Before I share with you our June 2022 results, as I promised in July 2021, I’ll share with you what we’ve been up to the past month. After that, we can talk about the numbers.
What have we been up to this month?
Personal life positives
Wow, so many positive things to share in June! It was a great month.
June started with the Jubilee celebrations. There was an event in our local park, where you could play chess with huge pieces, get your photos taken professionally, and some other stalls and activities. As you can guess, we mainly played chess and took photos. We showed up early so my daughter and I helped them set the board up, here is my daughter proud of her work:
A few days later, my son flipped himself from lying on his stomach to lying on his back for the first time ever! We’re very proud of him.
We also did lots of fun activities as a family during June, like going to the zoo and making homemade pizzas. When I write these posts, I go over Google photos to remember what happened that month, it’s always fun and makes me appreciate my life.
Later into the month, we saw signs all over our neighbourhood that one of those temporary funfairs is coming to our local park. We went 3 times and our daughter absolutely loved it. She didn’t want to go on any rides on her first visit but once she went on once (on her second visit), she wanted to go on again and again, it was very cute.
I also had two mystery dines with friends this month. One of them had a brief that stated you had to get four different items. The (awesome) problem -all they served were large pizzas. As you can guess, we ordered four large pizzas for the two of us haha. We were only able to finish three of them so my friend took one home to his wife.
Just like (almost) every other month, we had family come over from Israel.
Lazy FI Mum’s mother came over and got to spend a lot of time with her grandkids. They all loved it, everyone had a great time. We also went for a day outside of London (to Hitchin).
My brother was supposed to have a connection flight in London for 1 hour. However, the dumb*ss missed his flight so had a free evening in London, we met up and it was great spending time with him. We headed straight to Brick Lane for some salt beef bagel and some catching up before he goes on to his next adventure.
Personal life negatives
The only negative is that our daughter got bitten twice by other kids in the nursery. I know it’s natural and it’s that age but still really annoying seeing a bruise on her arm for a few days.
Money related positives
Two clients paid me this month for Excel courses I taught earlier this year.
We also got another monetary gift from Lazy FI Mum’s family, you can read my feelings about this here.
In addition, we were able to pay into our son’s tax-free childcare account! Although it’s an expense, I’m very happy we have it all set up, as I love the 25% government top-up.
Finally, very happy to put this in the “positive” section- the money we gave to our family member has now been completely paid back.
Money related negatives
I really want to bang my head against the wall for having to STILL type the next sentence. WE’RE STILL (!) DELAYED WITH PURCHASING OUR SHARED-OWNERSHIP FLAT.
June 2022 results- savings rate
Our savings rate for June 2022 was 95.52%. I know it sounds too good to be true, it is. It’s almost all due to the money we got back from our family member. If we hadn’t gotten any money from our family member, our saving rate would have been 39.30%. Just like it messed up the May 2022 results, it’s messing up the June 2022 results as well, which is why I’m presenting both scenarios.
As a reminder, my long-term target is 40% with 50% being an ambitious target. However, with a new kid and maternity leave, my goal for 2022 is a third (33.33%) with 40% being the ambitious target. After this year, it will be back to 40% as the long-term goal.
As time goes by, I am more confident we can meet that “ambitious goal” of 40% and even, maybe, hopefully… hit 50% for the second year in a row, we’ll see.
Our (weighted) average savings rate for the past 6 months is 59.41%. Our 12-month-weighted average savings rate is 54.03%. Finally, our YTD (since January) weighted average savings rate is 59.41%. Just like the past 6 months because we’re in June so there have only been 6 months this year, hence the 2 rates are exactly the same.
This month, I don’t have to show the numbers “If we ignored the money we gave to our family member” like I did last month because it’s now paid back so has no effect. I showed the 2 scenarios as a heads-up for this month. I suspected we would be repaid and know that if that happened, we’d have a ridiculous (95.52%) savings rate. That’s because I treated this money as a “negative expense” to offset last month’s expense, I thought they should be categorised the same.
June 2022 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, 12-month, and YTD average figures to “smooth” the data.
Anyway, what was different this month?
A lot was different this month!
In short- childcare, tutoring income, and money from a family member
As you may remember, we contribute to our children’s tax-free childcare account once a quarter (every 3 months). This causes a huge fluctuation in our monthly savings rates. June was one of those months. Paying for childcare this month affected our savings rate and our June 2022 results.
As I said, I’m actually happy about this expense because it means the government can start paying some of my son’s future childcare costs.
Most of my clients pay 1-2 months after I finish the course so there’s usually a delay. I got paid by a couple of clients this month. This also helped the June 2022 results and the record-breaking savings rate.
June is actually pretty quiet from a tutoring perspec tive (July is very busy) so I don’t expect to be paid a lot in July.
Money from a family member
I’ve written enough about this above. We got paid back, it had a huge impact on our monthly numbers but no effect on our 6-month, 12-month, or YTD savings rates.
