Aiming To Save 50% Of Our Income – 4 Years On

I recently shared a post on Facebook about how I’m aiming to save 50% of our income. It was a post all about our savings rate and what we would need to do regularly so that we could retire early, which is the overall dream. However, someone commented on that post asked if I could do an updated version, as that post is now four years (!) old and if anything had changed in the mean time. So, here we are!

 

Are we still aiming to save 50% of our income? 

 

In an ideal world, yes I would be. However, circumstances have changed significantly since I wrote that post back in May 2015, so I’m going to update it with our ideas and have a look at what we have achieved.

 

So, the most obvious thing that has changed in that time frame is that we have transitioned from being a married couple of two to a family of four with two young children. That of course comes with additional expenses which definitely has a tendency to drain resources. Some months, both boys hardly cost us anything and other months they seem to cost a fortune! When I wrote that original post about saving 50%, I was pregnant with our first child so knew changes were ahead 🙂

 

Secondly, as a direct result of now having two children, I now work part time instead of full time, as before. This is a personal choice and one that I made but it isn’t without sacrifice. The biggest one being that I have taken a big pay cut, as I now work three days a week instead of five. Obviously, this then has a big impact on our household income level, which wasn’t that much to begin with! However, this is something I definitely wouldn’t change, not for all the money in the world. I love being able to take Alfie to school and have time with Charlie. They’re not little for long so I’m ok with this choice.

 

We also have had a big extension done on our house. If you’re new around here, then for four months this year we lived through a big extension, which included a brand new kitchen diner downstairs and two more bedrooms upstairs. This was obviously a massive expense that we definitely didn’t have planned when I originally wrote about saving 50% of our income. It has been worth every penny and I love the new space, but it definitely came at a (big) cost.

 

Bearing in mind that I want to save 50% of our income, I thought I would look at the savings + overpayment rates for the first 8 months of 2019. I’m including both numbers as they are both helping us to work towards our dream of retiring early. The numbers look like this:

 

So the average over the last 8 months works out at £749.20. Now, if I work that out in relation to our household income, it is around 30%, which is a long way off 50%! In fact, when I work out what the numbers would need to be for that to equal 50%, it seems impossible.

 

There are two reasons why this is:

• we don’t earn enough. Put simply, in order to consistently hit 50%, we would have to earn more. There is no other way around that! For reasons above, we have definitely made this a choice at this stage. I am happy with that decision.
• we can’t cut our budget much further. We have trimmed our budget so that it consists of the basics and not much else. There is nothing much we could reduce/cut in our budget without making an impact on our lives. I don’t feel like we spend that much! We could always cut down I suppose, but not really anything significant in the long term.

So, the only way we would hit 50% as a consist savings/OP rate, I would have to bring in a lot more self employed income than I currently do. A lot more. I am trying, but it is slow. Hopefully when the dividend income begins to make a bigger impact on our savings (which it is beginning to – I’m track to receive £1,000 in dividends this year!) then the savings rate will not be quite so urgent.

 

So, for now we will continue to plod along and try our best, as that’s all we can do 🙂

 

Do you track your savings rate? What are you managing to do each month? I’d love to hear from you!

 

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