It has become my habit to spend some time at the end of every year on what I call my life audit. This process helps me track my contentment, think through my goals and track my progress. Let me show you how I went about this for the year 2023.
MY LIFE AUDIT APPROACH
For the purpose of my annual life audit I have dedicated a simple notebook, as I find writing things down by hand works for me. I look back at my goals for the past year and write down MY ACHIEVEMENTS, everything that went well, be it planned or not. Over time, I ended up categorizing my achievements into 7 buckets:
- Finance
- Travel
- Career
- Volunteering
- Family & Friends
- Contentment
- Health & Wellbeing
After this reflection on what I achieved the previous year, I follow this up by writing up MY GOALS for next year in the form of simple bullet points, to keep my ideas clear and concise. I might end up updating the Goals as the year progresses.
Once I have a good idea of my goals for the upcoming year, I draft a simple MONTHLY CALENDAR with 12 boxes dedicated to 12 months of the year. Then I highlight the main activities and milestones to be accomplished in each month. This visualization helps to create a rough plan for the year ahead and also keeps me on track.
MY SITUATION
I am currently in my late thirties. Leading a comfortable single life, I do not need to think of securing anyone else besides my aging parents in the future.
Mostly working from home and on occasion remotely, making use of the “short-term work from anywhere” policy my company offers. Luckily, my role allows for a flexible schedule and location, which was a dream of mine since I started working.
Although living fairly comfortably, I have some bucket list dreams to accomplish and for that reason I started to be more intentional about planning my future.
GOALS
In 2023, I set several goals for myself:
- I want to regularly measure how much I save each month.
- The plan was to save or invest at least 20% of my monthly income.
- And to increase my income by getting a promotion and a salary increase.
- Learn about a variety of potential new income streams to determine the best option for me to pursue.
Here is the evaluation:
I am happy to report, I was able to save or invest 23% of my monthly income! Slightly above my expectation and set goal for the year. The key to achieving this for me as a person who used to live from paycheck to paycheck, was automating my payments to my savings accounts, pension fund and investment fund. The money left my bank account a few days after payday, getting my brain into a habit of not counting with this amount for my regular spending.
In March, my effort to get a promotion and salary increase paid off! You can read more about my approach to moving forward in my career and increasing income.
It took some networking and patience, but I was able to grow my career and with it my income rose by 12%, moving my salary above average in my field, taking into consideration my location, but also well above average salary in my country overall. This, in turn, allowed me to increase the amounts that went into my savings and investments, although the savings rate remained around 20%.
I started building up my savings and investments fairly late, in 2020, when I was in my thirties already. Previously, I was able to save, but most of my savings went into traveling and other experiences. Therefore I am at the beginning of my personal finance management journey, learning what works for me.
In 2023 as I started to track my spending in more detail, I realized I am leaking money I could be saving or investing in some surprising areas – eating out (restaurants, bars) and presents (where I spent about 2x as much as I thought!). There is certainly much room for improvement in 2024.
Goals for 2024
And now about my goals for this year. Honestly, I am very happy seeing my slow and steady progress to improving my personal finance skills. My savings and investments are slowly growing. I am enjoying the journey and can say I am on the right track to living a less stressful life.
My goals for this year are:
- To maximize my income by negotiating a salary rise and building an additional income stream.
- I want to increase my savings rate to 40% of my income.
- Determine my comfortable lifestyle level to avoid lifestyle inflation.
- Finish saving the mortgage down payment amount for future house purchase.
- Build a blog that is authentic, helpful, adds value to the audience while it’s also capable of generating some income.
- Finish building up my emergency fund to cover 3 months of no income.
- Follow the “low spend” year initiative, to help accelerate my saving for an emergency fund.
It is more of a long-term goal to buy my own place in the next 2-3 years. The local real estate market situation is not the most favorable at the moment, and as my rent is very low, it is more beneficial to rent than to buy now.
SAVINGS RATE
My savings rate in the past used to be around 10% of my income. Not much, but at least it was a start. I am proud to have managed to increase my savings rate to above 20% for the whole of 2023, finally seeing some good results and the first slight hints of the power of compounding interest!
In January 2024, I increased by savings rate to 40% split like this:
- 10% of my income goes into a dynamic pension fund. That includes my employer’s and government’s contributions. I opted for a more aggressive amount here as I started fairly late. It is quite profitable in my case, as over the past 2.5 years the contributions and fund earnings made 40% of the overall amount.
- 12% goes to my housing savings account. I have not yet made the decision to buy a house, but this money could also be used to renovate a flat.
- 5% goes into an investment fund (stocks).
- 12% is being used to build my emergency fund.
- 1% buying investment gold coins. To provide me with an alternative payment method in case of crisis.
How much do YOU save?
IN SUMMARY
I haven’t used to be a person with a clear vision for the future. I knew pretty well what I DIDN’T want for myself and that was driving my decisions in the past. However, with the structure I put into place – my annual life audit exercise, personal finance tracking and starting this blog focusing on self improvement topics – the vision and my goals became clearer.
My mindset is slowly changing towards being a more proactive driver of my own life. Spending time on figuring out my individual purpose using the simple self reflection excercises mentioned in this post helped to move things along.
Despite not so high of an income, I have been able to save a solid amount in the past 3 years and I now know what’s possible.
One of my long-term goals is now to achieve financial independence – in my eyes this means being able to afford my current comfortable lifestyle without being tied to a need for employment. I believe I can achieve this in about 15 years from now, with a sustainable strategy combining increasing my income gradually, building good investments and keeping my “unnecessary” spending low.
What will be next? We will see. I am curious to see what kind of change publishing a blog will bring. I have room to grow!
Enjoy the year of 2024 and look forward to a new blog posts soon!
If you are interested in anything, you can find my at twitter, pinterest or using the contact form to send me a message.
Thanks for reading and good luck with your own growth journey!
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