It’s that time of the year again where you may want look back to see what has changed in your life. 2017 passed by so rapidly. Only 2 nights are left before we jump right into 2018.
If you haven’t created your goals for 2018, you can check out this post to learn more about efficient goal setting.
Today, I take the chance to show you what made my year 2017 awesome. I will only reflect the last 12 months from a financial perspective but for sure there were great events outside of my finances like my bachelor degree and the long holidays during the summer months with Mrs. Budget.
Reflection is a very important step to reach your goals. With reflection, you can easily see what worked in the past and continue to do so but you are also able to see flaws in the process and improve if necessary. In general, you can learn a lot through reflection.
With that said, I have split the post into two sections.
Let’s dive in.
What made my year 2017 awesome
1. If found an investing strategy that fits my personality
First, I want to start with investing and the strategy I use. This happened during the last months of the year and really changed my life! At the beginning, I’ve started investing in index funds but it just didn’t work out for me that good. I think the main issue was that it was to ‘average’ for me. Don’t get me wrong, I still think index funds are the best investment strategy for 80% of the people because it doesn’t include much of an evaluation and it is minimal work to do. However, I like to dive deep into topics and geek around about them.
I don’t have hobbies, I have occupations. When I do something, I really want to know a lot about it. I’ve read 3 books about the investing strategy since and I will add more to that list.
Everything started as I stumbled upon this great blog about dividend growth investing (DGI). From that point on, I was hooked and this month, I’ve bought my first DGI stocks.
I really like the fact, that they are relatively safe and (for me) easy to evaluate. It’s hard to find good stocks right now that are not overvalued. However, I still think the dividend income from these stocks will take care of any emotions that could hurt my long-term investing goals (a market crash, etc.).
Note: If you want to learn more about dividend investing, check out the section in the navigation bar or start by reading this post. If you are like me and like to read books, then one of these 3 is a good starting point:
- Get Rich with Dividends by Marc Lichtenfeld. My favorite book on that topic with an easy-to-use system.
- Dividend Growth Machine by Nathan Winklepleck. A very short read, but covers the basics of DGI.
- The Single Best Investment by Lowell Miller. A very detailed book that covers everything you need to know.
2. I nearly doubled my net worth goal for 2017!
My goal was owning 4,500€ by the end of the year and I will probably have more than 8,500€! This was caused by several things. First of all, I did pretty well this year and with my new working student job for a big German car manufacturer, I was able to increase my income and I kept my expenses low.
Sadly, another reason was the fact that Mrs. Budget and I have not found an apartment so we couldn’t move together. This was initially planned as another expenditure for September 2017. It’s very hard for the two of use to find a home where we don’t overpay. The real estate market is crazy in Germany and we have to compete with about 150 other applicants on every apartment we are interested in. It’s even harder for us because we don’t have a permanent position and we own a dog.
However, I think at the beginning of 2018 we will be able to find a new home and this net worth is a good starting point for 2018.
3. I increased my investments to nearly 2,000€ in 2017
I’ve started from less than 700€ in 2016 and went all the way to 2,000€ by contributing 100€ each and every month. I failed on several things in my first investing year and you can read more about it here but I constantly moved the money from my bank account to my investing cash account. At the end of the year, I’ve waited to collect more than 750€ to buy my first DGI stocks. My goal for this year was 1,800€ in my depot and I was able to achieve this goal in this month!
4. My savings accounts received enough money to meet my lifestyle
Maybe you have heard that I have purchased the iPhone X recently. If not, make sure you check out this post. I was just able to do this (with my low salary as a working student) without using 0% financing or taking a loan by saving the money upfront for this purchase. It turned out perfectly as I had enough money in October to buy it.
I also wanted to increase my savings account for our wedding to 900€ and I’ve reached 913€ in December. My holidays were paid by money that I’ve saved before and I have already taken aside 1,100€ for a deposit on our apartment. After all, it just works out perfectly and I still haven’t taken a loan in 27 years of my life.
5. My bank account looked pretty healthy during the year
2 years ago, it was just living from paycheck to paycheck and hoping that the money of my parents find my account soon enough before I get into the red. This year was just great and my bank account was above 1,000€ the whole year. My plan for the end of 2017 was 2,000€ and I can already say that I will be able to achieve this goal. Everything above this value gets transferred to my emergency fund on the 1st January.
Do you want to know why I really like this point? I’m not scared anymore of checking my balance when I am at the ATM. I remember when I was afraid of doing this or just took the money and stayed in ignorance. It just takes a lot of pressure from your shoulders!
