Thursday, 27 April 2017

Tips and tricks

I started writing this in a longer format and it sounded terribly smug, so I'll provide the short version. If you're reading this, you'll have a good idea of what's what anyway;

Assumed income - I travel a fair amount with work so my pay is never static, always different with expenses. It's further skewed by the pension contributions and healthcare etc, so it's a bit all over the place. To this end I started assuming my actual pay was what it was prior to my last raise. This means there's always a little more at the end of the month to put in savings!

Net worth - really glad I started monitoring this. It's not like I've suddenly saved a load of money, but it really keeps the discipline on watching the pennies as I found I was tricking myself to the upside and didn't necessarily deserve the pats on the back I was giving myself.

Savings targets - If I take the free money my company gives me towards my pension as free money (not unreasonable) then my automatic savings rate is just under 50% pcm using post tax income. Having learned the sky doesn't fall in if you push yourself a little more I've bumped up the pension contributions to hit this level. Now I'll take a pause and even, whisper it, maybe treat myself with whatever is left!

Looking at it another way, I am automatically saving two and a half months of spending every month. So, say my average personal spend per month is £500 - lunches, the odd drink or night out, new tyres for my bike, take aways etc, I'm automatically saving £1,250pcm. It's not just going to cash, I wouldn't be able to call on the money that goes into pensions etc if I needed it, but it's a nice way to think about it!

It's clearly massaging the numbers for impact, but when I think back to where I was a few years ago, it's a massive difference and goes to show what can be done when you focus.

Tie the above together and hopefully the snowball will grow just that little bit quicker.

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