June 2022 results- Net worth
In June 2022, our net worth decreased by 0.35%. The 0.35% is made of two parts:
- Our actual savings increased our net worth by 2.22%
- Our investments went down in value (again), which decreased our net worth by 2.57%.
To be honest, we don’t get too excited about market increases or decreases. We’re in this for the long run and that’s why short-term fluctuations don’t bother us too much. We are patient.
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 June 2022, our net worth is 29.08% (May 2022: 29.35%) of that number.
Still below the 30% mark. It’s crazy to see how much we save and still very little movement in our real (inflation-adjusted) net worth. In November 2021, we were at 29.24%. Seven months later and we’re worse off.
“It’s OK Lazy FI Dad… breathe… you’re in it for the long-term… it’s OK… breathe…”
The 0.27% decrease in our FI journey (as a percentage of our FI number) from 29.35% to 29.08% means a real (inflation-adjusted) decrease of 0.93% (29.08 / 29.35 – 1)*, which can be broken down into these two parts:
- Our nominal net worth decreased by 0.35% as mentioned above.
- The CPIH index increased by 0.59%, which decreased our real (inflation-adjusted) net worth**.
As you can see, 2 factors are out of our control:
- The market performance (are our investments worth more or less this month?)
- Inflation (are things more expensive than last month?)
As these factors are out of our control- I tend to focus on the savings rate. A 95.52% savings rate is deceiving, so I prefer looking at the YTD savings rate. 59.41% is amazing! That’s with one child in childcare (and one which we started paying for) and with Lazy FI Mum being on maternity leave since March!
These numbers are incredible.
Oh, funny story before I forget:
On June 30th (just before I ran our numbers), Lazy FI Mum said to me “I feel like we’re spending too much lately, we’re not as disciplined as we used to be”. A few hours later, I ran the numbers and saw we saved 59.41% in the past 6 months. I’m OK with this kind of “out of control spending”.
When can we achieve FI (and possibly retire)?
As I told you last in the October 2021 results, calculating an FI date is not relevant for us anymore. We will move back to Israel sometime between December 2025 and June 2026. As my models are split into tax years, that means April 2026 is our relevant date.
Once we move back to Israel, I will either move to “just” teaching (no accounting) or try and keep my current job but part-time.
If anyone’s wondering if moving to Israel will help or hurt our FI journey, I present to you this article:
Tel Aviv named as world’s most expensive city to live in – BBC News.
No need to click the link, the title gives it away. Good luck to us.
In any case, we will not reach our full FI number by the time we move to Israel. Therefore, the only relevant question is…
How far into our journey to FI will we be by April 2026?
Based on my “regular” (which is more like a worst-case) scenario, we expect to be 48.88% FI by April 2026. We are getting further from the 50% mark, very frustrating.
As a reminder, this number is based on our UK level of expenses. I don’t know how expensive Israel will be. We’ll need to track our expenses for a few months there to get a better understanding. Also, I will have to learn all the little local tricks (like I learned in the UK) on how to save money, get free stuff, and reduce my tax bill.
The April 2026 model assumptions
My model assumes that only our ISAs, LISAs and pensions (essentially, our stock/equity investments) will generate an annual real return of 4%. Meanwhile, I assume our real estate and cash will retain their real value but not increase.
In addition, I assume no future income from teaching as I can’t reliably forecast how much I’ll earn from this side hustle. That means any future income from teaching will be treated as a pleasant surprise.
Another future income I ignore is my job’s annual bonus, Except for the 2022 bonus, which was paid back in May 2022. Just like teaching, any future bonus is not guaranteed. That means that if my employer has a bad year, the bonus can be 0%. My model assumes every year (from 2023 onwards) is such a year. Again, any bonus that does come through will be treated as a pleasant surprise.
I know these assumptions are very prudent but I prefer being prudent and positively surprised to “realistic” and having to deal with unforeseen issues.
Well, that’s our June 2022 results, have a great weekend everyone!
* You might get a slightly different number (by 0.01%,). That’s due to rounding. The numbers I share are the accurate ones, the equations are just so you understand the way I calculate the numbers.
**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.
I’d recommend using some graphics so readers, can follow along.
I get lost when you say June was boosted by a contribution to a child savings fund or by repayment of funds by a family member. The repayment isn’t income? And haven’t you saved up for the child savings fund and now its miving from an account to the plan?
I love to follow along but this numbers girl likes charts!
While I’m not a graph/chart person, I know many people are. I’ll try to incorporate some in the July 2022 results 🙂
Tax-free childcare is an expense, as soon as the money leaves our current account, I treat it as an expense.
I put it in the positives because I’m happy we finally set it up for our son, now we can enjoy an additional £2,000 per year from the government towards childcare.
The repayment by a family member isn’t income in my eyes but a “negative expense”. When I look at it from an annual perspective, I gave someone money and they gave it back, nothing really happened. That’s why the repayment went to the same place the original gift/loan went, to offset it. I hope that makes sense.