Saving for the future: May

By | June 7, 2016

Author: Mr DDU.

We are big believers in living below our means; spending less than we earn. We try to only spend money on what is essential or makes us happy. Nearly everything society spends money is fleeting: food, holidays, a movie ticket etc. Most of it is forgotten about by the next day and we look to the next thing to keep us entertained.

Every month we track our income and expenses to see how much we’ve saved/not spent. This helps us to see how we’re going, as well as motivate us to continue saving. Hopefully over time, our savings rate will increase allowing us to invest even more.

We want to show that even on a modest income, it is possible to save hard, invest and become financially independent.


May Savings Update 

Dividend Income: $62.60

Other Income: $4,541

Total Income: $4,604

Normal Expenses: $2,259

Savings rate: 50.9%

May 2016 savings rate Dividends Down Under

Well look at that, our first 50+%. The main reason we managed to achieve it was because there were 3 pay days this month, but it counts nonetheless. We even included the eat-out food we ate for our IVF trip.

We’re extremely pleased with 50%, after 7 months we have finally got one. We have upped our supermarket spending, but removed takeaways and eating out, so that we’re eating as healthily as we can. This should just about even out, but we don’t mind if we spend a little more. We’ve taken advantage of when meat is on special at Aldi (and it’s cheap anyway).

We have a question for you, Aussies in-particular – at the moment we don’t include superannuation contributions in our savings rate, but should we? Although it doesn’t hit our bank, we are saving for our retirement with it. Do Americans include 401K / IRA contributions in their savings rate? – If they do, are we doing ourselves a disservice by not including it?

The 3 key factors for us to become wealthy are:

  • How much we earn
  • How much of our earnings we save
  • How hard we can make our savings/investments work

These monthly savings posts will track how good we’re doing with the first 2 factors.


What were your May finances like? Should we include superannuation contributions in our savings rate?


Thanks for reading this article about our investing journey Down Under.

Onwards and upwards!

69 thoughts on “Saving for the future: May

  1. The Green Swan

    Yes as Americans we include saving in our 401k and IRA as part of our savings rate. Looks like a great month of May for you, good work!

    1. Dividends Down Under Post author

      Hey Green Swan, thanks for your comment 🙂 Yeah it was a good month for us. What about employer matching, would you include that too?

      1. The Green Swan

        That’s a good question. I suppose that makes sense since it is part of my overall compensation to work. But the accountant in me would say to gross up the denominator (salary) by that amount as well then. I think the calc would be a but flawed if you only include it in the numerator. Overall, the calculation would result in a higher savings rate though.

        1. Dividends Down Under Post author

          Thanks for answering my question. It is an interesting conundrum, I think perhaps we’ll consider having a ‘normal’ savings rate and a superannuation-included rate which would include boosting my income by that amount.

    1. Dividends Down Under Post author

      Hey TJL, thanks for commenting 🙂 Thanks for letting us know your approach. I think we’ll be considering showing 2 different rates, so that we’re being clear about what our savings rate is, but also comparable to other finance blogs (particularly international ones who may include their retirement savings in it).

  2. Financial Slacker

    Very impressive to be saving over 50% of your income.

    As far as including 401(k) and IRA contributions, I do include them. I track those contributions separately as they are tax-deferred and cannot be easily accessed prior to age 65, but they are a big part of our savings.

    I don’t include the employer match as savings only because we don’t really see it. Honestly, I had to ask Ms, FS if we still even had a match. Contributions to the 401(k) account are automatic and the portfolio is in a target date fund, so I don’t spend much time looking at it. But now that I think about it, I probably should include the match as savings as it is effectively income that gets saved.

    1. Dividends Down Under Post author

      Hey FS, thanks for the comment and encouraging words.

      Thanks for explaining how you approach your savings rate. Superannuation is kind of like the employer match because we don’t see it, but it is part of our pay (it’s just mandatory). We’re now considering showing 2 different rates – before retirement contributions and after contributions. We should give ourselves the credit for it, but not boost our ‘normal’ savings rate either.

  3. pluggingandplaying

    yes, I include it. It is real money that will support me someday and I think it is a worthy line item. Good job on the progress thus far. Cheers !

    1. Dividends Down Under Post author

      Hey P&P, we love seeing a new face here – thanks for commenting 🙂 We appreciate your kind words.

      I agree, it is part of our savings, so why not count it in some way? Tune in next month to see how we show it.

      1. pluggingandplaying

        Thanks DDU, happy to be aboard. Feel free to check out my blog for money savings ideas, investments, and saving tips. Good luck !

