How to Count it #2 – Savings ratio and our historical figures

I am kind of passionate about high-level savings ratio. I do each month check of my net worth growth vs my income – just to see what I do really spend. Not in detail and I do not differentiate between P/L view and Cash-flow view.

So I went back to 2006 when I started to work – my first real job was financial advisor and then by the end of the year I went to full-time job to brokerage firm.

What is also important to mention – we are with my current wife almost 15 years together and have all the finances together. So I do consider both incomes as relevant.

Here comes the story:
– 2006 – got EUR 2.000 from my grandpa as starting capital + earned first money in full-time jobs (I had many part-time jobs since 2002 (I was 15 by then), but I do not consider them as an important income. My wife (then girlfriend) got app. eur 14.000 from her grandpa – to start living with me together. These were the last money we got from our families. Good for us!
– 2007 – earned almost EUR 10.000, good money for me, my girlfriend had couple of part-time jobs, but nothing significant…
– 2008 – our former CEO was very proactive and thought the crisis is coming, so I fortunately survived the firing months (30% employees were fired). Net income EUR 13.000
– 2009 – good year, got promoted, better income, we had good times (started to relatively travel a lot) – EUR 21.000
– 2010 – became expat in Austria by the end of the year and started to gain relatively nice income. Altogether EUR 24.000
– 2011 – it was difficult to travel all the time between Vienna and Prague, but I enjoyed the better parts of it – understanding different cultures, travelling a lot, investing a lot and enjoying new friends – earned EUR 32.000. And purchased our house where do we still live!
– 2012 – more or less the same year as the previous once. Except – I started MBA in 2011 and most costs have been associated with it this year, so I had extra costs this year (but they are not visible here, I did not calculate them by that time). And by the end of the year I returned back to Prague. Finally logged EUR 34.000
– 2013 – that was a drop. We did not get any bonus and I decided to leave the company, which happened later. So final income “bill” was EUR 27.000. But my wife started to work full-time, so that helped.
– 2014 – getting better. New job, all school debts paid down, better income and full bonuses. Plus my wife worked whole year, so we added around EUR 48.000.
– 2015 – great year thanks to my wife who earned better than in previous year. And we engaged, finally! 🙂 Total income: EUR 56.000
– 2016 – slightly worse, but does not matter. It will get better! EUR 50.000
– 2017 – yuuha! Got new job by the end of 2016 and that is visible on income. But my wife went to maternity leave (our first son, yes!!!), so she lost some of her income (but received support from state) – We made around EUR 54.000.
– 2018 – the strongest one. Got dream job(s), wife received also some support so we gained EUR 69.000
– 2019 till end of May – if everything stays as planned, we may finish this year even better than the previous one. Despite my wife does not get any child support anymore (we used accelerated scheme to get it all over 10 months), I managed to got a bit better at my job. So by the end of may we are on around EUR 43.000. Below in histogram.

This was just a very brief description, I do not see any big value in going deeper with that. What I want to measure this figures with is our accumulated wealth. I started to calculate it in mid 2015 (actually once we engaged and we said we want to have good overview of our financial situation). On one hand I measure accumulated income (theoretical value, just summing up what we historically earned) and on the other our net worth. There we go:

The good thing is that despite growing income we did not let our costs drive that much higher. I would not say they did not grow, but definitely not that dramatically as income. Second added value is passive income – that one is part of accumulated in net worth, but not visible in my income (I share really only what we earned as active income). It is clearly visible on the last histogram:

I measure here the ration between accumulated wealth and accumulated income. Long-term wise if we save as we do now, this ration should be even over 100% (passive income has to help). It is a pity that I do not measure all the stuff from 2006, because it would be visible that we really did not save so much. On the other hand, we did not start saving extremely more, we simply earn significantly more and keep our costs normal. Probably the best way towards FI! 🙂

Categories: how to count it

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