Looking back at the year 2016 almost feels like it was two years long. I am not saying that it was boring, but a very busy year in terms of career, life planning, side hustling and trying to pick out some peaceful and enjoyable moment with people close to me along the way. Through, a hard juggling act the Progression towards “RodansOdyssey” was significant, and barring some issues out of my control could have been extraordinary. Lets see what happened.
To start things on a light note here is my most ridiculous expenses of 2016: An £80 hotel and £510 for a 1 hour flight quickly down the drain. Why? I had an 8am flight home for Christmas, meaning I had to stay in a hotel nearby the night before to make the flight. Alarm set for 5am and I was woken 8:05am by the room cleaner, Fantastic start! A quick last-minute booking of the last remaining seat that day and hundreds of pounds later the silly error was corrected and Christmas was enjoyed at home. : )
What were my 2016 Goals?
Firstly, what was I trying to achieve in 2016? I had set myself some financial goals, and in hindsight they were almost all focused on reducing expenses and not so much on increasing incomes, but too late for that now.
Back in 2015 I spent £23,382.30 but subtracting debt repayments and investments the real expenses were just below £16,000 and that figure formed the basis of many of the goals I set for 2016. I did focus on some key areas though which can be seen below and the results achieved in 2016.
|Category||Expense in 2015||Target Saving for 2016||Desired expense for 2016||RESULTS: Actual expense in 2016|
A reduction on 2015 but very small.
|Gym Membership||£408||£386||£0||£168.83 - WIN - Ok not £0 but a massive improvement.|
|Groceries||£2327||£527||£1800||£1836.3! WIN! I will show how in the near future.|
|Restaurants||£799||£150||£650||£998 - FAIL! Some meals out with family and friends put this way up this year.|
|Household Goods||£394||£200||£194||£28.15 - HUGE WIN!|
|Flights||£849.04||£300||£550||£1138 - : ( FAIL! Massive error on my part missing a major flight and booking another last minute. Woops.|
|Car Parking||£138.38||£50||£90||£54 - WIN|
|Total savings identified||£2213||Total reduction achieved.||£921 - PASS! *
*Mostly from other expenses than those above.
Some of the goals went very well, in particular Gym membership and Groceries and some disastrous – Flights. But overall I managed to reduce my expenses in 2016 by £921, just under 6% saving across the board.
How did I reduce Grocery expenses so much? In short, every month I put £150 (along with my partners £150) into an envelope and that was what we had to spend each month on grocery shopping. Pretty effective and simple.
Gym membership: I cancelled my membership early in 2016 (though I did have a 2 month notice period which was unfortunate. Following this I spent the majority of the year working out in the outdoors, running, single legs squats and I invested in a set of Olympic rings which I used a few times a week which were both fun and a fantastic workout. Below were my two favorite “Gyms” each one came with fresh air and a branch. Perfect.
Successful but not outstanding with regards to expenses then and not why I think the year was overall very successful so lets move on.
Income and Earning after Tax
Two goals, more and from more places. In 2015 I had all my income coming from my employer bar a small few pounds made here and there with referrals. This is always somewhat of a worry if all your income comes from one source, what if for any reason that stopped in the morning? You would go from all to nothing in an instant with nothing to fall back on.
In 2016 I spent a lot of time and effort on increasing my income streams through as many safe methods as possible. The results were fantastic in both increasing income and reducing my dependence on any one single source of income. Something which I want to continue through to 2017.
An income increase of £20,974 – having just wrote that down now it is the first time I have seen the level of the increase. Almost double my disposable income over 1 year. I knew it had been successful but never realised the extend of the increase. This is the major factor that made 2016 a successful year for me. Increasing income so significantly and managing to reduce expenses by £921 whilst doing so. Not sure I can repeat this in 2017 but I will try my best!
You know I love banging on about savings rate and why I think it is the most important indicator of progress. It works on the relationship between income and expenses right? Both of which I have identified above. But if you took either of these on their own you have zero context of progress. Ok, so I reduced my expenses by almost £1000 but what if my income had dropped by £2000 over that period? You would see a drop in savings rate. Or what if I showed off a huge increase on my income but never detailed that my expenses exploded to match everything I earn leaving me with a savings rate of 0%? It’s the butter between the two that we are after. So let’s have a look at 2015’s and 2016’s savings rates.
- Income: £22,692
- Expenses: £15,973
- Savings rate = (Income – Expenses) / (Income) = (22,692-15,973)/(22,692) = 29.6%
- Income: £43,666
- Expenses: £15,076
- Savings rate = (Income – Expenses) / (Income) = (43,666-15,076)/(43,666) = 65.5%
If you read my posts on Savings rates in the past you will be familiar with this infographic and maybe even the graph I have posted below which is free to download to play around with yourself.
I plugged my savings rate results from 2016 into the spreadsheet to see some predicted results and things are not looking to bad, approx 9 years would lead to financial independence at that current level of savings rate (but remember, that doesn’t mean I need to be increasing my income every year, just maintain the same relationship between expenses and income that I did in 2016)
Finally, for net worth. Obviously a good increased due to a 66% savings rate. Over 2016 this increased from £15,214 to £45,853 and marked the first (almost) full year without any debt.
So why near perfection? Well, there was a big fish that got away at the last-minute which would have bumped that savings rate up from 66% to 78%+ but no point dwelling on the past. It was a very successful year of progress and absolutely some big steps in the right direction.
Now, to hold myself accountable I better put some 2017 goals down on paper.
- Expenses: I have a major purchase coming up of approx £1500 so adding that to the expenses of 2016 I would like to hit a figure again of £16500 or less.
- Income: £45,000 – a slight increase on last year
- Savings rate: 60%+
I hope you all had a progressive year in 2016 and one last thought.
Rollo May – American psychologist as quoted in Think and Grow Rich : A Black Choice (1991) by Dennis Kimbro and Napoleon Hill, p. 104