Its been a while since I did a savings goal update, so I thought it would be a good idea to do one now.
Since debt freedom in Dec 2015, my husband and I set out to save and invest for the future with every paycheque….no matter what. We splurged our last paycheque in December of that year and starting fresh in January 2016.
How we are tracking things differently from last update?
In my previous savings update last year, I would track all savings goals, even those for planned spending. This included things like vacation fund, baby fund etc. I am taking a different approach moving forward and only tracking long-term savings goals (i.e. retirement, emergency fund). This removes a lot of the unnecessary fluctuations in amounts for these planned spending accounts as we deplete them. At the time, I took this approach because we just starting our savings journey, and we wanted to stay motivated.
Where we focused our efforts in 2017?
Our biggest focus this year was beefing up our individual Tax-Free Savings Accounts (TFSA) and investing these monies in self-directed mutual funds with low MERs and commission fees. We started the first half of 2017 with a savings rate of 30% (take-home pay) for take home pay and 50% for windfall income like bonuses and tax refund. In July, we brought this number down to 25% to account for an increase in household expenses. Starting September, this rate will go down to 15% until the end of the year. This is to accommodate our final trip of the year to Tanzania for 22 days in December. Luckily, we have relatives back home to stay with, but we will be covering all our expenses for flights, activities etc. Its wedding season back home, so we expect to go to lots of wedding and have fun.
Our second biggest focus was to make sure we continue funding our critical illness account. One of the first things we did after debt freedom was to purchase term like insurance for both of us (no particular reason why we did it this way- mostly because we didn’t have any month before). Our premiums for a $700k policy for each of us was $104/combined per month. We also looked at the premium numbers for critical illness insurance to see if that would be a viable option and after some research and analysis, we opted to self insure for CI at $146/month. This money is invested in a joint unregistered investment account.
Our final focus was to continue paying into our retirement matched savings plan with our employers at 5% each paycheque. We have been fortunate enough that both our employers match our contributions so this has helped our goal as well.
My husband’s employer offers defined contributions plans, profit sharing and share ownership enrolment based on different employment criteria like salary, years of service etc. These monies would get paid out as part of his pension, but because that is decades from now, it is hard to figure out what the current market value for that is now, so I don’t bother. We will consider this pay as a bonus, over and above what we are saving now.
Where we are at:
|Emergency fund (GIC/CD laddering strategy)||$11,700.00|
|RRSP- combined (invested)||$19,224.00|
|TFSA- combined (invested)||$28,618.00|
|Critical illness (invested)||$ 2,638.00|
From nearly $0 to $62k in a year and 8 months has been something. This figure is net of all debts. I can’t believe we managed to do this given all the expenses we have incurred in 2017 and the trips we have taken so far, this year. This is probably a small number for some of you, but coming from a negative net worth of $120,000 4 years ago, to this has been amazing for us. Side hustle income and bonuses helped and I hope we can continue our momentum to the end of the year.
Our goal to finish off 2017 is $65,000!
Do you have a financial goal you are trying reach by the end of the year? What were some successes and failures you would like to share?