Before I share with you our August 2021 results, I promised you something in last month’s results. I promised I’ll share with you what we’ve been up to the past week/month. After that, we can talk about the numbers.
What have we been up to this week/month?
This month was all about family.
It started with the fact that Lazy FI Grandma was here for the first week of august (and the end of July). We always enjoy her visits and she will be back in September. This is for any of you who think that moving continents means no mother in law haha.
August ended with my brother and his girlfriend coming over from Israel and staying with us. It was a great visit (from our perspective at least) and we spent a lot of time outdoors with them. We even went back to Epping Forest, which I love (and so does our daughter).
We also went to a wedding. I was a bit scared of taking our 1-year-old daughter to a wedding ceremony. However, as always- she amazed me. She was so good, she sat (almost) quietly and was really interested in the ceremony.
I also took our daughter on a “date”. Our dates comprise of a visit to the Discover story centre and a Nando’s. I love taking her to Nando’s. She sits in a high chair, feeling all grown up, drinking water from a glass through a straw and eating sweet potatoes and chicken. The fact that she’s better behaved than me is also a plus.
Now, to the less positive part of this month. It’s hard for me to call this part “negatives” as I’m very fortunate. I have a well-paid job that I quite enjoy and that has a great work-life balance.
However, this month was a bit less fun.
My employer has decided it’s time to (partly) go back to the office. We’re looking at 2-3 days a week. I won’t lie, these are days I don’t really enjoy. I understand the importance of meeting colleagues face-to-face, I really do. However, these are days in which I spend significantly less time with my daughter than usual, mainly because of the long commute. My motivation to achieve FI is through the roof, in case you were wondering.
Speaking of FI, let’s see how our August 2021 results look like.
August 2021 results- savings rate
Our savings rate for August 2021 was 52.52%. As a reminder, my long term target is 40% with 50% being an ambitious target.
Our (weighted) average savings rate for the past 6 months is 51.75%. As March 2021 resulted in a negative (!) savings rate, next month will (finally) not include that month. This should result in a much higher 6-month-weighted-average savings rate. Our 12-month-weighted average savings rate is 51.98% (phew).
All three (monthly, 6-month and 12-month) savings rates are above 50%, I’m very happy with that.
August 2021 results- What was different this month?
Every month something unusual happens. Sometimes it’s a one-off expense and sometimes it’s a one-off income. The fact that this happens every single month amuses me but also makes it harder to analyse the savings rate and draw conclusions. That’s why I also use the 6-month (and 12-month) average figure to “smooth” the data.
Anyway, what was different this month?
Quite a lot actually.
As usual, having guests over increases the costs a bit (totally worth it!). It can be the grocery bill, eating out a little more and also commuting. We go out a lot more when we have family over, this results in much higher use of public transport. Add some “back to the office” to the mix and you have quite a big increase in that category. Funny enough, when I look at the actuals all 3 categories (transport, groceries and going/eating out) went down. That’s because we had guests last month too. It seems like we spent more money with them, weird!
A category that improved our results is “Mystery dining”, which you can read more about in the post I wrote about it. I finally got reimbursed for dines I had in July 2021. This resulted in a “negative expense” in that category.
Also, the family member paid us back for the money transferred in July 2021. As I included the money transfer as an expense in July, I treated it as a “negative” expense in August 2021. That was a big one.
Another one is that I finally contributed to my LISA, which resulted in a government bonus. I treat the bonus as income.
We also made our quarterly contribution to our daughter’s tax-free childcare account. I think tax-free childcare is one of the biggest and easiest ways for parents to cut expenses. That’s why I wrote a post about it. If you have kids who go to childcare and you don’t know what tax-free childcare is, read this! it can save you £2,000 a year with minimal effort.
August 2021 results- Net worth
In August 2021, our net worth increased by 3.88%. The 3.88% is made of 2 parts:
- Our actual savings increased our net worth by 1.34%
- Our investments went up in value, which increased our net worth by 2.54%
This month, no rounding differences.
Mr Market once again shows us who’s the boss. The more we invest, the more power he will have over our finances.
During August 2021, Mr Market not only increased our net worth more than we did (our savings), he also earned more than us (our income)!
Achieving FI– how far are we into our journey?
Reminder: I set our FI number (how much we need to retire) in July 2020 and update it every month for inflation (I use CPIH* index).
At the end of August 2021, our net worth is 28.32% (July 2021:27.26%) of that number.
As there was no inflation increase this month, the real and nominal increases are the same. Both our real and our nominal net worths increased by 3.88%
As you can see, 3 factors aren’t in our control:
- The market performance (are our investments worth more or less this month?)
- FX rate (are our Israeli Shekels worth more pounds or less compared to last month?)
- Inflation (are things more expensive than last month?)
When can we achieve FI (and possibly retire)?
Based on my current calculations, I and Lazy FI Mum should both be able to retire in 2030/2031 if we wish to. This is the same result as last month. I only look at full (tax, April-April) years so it takes a lot to move a full year.
However, I now 2 run more calculations each month:
What if we only pay our mortgage, contribute to our pensions and max our LISAs (no other savings or investments)?
Well, this will push our date back to 2031/2032, 1 year back. Same as last month.
What if we don’t even contribute to our LISAs and just pay our mortgage and keep our pension contributions?
This will push us back by 2 more years to 2033/2034. Again, same as last month.
I’m still happy with these results. They mean that I will be able to reach FI at the age of 46 even if we reduce our investments significantly.
Well, that’s our August 2021 results, have a great weekend everyone!
*CPIH- “Consumer Price Inflation including owner-occupiers’ Housing costs”. As we are consumers and we do, partly, own our home- I think this is the best inflation metric for us. You can see the changes in the index here.