Author: Mr and Mrs DDU.
We are big fans of numbers and analysing things, so we wanted to have a closer look at how our finances went during the year.
2017 Savings Rate
This is calculating our income (after tax) minus our expenses for the entire year. It doesn’t include any superannuation guarantee payments in the below percentages and amounts.
Total income after tax: $91,587.77
Total expenses: $51,948.21
Total savings: $39,639.56
2017 Savings Rate: 43.3%
Here’s the graph:
The graph hints at the improvement, but here’s the clear numbers:
2016 Savings Rate: 18.3%
2017 Savings Rate: 43.3%
Amount saved in 2016: $9,070.45
Amount saved in 2017: $39,639.56
We are very pleased and happy with the improvement. The savings rate improvement is proof that we’re not letting our extra income fully turn into lifestyle inflation. We managed to save more than 50% of our income in 5 months and also had a 49% rate in another month.
In any budget, $30,000 is a lot to save. We put more than half of it into shares but we also saved some into our house fund, emergency fund and IVF #2 fund.
Dividends & Investments
Dividends are the key financial statistic that we want to build. Why? One day we want to be financially free, where our expenses are completely covered by our investment income. At that point, we could decide to retire and not work again. If our investment income grows faster than inflation, retirement could get better as the years go by.
We aren’t just buying shares with the highest dividend yield. We’re buying businesses we think offer very sustainable, growing dividends over the long term. We aren’t trying to be perfect investors, but investing in what suits us the most.
Our investment income in the first few years will be fairly small, but we have to start somewhere and grow it. Compounding is an unstoppable force when it gets going and we’re going to put it to work as much as we can.
So how did we do during 2017?
We received a total of $877.14 during 2017, which is an average of $73.10 per month.
The dividends aren’t a lot yet, but they are adding up to something. The dividends amounted to 1.7% of our expenses, hopefully the percentage rapidly increases.
Let’s compare 2016 and 2017:
2016 Dividends: $414.47
2017 Dividends: $877.14
Improvement in dollars: $462.67
Improvement in percentage: 111.6%
How did we achieve this huge growth?
Some of it was down to good dividend growth from our investments, but a large factor was the amount of money we invested. We added $18,193 to our portfolio, which was an average of $1,516 each month.
We only invested $2,800 in total during 2016, so we increased our annual investment by $15,393.
We invested that money into 21 different shares, we’ve made our portfolio more diverse and we’d like to think better performing.
Perhaps it could be worth analysing our share performance in another post.
This year has been the best year for us by far. We have Baby DDU in our lives and our finances have had a great year. If we can replicate this performance next year we’ll have another great year, but as always we’ll look to do even better. Our 2018 goals post is coming next.