Tuesday, November 1, 2016

Income and Expenses, Savings Rate for Q3 2016

Time has passed very quickly, it is already November and the time to look, how I managed during the third quarter, and how my journey towards financial independence is progressing. The past year has so far gone reasonably well, although I'll not achieve my dividend income goals, I'm still fairly satisfied with my achievements. Since this is the second year when I keep a stricter control of my spending, I  also made a comparison with last year's results. As I mentioned in my first income / expenditure report, I will make a summary on a quarterly basis, because my months in the case of income are very different. This will give me a better view of the overall situation and hopefully will inspire some of my blog readers.

Here are my numbers for Q3:

All revenues are reported net of taxes.

During the third quarter of the wage income was quite good. In July, I got a summer vacation money, that's the reason, why my salary income in July much higher is, compared for normal months. On the other hand August, much smaller, because I was at vacation on August. Expenditure in July was a lot higher than my average, mainly due to the payments of holiday trips.

My goal is to save about half of my wage income and invest those wisely. In the third quarter I clearly missed my target, due to high expenses in July, my saving rate of wage income was only 36.74%. When I take into account also the dividend income, my savings rate rises to 45.18%. 


One thing that I will follow with great interest is the dividend income and expenditure ratio, because it is the most important thing on my way towards to the financial independence.


The third quarter went really badly, dividend income covered only 24% of my expenses. Poor achievement is due, of course, over-spending during July.

Let's look at how I have succeeded so far in 2016:


My expenses were an average of 1744 Euros and my salary was an average 2900 Euros per month. As you can see, during the three quarters I managed to save much less than 50% of my wage income, precisely only 39.87%. Of the total income my savings rate at the end of the third quarter was 54.15%.

After an excellent second quarter, it is time to go back to reality and realize that there is still a way to go. During the first nine months, my dividend income covered 51 per cent of my expenses.


Comparison between 2015 and 2016:


As you can see, during the first nine months my dividend income decreased about by 10 per cent, even though I made several acquisitions over the past year. The main reason for the reduction in dividend income are in the  last year reported dividend cuts, (Summary of Dividend Cuts), as well as the year 2015 compared smaller extra dividends. Wage income compared to last year were significantly higher, for the simple reason that I did more overtime work. Due to the high increase in spending, + about 31%, my savings to wage income went down 20.5%, it was only 36.74% for the first nine months. Of my expenses, dividend income accounted for about 31 percent less than the year before, so the journey towards financial independence seems to be rather more distant than closer. 

I look forward to what the end of the year will look like. In the fourth quarter dividend income should be a bit higher. Wage income should be close to normal (2k EUR per month) and expenditure hopefully, much less than in the last quarter.

Thanks for stopping by!

Photo Credit: Stuart Miles/FreeDigitalPhotos.net


  1. You managed a huge savings rate in September, well done DividendHawk. I like how much of your expenses you managed to cover in the last 2 months too. Good luck for the final quarter!


  2. That are some impressive saving rates! And I really feel inspired to do the same. In the end the most important metric is the average percentage of the dividend coverage of all expenses. And you're doing very good. My target saving rate is also 50%. What is your tax rate on your dividends? In Germany it's 25%.

    Thanks for your motivating post and detailed graphs!

    1. Hi DivRider and thank you! In Finland, the tax rate is 30% on capital gains and 25.5% of dividend income.

      Thanks for visiting,