#40 Anticipating Financial Circumstance Changes

One of the things I'm concerned about is that as we get more money, either by paying off debt or salary increases, the additional available money is just absorbed.

For example 2 months ago I paid off my student loan. This was £330 per month. However, in the following 2 months we've not saved a penny.

Further example is that 2 years ago I was earning £51500. That is nearly £18k less than what I earn now. However, we have no savings to show for it. Granted the priority in this time has been paying down debt and we have achieved that.

So my plan is to plan and as soon as additional income comes available have a decision already made to automatically move that money each month so it's not missed.

Upcoming changes in circumstances.

1. Potential pay rise eta March / April 2017
1. Roughly £50 per month
2. Bonus eta March/April 2017
1. Roughly £3000
3. Tax code change eta May 2017
1. Roughly £100 per month
4. Paid off Credit Card eta Sept 2017
1. £50 per month
5. Paid off House Loan eta Sept 2018
1. £281 per month

Options for what to do?

1. Cash savings.
2. Stocks and Shares ISA.
3. Pay off mortgage.
4. Treat.

If I commit 

1. Any additional pay rise income to go into Stocks and Shares ISA. We've proved that we dont store cash very well so will use monthly surplus to top up cash savings.
2. Commit to split the bonus in 3. One third to cash savings, one third to S&S ISA and one third towards treat for the wife and family.
3. Commit to adding tax code changes to S&S ISA.
4. Credit card re-payments can be used for cash savings.
5. House loan is too far in the future to consider now.

What I'm interested in is increasing the monthly amount I save into the S&S Isa.

Currently this is £50, starting 2nd Nov.

With pay rise and tax code change additional income this should increase to £200 per month by the summer of 2017, as well as a one-off bonus amount.

I have started considering what my 2017 goals are likely to be. It's early but I'm excited as it'll be the first year where the focus is turning to wealth accumulation rather than debt repayment. With £400 already invested in PPBF shares the aim should be completing 2017 with around £2.5k held in stocks and shares, with a further £1.2k invested in my company share save scheme.

#39 Where Does My Money Go?

I'm interested in seeing a breakdown of where my money goes and crucially how much % of my gross pay am I actually saving.

Gross Pay	$5,750.83
Tax	$1,495.47	26%
National Ins	$384.44	7%
Season Ticket For Commuting	$274.67	5%
Childcare Vouchers	$124.00	2%
Fixed Spending	$1,302.81	23%
Variable Spending	$1,020.00	18%
Debt repayment	$331.65	6%
Pension Payments	$287.54	5%
Fidelity World Tracker Fund	$50.00	1%
Expected Savings Per Month	480.25	8%
	Overall Total	100%

This is based on my monthly budget, which as we know I've only stuck too once so far in over a year. Therefore the 8% expected savings per month can be ignored.

Using gross is interesting as I can see the amount of tax paid etc however as this cannot be changed it doesn't provide a fair reflection upon how much of money which could be saved in theory is being saved.

Therefore, here are the net figures...

I have added the net pension cost to me to the net pay to enable a 100% view of the book;

Net Pay + Pension Net Contribution	3,351.48
Fixed Spending	$1,302.81	39%
Variable Spending	$1,020.00	30%
Debt repayment	$331.65	10%
Pension Payments	$166.77	5%
Fidelity World Tracker Fund	$50.00	1%
Expected Savings Per Month	480.25	14%
	Total	100%

Disappointingly the amount of my available pay being saved is exactly the same = 6%.

If we stuck to the budget this could be increased by 14% to 20%.

Once debts are re-paid this can be increased by a further 10% to 30%.

What concerns me most is that over the last 18 months~ we have only stuck to budget once.

What that means is that excluding my pension which can only be accessed at age 55 we're only actually saving 1% of my take home pay.

That is ridiculously absurdly low.

 According to this chart referenced by Mr Money Mustache  this means I'll retire in 98.9 years. Great.

Therefore, priority has to be increasing the savings rate by sticking to the monthly budget, paying down the debt and increasing the automated savings each month rather than rely on cash savings.

When it comes to 2017 aims for the year I think this will need to one of the key drivers. Replacing the debt repayments with direct debits into savings to increase our savings % to 16%.