Looking ahead: 2020 personal finance
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.
My income
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.
My expenses
2019 proved to be a difficult year for my expenses. My relationship is stronger than ever, especially after moving in together, but this brought a whole slew of expenses with it. Expenses I didn’t originally foresee in the beginning of the year.
To no surprise to anyone my expenses stayed higher than in 2018 and the beginning of 2019. While October and November proved that I could keep my target expenses when living together -as estimated in my look ahead– they were the only months. Though being honest, September was the first month where we had to get furniture and December was the holiday period with a last-minute plan to visit my GF’s family.
This creates a peak in expenses now (December-January) and I and my GF agreed to stay closer to home for the rest of the year. We now have a good grasp on our eating and living habits so once January is over I will put my attention to earning extra income and investing.
Having cleared the fog a bit, I can now make an estimation. A reasonable expense range should be 900 EUR – 1250 EUR/month which equals 10,800 EUR – 15,000 EUR for the total of 2020.
It’s clear that I grossly underestimated how our relationship would move forward in 2019. It turns out 2019 was already a pivotal year with my move. For my milestones of 2020 I will be more conservative both in terms of expenses and the resulting Savings Rate.
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 | ||
|---|---|---|---|
| 33,000 | 36,000 | ||
| Expenses | 10,800 | 67.27% | 70% |
| 15,000 | 54.54% | 58,33% | |
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:
- Monthly:
- € 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!
First congratz on your blog.
Question: When did you starting making your investment portfolio of 80.000 €?
I started myself in 2018.
I own an app (with mortgage)
Have a good income
2019 generated 170 € in dividend after taxes…
It is not much yet but I am determinant to keep investing (roughly 400€/month).
Next goal 2020 300 € in dividend
Dividends for life 😉
btw: 30 years old
Hey Glenn,
First, sorry for the delayed response.
Now, for your question:
I’ve been busy with investing and trading ever since I could open an account at 18 but a large part of my student time was spend on trying to make forex work. This resulted in a large loss after trying for 7 years. I unded up only building up my current investments about 3 years ago. I did have quite a bit of savings and money from forex that I didn’t lose.
You are doing pretty great yourself. Keep it up!
What do you think about tax 30% on dividends….
Doesn’t it eat to much of your growth?
Hey Glenn,
Thanks for your valid concern.
That’s why I focus on Belgian REITs (Dutch: Gereglementeerde Vastgoedvennootschappen (GVV’s)). We can retrieve 800 EUR[NL] x 30% = 240 EUR in dividend tax. This is for regular stocks only, so not trackers, funds, etc. It’s why I focus on Belgian REITs.
Stocks that pay a dividend are also interesting exactly because they pay a dividend, especially the so-called aristocrats. These companies are well established and have a proven track record. Good examples are JNJ or GSK. This doesn’t mean all of them have an ever-increasing stock price that recuperates their paid dividend and then some. For us Belgians this means we shouldn’t be focussing on them (which I’m not doing) but I’m also not going to completely ignore them when I choose the satellites for my core-satellite strategy.
This is my view at least and why I do what I do 😉