I saved 47% of my income this year!

I saved 47% of my income this year!

I finally find the time to gather all the data needed from my bank account and investment accounts and build an expense tracker. Nothing significant, just an informative chart about how much I spend, save and invest. In general, my spending habits are pretty stable and I’m rarely having spending sprees. What I discovered looking at the data, impressed me a bit. I kinda never thought that I would achieve something like that, despite the fact that some of that is thanks to the Covid19. It appears I saved almost half of my income this year. If I want to be precise, I saved 47% of my income Jan-July 2020!

This is huge! I never thought I would achieve this. In this, I am including also all of the money I invested, because these are funds I didn’t spend on anything but the future. As you can see from the graph below, a major impact on my spending habits has Covid19. That is because in our country the lockdown was introduced on the 2nd week of March and we were under lockdown till mid-May. During the lockdown, we pretty much cut most of the things we were spending money on. That would be mostly gas, going out. In regular months, gas and going out is about 10-15% of my salary.

2020 YTD Savings and Invesment rates

I saved half of my income this year, because I paid myself first.

So, if you had the time to read one of my first blog posts about how I started my finance journey, you will know that I pay myself first. I know it sounds a strange thing to do, but to me, it had the most impact. Paying myself first means that as soon as I receive my salary, I deduct 20% of it and send it to my savings account. In my case, I don’t do it myself, but I asked my bank to create a scheduled transfer between the two accounts. This way I can’t skip it or tell myself “ok, this month I’m having a vacation, I’ll need more money”. It’s a harsh self-discipline, but it works like a charm.

This way I’m spending what it’s left from the money I saved. The rest of my savings are coming at the end of the month: as soon as I get my next salary, I send to my savings account everything that’s left from my salary from the last month. From the graph, you will see that I’m starting with a very small investment compared to my salary, but slowly increasing. Not sure if I’ll be able to maintain that 20% of investments from my salary, as in July I needed almost €300 to buy 1 share of the SXR8 ETF. Still, I’ll increase the investment ratio to about 10%.

Why I’m ramping up my investments slowly?

Despite that with my latest savings from July, I’m finishing my travel fund, I’m still going to increase my investments slowly. My idea behind that decision is that I’m still learning how to do the whole investing thing. So far I can say that I’m not losing money and my ~€700 portfolio is on a 10% gain. Still, I need to learn and understand more about how to value stocks and how to pick a dividend stock that I could invest in the long turn. That’s the hard part for me. I prefer to keep a bit more money in cash, instead of doing the wrong move. 

I saved half of my income this year, but I don’t want to throw that money away easily or recklessly. I’m constantly learning, reading books, articles, learning from the #debtfreecommunity in IG, etc. Currently, I read “The Intelligent Investor”, by Benjamin Graham. A book review is coming as soon as finish it. So far it’s impressive!

How is your year going? What is the last thing you learned? Do you read daily?

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