  4. ambertreeleaves

    As a Belgian, I include all savings that go to a retirement fund, no matter what form it takes. It is money I do not spend. It is money I invest for the future.
    I do not include as income saving any amount our employees sets aside for us each month. Right now, that is a blind spot in our savings rate. It is on the other hand part of our amber index.

    Congratz on a 50+ savings rate!

    1. Dividends Down Under Post author

      Hey ATL, thanks for your comment as always my friend. 🙂

      Thanks! We finally got a 50%, hopefully it doesn’t take a long time before we see that number again. I appreciate your explanation of your thoughts on the savings rate, I think in the future we will also include our super contributions as an extra savings rate from now on. So we can see the normal savings as well as the boosted savings rate.

  5. Mrs ETT

    I don’t include anything that comes out of my pre-tax pay, because that would mean a constant reminder that I’m doing it, and I’d rather this remain in the “you don’t miss what you don’t see” realm. Also, because Governments – if I can’t access it, it isn’t really mine. Two caveats – I still like to include my Super in the big picture now and then, because it feels good, and I’m not going for a 50% savings rate – if I were, I think I would have to include it.

    1. Dividends Down Under Post author

      Hey Mrs ETT, thanks for the comment and sharing your thoughts 🙂

      I agree with your thinking, and why it isn’t so important. We can’t access the super anyway, so it doesn’t matter that much. We want to retire WELL before we can access Super, so it’ll just be bonus money by then.

      But, it is essentially money that’s being paid to us, for retirement (which is half of what FIRE is all about), so at the same time I can see why it’d be worth including. Plus, to be comparable to our international cousins, including it would be reasonable (like The Jolly Ledger does). I think we may show 2 different rates – one ‘normal’ rate and one with super added to the income and savings rate, just to get a comparable rate.

      PS – Does the ETT stand for a blog? I’d love to know and visit it if there’s a blog 🙂

  6. J

    Yay for 50% savings rate! Good job! I guess the comments in this blog affirm our convo the other day. I guess we agree with Mrs. ETT that: Governments. We all know it too well. I don’t include Super in calculating my savings rate but I do include it in my net worth, but I’m not sure now if I should.

    1. Dividends Down Under Post author

      Hey J, thanks for commenting as always! Yay indeed, we’re really happy to have finally broken that hurdle. Hopefully it’s not ages until the next time we see that 🙂

      It’s very interesting reading all these comments..and the different’s almost not comparing apples with apples. To cover all the angles, I think we may publish our ‘normal’ savings rate, and an extra rate which includes super as income and in the savings rate (probably net of the 15% tax). That way we’ve covered all the bases and are comparable for our international cousins (and giving ourselves the credit for earning our super payments) and the other rate for people who just track by what they have control over.

      1. J

        Thats seems like a good approach! I’ll see how you go with that and maybe I can do that too.

  7. The Personal Economist

    Nice savings rate!
    I don’t include super (and my employee pays more than the minimum SG) but do include it in our net worth. Seems from the comments there is a mix of approaches. It certainly is important and a big chunk of our net worth (we exclude our owner occupied properties in our net worth). I suppose I see savings as something we can control whereas the SG is just paid in (not that I don’t appreciate it!)

    1. Dividends Down Under Post author

      Hey TPE, thanks or commenting 🙂

      I can see why we have our savings rate set up the way we do. I think in the future we’ll show our normal savings rate and one which includes super as income and in the savings rate. That way we’r covering both bases. I agree though, Super is completely in the background. We want to achieve FIRE far before super-access age so therefore we aren’t too concerned about it.

  8. Jax

    This was something I was wondering too, whether to include IRA/employer retirement plan in my savings calculation. I know nothing about superannuations, but are you vested from day 1?

    Great job on 50% savings rate!

    1. Dividends Down Under Post author

      Hey Jax, we really appreciate you coming to our blog and commenting 🙂

      It’s up to you and you want to track it 🙂 We’ll show both rates, one with and one without it to just cover all the bases. Explains what super is. It’s made up of mandatory (extra) 9.5% of our wage paid quarterly by our employer. You can also add extra if you want. We can’t access it until we’re in our 60s.

  9. Team CF

    Awesome, a +50% month for your savings rate. Sweet! It will help your overall yearly target quite a bit I assume? We have similar sort of contributions like the superannuations, but don’t count those towards our SR. It’s a bonus that we don’t count on having/getting. Call it our safety net.

    In our mind the SR should be what you have left each month to invest into assets. Take it for what it is worth.

    1. Dividends Down Under Post author

      Hey CF, thanks for your comment 🙂

      It does help our yearly target, we’re just trying to do the best we can. I agree with what you said, we don’t have access to it. But at the same time, a lot of people DO include it. So I think the fairest way is to have 2 different rates, one without super (what we can control) and another which includes super, as we are paid for it.

