.
My Saving rate for Nov 2019 was 84%.
Yes, I was as astonished as you perhaps are. I actually thought I had made an error, but no, I have achieved this.
My investments increased by £6199 in one month. Again, I am astonished. It is more than my salary already. (Sorry for the small size!)
How did I calculate this?
Very simply, it is as so:
((Total Income – Expenses) / Total Income) * 100 = Savings rate.
If expenses are (Total Income – Investments) then the formula becomes.
(Investments / Income)*100 = Savings rate.
I back-calculated my savings rate to give the following:
As you can see, a general increase throughout the year (with a few hiccups along the way!).
Key points of the month
Several significant things happened this month; firstly, it was the first month with increased pension contribution. I am putting away 14% of my salary. This has the benefit of increasing the amount of tax I claim back (which counts towards the savings rate). My employer puts in a higher amount than my previous employer too which increases the savings rate even further.
I also invested £1600 into my S&S ISA.
All these things made my savings rate higher.
On a down side, was hit by a bigger tax bill in my salary than expected (thanks to my old employer totalling the annual taxes rather than paying out the average PAYE). This left me with £600 less than I was expecting. Combined with the increased pension contribution, this is putting a squeeze on the budget as my new employer whacked it out my pay. Payroll say it will be back to normal next month.
Finally, I had a massive expenditure on a skiing holiday I’m taking in February which became due now. This was expected and budgeted for,but was a lot of money to handover. It counts as expenditure, but It was from my savings.
Otherwise, this month has been fairly quiet for me and I was very happy with my spending until the end of the month when I got the double whammy of holiday and less take home.
To make my spending tracker I have used the Emma personal finance app. The app links up to my bank accounts and automatically categorises my expenses real-time. It then provides a monthly total for each category against a budget. I have simply used this as the basis for my spreadsheet.
In the spreadsheet I have also tracked my investments which for this month are as follows:
So that explains the extremely high savings rate this month. It does seem to be counter-intuitive that with such high expenditure, but it is what it is. It can be explained somewhat as I now include my investment in my budget.
I have massively increased my rate thanks to increased pension contributions which gives increased tax breaks to give a savings boost. My ISA contribution was the first I have done this year.
Well done me. Now I just need to keep this up!!
In other news…
I nearly forgot to mention that I was very pleased to have been featured in on the EU’s FIREhub. It’s a great place to get FIRE resources from a wide range of bloggers from across the EU. Thank you very much FIREhub!