- 1.Looking ahead: 2019 personal finance
I really liked his post idea so I wanted to give it a shot as well. While I have a Milestones page to keep track of my financial and personal targets, I didn’t really consider how to share my thoughts and how I got to these milestones.
With this post series, I can look back when the year is coming to a close to see the result of my personal predictions and whether or not my thought process was accurate or not.
By putting my thoughts in writing, I can improve myself year over year. Thank you fire the boss for the idea!
Without further ado, the first of hopefully many Looking Ahead: 2019 personal finance.
In 2018 I received a total salary increase of 525 EUR which resulted in a gross salary of roughly € 4,450 (incl. monthly availability bonus). This gave me a net of € 2,535.71 to work with every month. It does vary from month to month due to some extra-legal benefits.
Having received a salary increase and promotion, I don’t foresee any major changes in my salary the coming year bar a sudden change of position or job. As such, my average monthly income will hover around € 2,500 – € 2,600. I do help out here and there from time to time so I also take income from a side hustle into account of € 1,000 – € 1,500.
Without any major changes, my main total yearly income should be around € 35,000 – € 36,500.
The expense side of things could be more tricky.
I recently got into a new relationship (which will become obvious in my monthly Savings Rate), so especially the first few months might be more expensive compared to the same period in 2018. I intend to rebalance my expenses once we are in more of a routine. That way I can keep the status quo of my expenses to some extent.
Expecting a peak in expenses in the 2019Q1 I believe my monthly average expenses for 2019 will be in the range of € 700 – € 800. I expect this increase (€ 23,55 – € 123.55) due to a change in lifestyle that won’t get absorbed completely when I try to rebalance my expenditures.
On the other hand, certain expenses can become shared, especially excursions and holiday accommodation, though I highly doubt that it will give complete compensation.
€ 700 – € 800/month equals € 8,400 – € 9,600 for the total of 2019 which is a probable expense range.
To the attentive reader, these monthly expenses will seem low. You are correct if you guessed that I don’t have expenses related to my home.
This is for the simple fact that I still live at home with my parents, and I don’t foresee a change in this living arrangement for the year 2019.
2020 is even more ambiguous, though, if my new relationship goes as well as it started, 2020 might become a pivotal year for me.
Note that I’m well aware that a change in living costs will disrupt my SR and FIRE date. I know this and took this into account for my FIRE target.
Monthly Savings Rate evolution
With both the income and expense side estimated, it’s easy to guestimate my average Savings Rate (SR) for the coming year.
With a range for both my expected income and expenses I have the following table for my SR:
|Savings Rate range||Income|
The expected average SR for 2019 is thus between 72.57% and 77%.
My stretched ambition is to strive for an SR of 80% or higher. This will not be possible on more than on occasion but it’s something to reach nonetheless.
Saving and investment goals
If it’s possible to adhere to my self-imposed SR, I should be able to save between € 1,850.53 and € 1963,5 per month, given I get the average of my income range (€ 2,550).
this roughly € 1900 will get split in the following way:
- € 1000 to my personal trading account at Lynx.
- Rest: remains in checkings account which allows me to remain flexible in regards to expenses or investment opportunities and the next point.
- € 500 to the Beobank step-up savings account.
If the recession continues in 2019 I plan to continue to increase my ETF investment positions and even get some additional dividend paying stocks to add to my portfolio.
Additionally, I will move my savings account from Moneyou Plus to MeDirect Fidelity Saving. This move will bring me a higher savings interest rate.
- Current rate: 0,01% & 0,35%
- Future rate: 0.05% + 0.80%
While this adjustment does not compensate for inflation, the loss gets minimized. f I keep my money in one place for 12 months uninterrupted I at least get a less bad interest rate. In percentage it’s even an improvement of 136%!
As you can read, I have to make quite a few assumptions. This is only natural since nobody can predict the future.
However, this shouldn’t prevent me from trying to reach my targets. I don’t think I have made it myself easy nor impossible given what I expect to come out of 2019.
Based on what I’ve written down here, I will create new milestones for 2019 at the beginning of the year. Look forward to it!