      1. Team CF

        Always do what you feel is best! We decided to just report one to avoid confusion. Need to make a list one of these days what is included in the Savings Rate.

        1. Dividends Down Under Post author

          Exactly right 🙂 It’s funny how we’re all finance bloggers but the same rate can be influenced by so many different things.

  10. Mr. PIE

    Nice progress on the savings front and cutting down the eating out stuff. Very cool you hit +50%.
    Like many above, we absolutely include our 401k in our savings reporting. We don’t include my company provided pension in net worth. But of course we do apply it in our SWR projections where it is a big piece of our future income in FIRE.

    1. Dividends Down Under Post author

      Hey Mr PIE thanks for commenting 🙂 We think it’s really cool we hit 50% too, it’s a great barrier to break through.

      That’s interesting you include your 401K. I think in the future we’ll show 2 savings rate – one with super included and one without it. We don’t count it towards when we can achieve FIRE though, because we can’t access until we’re in our 60s.

  11. Josh

    A 50% savings rate is awesome. When we pay off our house we will be able to hit that mark. Until then we have somewhere between 10 & 20% depending on the month & our variable income.

    1. Dividends Down Under Post author

      Hey Josh, thanks for your comment 🙂 We love that we’ve hit 50%+, it’s a great thing we did it. A lot of your house payment is going to paying off your debt, so it’s paying for your asset. At least you own your asset, eventually you’ll have paid it off and no more payments 🙂

  12. itpaysdividends

    Congrats on your first 50%+ month! Once you break that barrier for the first time it seems like it gets easier and easier! Our May wasn’t bad. Savings rate was down because we decided to take some of our short term cash savings and pay off our last car loan. Nice to be out of non-mortgage debt though!

    1. Dividends Down Under Post author

      Hey Thias, thank you! It’s a great feeling and I’m proud we achieved it. Nice job for getting rid of your extra debt, I think that’s a pretty good result if you ask me 🙂

    1. Dividends Down Under Post author

      Hey IH, thanks for your comment. I love your modesty, I appreciate you calling it a strong month when we’ve only just started and it’s tiny compared to some bloggers out there. Thanks buddy 🙂

  13. apathyends

    Great month! 3 paycheck months are the best!

    Like many have already said I include our 401k in our savings rate, and also the company match but also add the match to our income

    1. Dividends Down Under Post author

      Hey AE, thanks for commenting 🙂

      Definitely 3 paychecks are the best; I think that is what we’re going to show in the future too. A rate without super and a rate with super, that way we’re covering all angles.

  14. misterslm

    Canuck here, and I do include contributions to my rrsp and tfsa. Congrats on another great month!

  15. Chonce

    So much truth in this post! I believe it’s easier to save the more you earn. I try to achieve around a 50% savings rate, but for now it also include debt payments since I consider that future savings in terms of the interest I could be owing the the future if I weren’t aggressively trying to pay down my debt. I can’t wait until I’m debt free though so I can utilize other methods of saving like investing more.

    1. Dividends Down Under Post author

      Hey Chonce, thanks for coming to our blog and commenting, we really appreciate it 🙂

      Nice job saving around 50% of your income, I see where you’re coming from, you’re increasing your net worth – good luck paying off all your debt ASAP!

  16. Our Frugal Escapades

    Nice May guys! Our grocery bill went up also from trying to eat healthier. Mr. FE laughs at me because I REFUSE to increase our budget. Instead, I am trying to track down sale prices on produce and buy more in bulk.

    We do include our 401k match as part of our income when factoring in our savings rate

    1. Dividends Down Under Post author

      Hey FE, thanks for commenting 🙂

      Some things in life are worth the extra expense; eating healthily is definitely one of those things. Good on your just trying to find the best value, making your budget still work for you is good frugalness.

  17. Mr. Tightarse

    Great job on your savings rate!! Eating well is a great way to cut down on expenses but also improve health. I find it’s actually heaps of fun cooking up a new meal with Ms. Tightarse!

    I don’t/won’t be counting super in any regard really. My logic for this is that I plan on being financially independent well before I am able to access it and so it doesn’t contribute to the net worth I am able to draw on to live off. I think this is the main difference with our american counterparts, they can use the conversion ladder to access funds early and so it makes sense to count it in their financial independence calculations as it’s income producing money. This doesn’t even take into account all the potential regulatory changes in the next ~45 years before we can access it.

    1. Dividends Down Under Post author

      Thanks for commenting Mr T 🙂 We love cooking up some really healthy, yummy food – it’s great.

