Every month I’ll post an update on my finances from the last month, with a focus on increasing income, spending less, and maintaining a high savings rate. You can see previous updates here.
Results – April 2017
April was a “normal” month – 2 paychecks, a tame stock market, and flat expenses. My net worth increased, I paid off some debt, and I paid my 6 month car insurance bill (I really did save 15% or more by switching to Geico…).
2017 Savings Rate: 55%
My yearly savings rate dropped a bit. I knew it was coming. It’s why I decided to use my yearly savings rate (instead of monthly) as the metric of progress for these reports. Having a good month is much easier than having a good year – you can delay purchases, slash spending, save as much as you can, hustle and make more income – but you fail to stop and ask yourself if it’s sustainable. And is it really progress if it’s not sustainable?
Having a good year is a grind. It takes planning, focusing on good habits, thinking not just about what will make you happy today but what will make you happy in a year, 10 years, when you’re 70. It takes luck and resources.
For reference, I’ve included the formula I use to calculate my savings rate at the bottom of this post. I read a discussion the other night debating whether or not it was a useful metric for measuring financial progress. As long as you measure consistently and against yourself, it’s useful. When you start measuring against other people, your problem becomes a lot bigger than how you’re calculating your savings rate or your net worth.
Thanks for reading!
I calculate my savings rate as follows:
401k contributions + employer match + debt payments + other savings / Take home pay + 401k contributions
Image by 1shots at FreeDigitalPhotos.net