A Canadian family's journey to financial independence

Our Numbers // October 2017 Recap

Our Numbers // October 2017 Recap

Finance is such a loaded topic. Some of us are downplaying our wealth (aka, practicing Stealth Wealth), while others are projecting a wealthy life (big house, fancy cars, expensive vacations) while hiding massive debt.

Part of it is judgement. Being judged for not having enough; being judged for having too much. Our culture tends to have expectations as to How One Should Act based on their income, savings, etc. Society often makes us feel that the more money you have the more you should spend, when really if the goal is to FI/RE, the opposite should be true. Because of how the FNB family pinches our pennies I imagine many of our friends and family would be surprised at our savings and net worth. Fun story: when my son started JK, my well-meaning aunt offered to pay for his school pictures because she wanted to ensure she got some and knowing how frugal I usually am, she assumed that I couldn’t/wouldn’t buy any. Ha! I politely declined her offer and have ordered the overpriced school pictures every year for the family.

I’ll Show You Mine…

My husband thinks we should lay it all bare: income, expenses, investments, net worth. It is true that I love to read monthly spending and savings recaps on other blogs. I find it very inspiring. For now, though, I am on the fence about sharing ours. Most of it boils down to privacy. Perhaps one day I will be there, but for now I plan to share our monthly savings rate and what percent of our “goal retirement savings number” we have reached based on how our investments are doing at the end of each month.

Our savings rate is calculated by dividing the amount of money we invested in RRSPs, TFSAs, and our non-registered account (not including the amount of money going to our mortgage principal) by the income from that month. Our income varies from month to month due to my side hustle and because lately I’ve been selling a bunch of items on Kijiji and local BST Facebook groups. It’s all part of my journey to reduce clutter and become more minimalistic, but that gravy train will eventually run out of steam as I clear out all the items we don’t need any more; then I will shift the focus to spending mindfully and carefully.

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Goal Retirement Savings Number, aka the ‘Stash Goal

Our old financial planner never took me seriously when I said I wanted to retire early. When I first told him that in my early thirties, he just chuckled and said that “Freedom 55 isn’t going to be possible any more for your generation.” That should have been a giant Red Flag but I just laughed along nervously and thought maybe he was correct.

I could write a dozen blog posts on why he is wrong and the scam that is most financial planners. We can leave that for another day. Many people (wrongly) calculate how much you need for retirement based on your current income. Let’s say you make $100,000 a year as a nice round number. They assume you will need 70%, or 80%, or some other random percentage of that income as a kindly, grey-haired retiree – so $70,000 or $80,000 a year. REALLY? They then somehow extrapolate that further to determine you need millions and millions to retire.

What if you earn $100,000 but only spend $50,000 a year, and are saving the rest? Shouldn’t how much you actually spend be more important than how much you earn when it comes to planning your Golden Years nest egg?

Or for many, retirement is something you do when you reach a certain age (usually 65); it is not something you can save aggressively for in order to reach much earlier.

For our purposes, I created an estimated retirement budget, then added in a yearly travel/life spending cushion, and multiplied that total by 25 to come up with our Goal Retirement Savings Number, or the ‘Stash Goal. This trick of wizardry is based on The 4% Rule – which I will let others more eloquently describe than myself.

Our ‘Stash Goal is a bit of a moving target right now. If we dip our toes into the real estate market, or develop some passive income/side hustles we want to continue (which I highly assume we will – neither Mr FNB or I plan to stop working completely once we retire), then we may choose to retire from the rat race with a smaller stash.

I did not include our house value in that number, since we will not be moving right away in retirement. If we can pull this off in around ten years our children will be in middle and high school; we assume we wouldn’t be moving/downsizing until they are independent, done school and out of the house (probably hopefully in their early twenties). We have a family RESP for our children but that is obviously not included in our retirement savings. I also have not included any government money we will get in the form of CPP (Canadian Pension Plan), OAS (Old Age Security) and GIS (Guaranteed Income Supplement). Not because I’m a doomsday sayer who thinks there will be no government support in my retirement, but because I don’t want to rely on it and it is impossible to calculate what it would be this far out.

October 2017

I went back and calculated (for the first time!) our numbers for the last few months. I averaged out our savings rate over July, August, September and October to give a good base line. I’ve been tracking our investment total for a few months now.

Savings rate: 25% (this has been as low as 15% and as high as 39% over the past four months; this is the average)

% to Stash Goal: 31%

Do you find it interesting to read other people’s financial details (income, detailed spending, investment recaps, etc)? If you’re a blogger, how much do you share of your own financial picture?