      I agree – we don’t count Super as part of our FI target, but I guess as Aussies we’re still earning it and technically saving it, even if we don’t have a choice. We’ll still report our normal income & expenses, but we’ll also have a rate with Super included too, just to cover both bases.

  18. Dividendsdownunder Post author

    Hey Mrs DN, thanks for commenting! 🙂 Thanks for for the congrats.

    Good point, we have no control over it. But we are still earning it so, I guess whatever works best for your counting your worth. I think we’ll show our normal savings rate and one with super included, so we’re showing both. Are you going to blog about your numbers?


    1. Mrs Dollar Notes

      We haven’t made that decision yet because many of our family members and friends know about the blog. But maybe it could be interesting for people to read. At least I enjoy reading real numbers because it is easier to relate.

  19. seattlegirluw

    I’d have to look over past posts to be sure, but I think I do include the IRA in our savings calculation. Because… it’s savings.

    Congrats on the savings rate — very impressive! Alas, we’re nowhere near that. Too many health-related expenses. Plus convenience tax is a recurring issue in our household. It’s something we’re working on, but when you both feel awful so often… It’s difficult.

    1. Dividends Down Under Post author

      Thanks for coming to our blog and commenting, we really appreciate it 🙂

      We’re really happy with our first ever 50% savings rate, let’s hope it’s not too long until the next one. I can understand why it’s very difficult for you guys, you just have to do the best with your own budget I guess, there are some bloggers that save 75%+, we’d love to do that, but it’s just not possible yet.

  20. Dividend Life

    Congrats on beating 50%! Hopefully it’ll be the first of many as your income increases and you keep expenses low.

    I don’t include pre-tax retirement payments or income or total retirement value as part of my reporting metrics. Many people do; it’s just a personal preference. I’d rather beat 50% the ‘hard-way’ even if I could show higher numbers from including pre-tax contributions or pre-tax income in accounts I can’t access..

    Keep in mind too that saving $1,000 pre-tax isn’t the same as saving $1,000 post-tax (it’s equivalent to saving $750 post-tax assuming a 25% rate). I think if you include pre-tax contributions, you’d need to use gross salary as a baseline.

    Best wishes,

    1. Dividends Down Under Post author

      Hey DL, thanks for coming to our blog and commenting 🙂

      Yeah, we definitely don’t plan on any lifestyle inflation – our expenses should stay around the same, except for kids.

      Thanks for explaining what you do. I think in the future we’ll have a normal savings rate (on a cash basis) and one that includes our super contributions (which adds it to our income and the extra savings rate, net of tax). That should cover both bases.

    1. Dividends Down Under Post author

      Hey MG, thanks for commenting 🙂 Yeah they’re great – it certainly helped our savings rate. We probably don’t have a chance of achieving 50% until our next 3 payday month.

  21. Graham Bell (@gbellddsc)

    Great savings rate!
    Spending always comes down to values.
    I use to be able to save between 35-50% every pay, but it’s dropped off tremendously since quitting the day job. Though, I was prepared to live on less and expected it. Eventually, I’m hoping the combination of blogging, freelancing, dividends, and trading start accumulating to more than the day job ever paid. Then I’ll be able to get back to savings rates like this and doing what I love. Impressive job and thanks for sharing:)

    1. Dividends Down Under Post author

      Thanks Graham 🙂 Yeah, we all have to maintain a certain level of basic spending to live, which we can just keep growing our income to match – no lifestyle inflation though.

  22. ThreeMillionDollarMission

    Now I see what you mean by savings rate! I have some work to do on that and we’re going to need it. We have some crazy life plans coming up that are going to challenge our finances and family for the next 7 years! To be announced and I’m looking forward to sharing with you. Great job man.

    1. Dividends Down Under Post author

      Hey TMDM, thanks for commenting 🙂

      You’re well on your way to becoming financially independent, I’m sure you’ll get there and I look forward to watching your journey.

  23. No More Waffles

    Congrats on getting to 50%! Huge number that not too many people can boast about. Keep it up and you’ll be rolling in cash before long.

    Best of luck over the coming months,

    1. Dividends Down Under Post author

      Hey NMW, really appreciate the comment and encouraging words 🙂

      Well lets hope we can get some pretty big numbers – you’re right that 50% is very difficult!

  24. Jef Miles

    Love this update & savings rate! 🙂
    Congrats on your May, mine was okay & you’ll have seen the update on MoneyGlee

    Looking forward to continuing to see you both grow..

    1. Dividends Down Under Post author

      Hey Jef,

      We loved the update too! I hope you keep seeing some good growth here, 50% will be difficult to match again for a while.

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