As I did last year, I will try to aim for certain milestones on both a personal and financial level. I already looked ahead on what I want to achieve in 2021, so now it's time to put those numbers into concrete SMART milestones.
Last Updated on January 2, 2021 by Mr. FightToFIRE
My second financial look ahead, this time for the year 2020, has the same idea as the last one. I want to share my expectations for this year and use this as the Kickstarter to create my targets or milestones.
Let us get this started with the main topics: my income and expenses. The two components needed to calculate my savings rate and that are the foundations to reach FIRE.
I started 2019 with a gross salary of 4,500.05 EUR and topped the year at 5,039.89 EUR. In other words, I received a salary increase of 539.84 EUR or 11.3175%. This gave me a net of 2,700 EUR to 2,800 EUR every month early in the year depending on holidays and some extra-legal benefits.
Having received a salary increase and because of a change in salary negotiation practices (reorganisation), I don’t foresee any major changes in my salary the coming year bar a sudden change of position or job.
What will change, and what I talked about in the past, is the salary car I will receive. I traded in some gross salary for this benefit. The net result is a decrease of about 300 EUR compared to 2019.
Substracting this loss from my income results in a range of 2,400 EUR – 2,500 EUR. To compensate for this decrease, I plan to do a Flexi-job. This should increase my net monthly salary by 350 – 500 EUR.
With no major changes, my main total yearly income should be around € 33,000 – € 36,000.
Monthly Savings Rate evolution
With both the income and expense side estimated, it’s easy to guesstimate 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 2020 is thus between 54.54% and 70%. But I’ll play it a bit safer and aim for 50% on average for 2020 anticipating a few “surprise” expenses over the course of 2020.
My stretched ambition is to strive for an SR of 75% or higher. This will not be possible on more than one or two occasions 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 some cash per month.
The problem is that I also need to put some aside for the apartment, just in case. If I get the average of my income range (€ 2,875), roughly € 1400 (2875×0.5=1437.5) will get split in the following way:
- € 1000 to my account for the apartment.
- Rest: remains in checkings account which allows me to remain flexible in regards to expenses or investment opportunities.
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 2020.
Based on what I’ve written down here, I will create new milestones soon. Look forward to it!
2. Looking ahead: 2020 personal finance