We here at DQYDJ have recently been sharing some of our insights into our own personal finances – you can thank tax season for that. Recently, I covered our current asset allocation and Cameron his. Today, taxes in hand, I tallied up my savings rate for last year.
In 2017, our net saving rate (dollar contributions to savings, investments, and similar after taxes) was 42.16%. Our expansive savings rate – which includes principal paydowns made by my wife and myself - was 48.34%.
2017: A Better Savings Year than 2016
Last year our second daughter was born and our savings rate declined. (Yes, kids are expensive – and totally worth it). This year we had a nice rebound, matching our pattern from after our first daughter was born in 2013:
We did tally our expansive savings number last year as 39.12%. I know most of you don't like that rate since it penalizes certain types of savings (read: real estate) but unfortunately I only tracked the strict rate further back. To hazard a guess, our 2017 was in the ballpark of our 2014/2015 numbers for expansive savings.
Reflections on 2017 Spending and Savings
As always, we write these posts to hold ourselves accountable in a public forum. Stating our personal savings performance is a good exercise for us, and hopefully keeps you reading – and thank you for being a reader! Before you trust us too much, though: we did hold some XIV, the reverse-volatility fund which blew up extravagantly a few weeks back.
(And don't feel sorry for us - we did read the prospectus!)
2017 was much better than 2016 for our spending, although there are places we could still improve. Overall, our spending will probably increase over the next few years. It might take some chasing nickels around dollars, but with two daughters we'll economize where we can before things start to get really expensive.
Looking Forward to Health and Savings in 2018
We're happy and healthy at this point in 2018. That's actually a different story than our lingering coughs through this Bay Area winter(!). (Knock on wood, that's over though.)
We're not going to make extensive changes to our account mix outside of the investments inside. We covered those details in the asset allocation post. We have been increasing our investments in taxable accounts over the last few years and we'll continue to evaluate the best mix – and placement – of investments to maximize returns post-taxes.
We'd love to try to save 50% one year, even counting by the expansive definition. A 50% savings rate is almost a meme in personal finance – a nice combination of 0-investment return pessimism with round number bias. Knowing all that, it still feels like a reasonable goal.
What was your 2017 savings rate calculated using your favorite method? What's your 2018 goal?