6. I was able to donate some money
This hasn’t to do with my finances directly but it should be a big part of them in the future. I just donated 100€ in this year but you know what? I think most students are not able to donate anything to others and that’s why I am proud of being in that financial situation to help other creatures that are not so blessed than I am.
This year I’ve made the following donations:
- 20€ to buy a gift for a campaign that fulfills the wishes of children for Christmas. (It’s sad and a bad sign that this year my mother and I, both had to buy shoes. The last years, we should buy toys. Maybe it’s just a coincidence but anyway I hope my donation will help).
- 30€ for a children hospice in Germany.
- 50€ for a local animal shelter.
I wasn’t able to reach my last goal to save 50€ for a car. I’m not sure if I will take away some money out of my cash account but it just doesn’t seem so important to me right now. I will probably start working full-time in February and I will be able to make larger contributions to this account later.
What will make my year 2018 even better
2017 was definitely a good year from a financial perspective. But what’s next?
At the beginning of January, I will have my first interview for a project in February as an iOS freelancer. As a software developer and especially iOS developer the market is very good right now and I am pretty sure that I can find a lot of clients that will pay me more than 60€ per hour. This will increase my monthly income from 1,400€ to about 10,000€! For sure, this will give me much more flexibility and stability when it comes to savings and investments. Here are my (bold) predictions for 2018:
1. My net worth will break 30k EUR
After the pretty good year of 2017, this should be easy to achieve if I find enough clients. However, this is the uncertainty on this equation and pretty hard for me to guess. If I have a project for 8 out of 11 months, then this should be again a goal that is set too low for my net worth. However, I like to go with a safe bet for this year where I’m just starting out.
2. My investments will increase to 8,000€ and I will earn more than 20€/month in dividends
It’s the same as with my net worth. This is an easy pick if I am able to find enough clients. However, I am also not 100% sure how taxes will affect my calculations and therefore stay below them is the better way to go. My depot would be tripled in one year and right now I make around 3-4€ in dividends per month. However, my stocks are mostly index funds so I hope with my DGI stocks the average amount of dividends per month could be increased a lot. So overall, my goal for 2018 is to collect stocks that will generate 240€ in dividends per year.
3. Keep my bank account healthy
I don’t want my bank account to increase, I just want to stay in the position where I feel totally fine by looking at my balance. My target is again about 2,000€ in my bank account and I want to transfer the rest into savings accounts and my emergency fund.
4. Increase my emergency fund to 6,000€
Right now, I have 1,200€ in my emergency fund. This is fine as a student who still lives at his parents’ place and doesn’t have to cover a lot of costs. However, I am becoming a freelancer and as I said before, I am not 100% sure if I have a project for every single month. With that said, it should be clear that I need to increase this emergency fund to at least 6,000€. My goal is to cover all the costs of 6 months of living. Though, right now I am not sure how much this will be as soon as we have our own apartment and our own car. It’s mandatory to increase this fund later. But for now, 6,000€ should be enough.
5. Our wedding account grows to 2,300€
I don’t know when Mrs. Budget and I will marry. But I know for sure that the moment will come where I ask her to be my wife. So, why not saving now to cover a large sum of the overall bill without taking a loan? This is a small increase in monthly contributions but that should be fine as soon as I work as a freelancer. I want to tackle this savings account even more in 2019 and grow it to 5-figure when we are closer to our marriage.
6. I will help other even more
I want to increase my donations three-fold. To be honest, if I earn something close to 100k per year 300€ seem to be very little. I have to admit that it is very little. Though, I can not guarantee that I will earn that much and I have a lot of things to buy in my first year of full-time work. I hope that I can seed the money tree this year and then it will be much easier for me to raise the donations even more. I have a long-term plan and the better I do now, the more I can give back later. Anyway, for sure I don’t want to use this as an excuse not to give away any money. 300€ just seem to be the right number for 2018.
7. I will buy my very first car!
Finally, after 10 and a half years of owning a drivers license, I am able to buy my very first car at the age of 27! As a student and intern, I wasn’t able to take away the money to buy one. Now, as a freelance software developer with working places that can vary a lot, I really need my own car. This will also make it easier for Mrs. Budget and me to drive to go grocery shopping as soon as we have our own apartment. I am looking forward to buying the car in the mid of 2018 but until then I need to talk to my tax advisor which is the best buy for me. In Germany, a leased car could make sense or a used one.
This wraps up my year 2017 and my prediction for 2018. I will keep you updated on all the things as usual in my net worth reports. Until then I wish you a happy new year!
How well did you perform in 2017? And what are your goals for 2018? Let me know by leaving a comment below!