One of the reasons I was very pleased with how my January spending review turned out was because I experimented with living January the way I wanted 2018 to go. I didn’t do an uber frugal month. I socialised (frugally), did tons of sport and ate really well. I came in at £1696.24 – excluding support, debt and £135.23 of travel that was enabled by the side-hustle income that I made of £150. In a recent post, I reviewed a couple of other options that I could pursue other than early retirement because 6 weeks into the year and I’m not sure that I can keep my discretionary spending at the level that it needs to be to retire within the timeline that I desire. As a result, here’s the budget that I’m working with this year.
What does this mean for my expected savings rate?
If I excluded support and debt repayment from my budget (mostly because if I carry on supporting friends and/or family after this year, I’ll do so with money raised from side-hustling), then I’ll be spending £1, 642.95 a month on living expenses. Add in my current pension level of £216.67 a month (5% of my gross earnings) and I will hit a 52% savings rate for the year – 60% with the company match
Those pension and gross figures are based on my pre-promotion salary. I won’t know how much my net income will be until this next pay-day because
- I don’t get my new salary till then – it will be backdated to January 9th
- I no longer have the deduction for my bike from my salary so that might be an extra £30-40 coming my way per pay-slip
- I am going to owe taxes for last year – my personal (tax-free) allowance might be dropped from £11,450 to less than £6, 500. This would knock off around £132 per month from my current pay. I don’t know what it will mean for my new pay. It could knock off nearly £200 which means that I might not see much of a difference from my current salary
No matter what, I’m chuffed that I will have at least a 60% savings rate. This is only 4 percentage points shy of my goal of 64%.
Am I going to earn any extra money?
My travel plan right now includes the following trips that I’ve booked or must complete
- San Fransisco
- Long haul trip to Africa
- Summer festival
- Frugal Scotland holiday
There are planned trips to Poland, Montenegro and the Green Man festival in Wales that I need to figure out vacation days and/or money for. I hope to earn some money for these via my teaching gig, theatre job or some other freelance situation. I don’t know enough of how much I’ll earn or do with these so I haven’t included the income in my forecast. The maximum (net income) I think I could earn from each of these side-hustles based on the time I have available to work is:
- Teaching (6 workshops) – £540
- Freelance (1 5-day project) – £1, 350
- Theatre (1 day a month) – £372
That’s £2, 262. More realistically, given that I don’t appear to be able to work much before the end of April, I would earn an additional £1, 260 (net) for the year to supplement my travel budget and/or debt payoff.
It will be essential for me to hit my savings goals for this year. Regardless of what plan I have for my future – work-optional or flexible work schedule – I’m going to need to get into the habit of paying myself first. If I rein in my expenses, I could pay off more debt or complete my other trips. It would be awesome if I could also meet my target of £1, 642.95 a month for living expenses but since we know that I’m more spender than saver, I won’t hold my breath.