Looking Forward to 2019 – Financial Planning

Looking Forward to 2019 – Financial Planning

Posting my plans and goals for 2019 makes sense, after I reviewed the year of 2018 on Monday. I have been looking forward to 2019 for a few weeks already, budgeting and planning.

I will plan out my goals both conservatively and optimistically, to arrive at a range. Landing anywhere in that range would make me very happy.

Also, I decided to start posting actual numbers here to hopefully paint a better picture of the situation and the road to Fire The Boss.

Let’s see what we’ve got here!

Increase in Income

I have drafted a financial plan for 2019, with a lot of variables. I don’t like variables, but not everything is known in advance so we simply have to deal with them.

One of the unknowns is the increase in income. I’m still in the phase of my career where I expect my salary to increase, however nothing is certain.

One thing that is certain, is that my income tax will be slightly lower with our new tax plan. That means that I will increase my net salary a little bit even if my gross doesn’t increase.

The expected (net after taxes, company car, pre-tax retirement savings) salary range from conservative to optimistic will be 2,550-2700 euros per month.

Regarding bonuses I expect a 1,500-2,500 euro net bonus next year. Also my tax return will probably be around 1,000-1,500 euros. Next to that, I plan to earn at least 1,500 euros net from my side hustle, but targeting an optimistic 3,000 euros.

That means my total yearly net income will be in the range of 34,600-39,400 euros.



Expected Expenses

To continue the alliteration this paragraph is about the expected expenses!

I’ve done the budget for next year, and expect to spend around 1,700 per month on fixed costs such as the mortgage, but the number also includes discretionary spending such as vacations and clothes, and reservations for replacing my laptop and phone when the time comes.

This amounts to 20,400 in yearly spending.

The article with my detailed budget can be found here.

Savings Rate Goals

In 2018 I had a target savings rate of 40% and it’s still unclear whether I will make it or not. It depends on whether some costs fall in December or January I guess. It doesn’t really make sense (the costs are there anyway) but still it would be nice to hit that number.

For 2019, I will increase my goal by 1% to a massive 41% in the conservative plan, to a whopping 48.2% in the optimistic plan.

I will post two differently calculated savings rates in the future.

Saving Amount Goals

The above means that I have to save 14,200-19,000 euros next year and add them to my investment portfolio.

If that works, I will have gained an additional 2.4%-3.3% in financial independence (as calculated with a 3.5% withdrawal rate).

Whether my portfolio will actually increase by this amount is very uncertain and depends on a lot of outside factors. One of them is the stock market performance, and I don’t expect 2019 to be a fantastic year to be honest.

But who knows, nothing is certain!

Plans Never Work

No battle plan survives first contact with the enemy. There’s always an event that was not part of your contingency plans.

The same holds up for your financial planning. Anything can change everything. So while I think it’s good to plan for the future – it gives you a sense of where things are going – nothing is ever set in stone. I know I will not necessarily make this 41% savings rate work. But sure as hell I’m going to fight for it!

What does your financial plan for next year look like? 


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9 thoughts on “Looking Forward to 2019 – Financial Planning”

  1. It sounds like you have your expenses fully under control and are on track to achieve a great savings rate next year; almost 50%, nice!

    If I were you I would really focus on generating more income from your job, as it is hard to save more than you do without sacrificing quality of life. If I remember correctly what you do and that you are still quite young, this should be very possible.

    Keep educating yourself by reading great business or self development books (just finished Principles by Ray Dalio myself). Then find ways to add more value to your employer in the same amount of time, and negotiate that you get compensated properly for this!

    Adding another €10k net income per year will increase the amount of investable surplus by 50% to 70%! You just have to be careful not to inflate your lifestyle at the same time ????.

    My plan for next year is to invest at least €50k out of our combined €95k net income (€70k from me + €25k from my wife). Hopefully even a little bit more if we don’t spend too much on holidays and home improvement…

    • Hi Bart, thanks a lot for you comment! I sure am working on the income side of the equation. Here in NL I guess I could get my spending down another 1000 or 2 per year, but that will be it so my focus is on producing more income through my job and side hustle.

      Would you mind sharing what your job is, and in which country?

  2. Over 40% saving rate is very impressive. I also don’t expect much strength from the stock market next year (also no significant further decline), but this means that we can add further investments to the portfolio at lower base. Try to stick to your plan and you will be more than fine on a long term.

    Merry Xmas in advance!

  3. Looks like good plans B. Although a plan might not come true, it is always better to have one than to have none. It gives you direction to where you want to go.

    For 2019 I have not made a plan yet. Probably will post that coming week.

  4. Hey Fire The Boss,

    Thanks for sharing this. It’s an excellent idea to look at the upcoming year. While you are right there is always something that can change our plans, it’s good to at least have an idea of where you want to go. It’s also why I took your idea and implemented myself, hope you don’t mind ;).
    I’m really curious how, one year from now, things will have evolved and whether we reached our planned milestones or not.

    P.S.: I didn’t subscribe before but now that I read a few more posts and pages, you have a new follower. Keep it up and let us reach FIRE.

    Greetings,

    Mr.FightToFIRE

    • I am also curious as to how the plans pan out, but they should be doable right? Nothing’s better than a little challenge. It will make us better.
      Thanks for stopping by and the kind words. These comments are what make me happy to keep blogging!

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