2024 Financial Wrap Up
22 Dec, 2024
Today, I will describe our financial year from January 1st to December 15th 2024. As someone who likes to update their net worth at the end of the month, it is awkward to do it two weeks early 🤪. We will take a break in January, and I didn’t want to wait until February to post this.
I have been enjoying seeing others share their numbers on Instagram and love that it's becoming less of a big deal to do so. Like you, I am curious about other people and their money. The more open people are about money, the more we can learn from each other.
Therefore, without further ado, here's how 2024 shaped up for Jonny, our daughter and I. Please don't judge; use my situation to improve yours.
Net worth update
On January 1st 2024, our total net worth was $1,484,000:
House - $955,000
KiwiSavers + ETF - $476,000
Cash - $38,000
Cars - $15,000
On December 15th 2024 our total net worth was $1,561,000 ⬆︎ $77,000:
House - $920,000 ⬇︎ $35,000
KiwiSavers + ETF - $592,000 ⬆︎ $116,000
Cash - $35,000 ⬇︎ $3,000
Cars - $14,000 ⬇︎ $1,000
Total net worth increase of $77,000, or 5%.
House: Down 3.7%
KiwiSavers + ETF: Up 21.7%
Two factors hindered our growth this year. On May 1st, we applied the 4% Rule and sold $20,000 of investments to use as income (no regrets). On January 1st, I always reset the supposed value of our house for the full year. I did this two weeks early for this blog post, and Homes says our house has dropped in value by $35,000, pulling our numbers down.
NOTE:
We have no debt of any kind.
We combine our finances, except our individual KiwiSaver accounts.
Investment growth
I count the value of our home in our net worth because it makes up such a large chunk of our wealth. Selling it, downsizing, and releasing equity that we can invest in our ETF are on our radar for 2026, so keeping an eye on its value is important. And also annoying.
We want to arrive at early retirement with a cheaper home and more money invested in share market assets that grow over time and can pay us a passive income.
We are more interested in how our KiwiSaver and ETF investments have performed in 2024, as these will enable us to become financially independent and work optional.
On January 1st, our combined investment value (KiwiSavers and ETFs) was $476,000. By December 22nd, it had risen by $116,000 to $592,000, a 21.7% increase. The share markets have had an excellent year.
I used the Rule of 72 and calculated that it took four years for the value of our investments to double. That is impressive.
I keep track of what we have personally contributed to our investments from our after-tax income. This year, it was about $28,000. Our employers and the government contributed about $3,000. Plus, we earned and reinvested about $2,000 in dividends, for a total of about $33,000.
On May 1st, as per our plan to apply The 4% Rule, we sold $20,000.
This means that we added to our investments over 12 months and took out a $20,000 chunk in one hit, resulting in an overall 21% increase in investment value. I explained at the time why we did it this way.
I don’t specifically track our KiwiSaver investments, just the balance, but I do enter every trade I make into our US 500 ETF into Sharesight:
I enter every trade I make into our US 500 ETF into Sharesight.
Income
PocketSmith is telling me that we have made $128,000 after tax. This came from Jonny’s PAYE income, my PAYE income from the job I’ve now left, freelance graphic design work, income generated by The Happy Saver, applying The 4% Rule and a few other miscellaneous odds and sods. In total, our income rose by about 18% this year. I’m pleased with this, given how much we don’t work.
My PocketSmith pinwheel showing our income sources for 2024.
This is the first year we have used Hnry as our accountant. With our self-employed income, we both knew with certainty what we made each week and month after tax, ACC, etc. Plus, it is far easier to pay tax on unexpected income now. Switching to them has been a game-changer for both of us. We no longer had to guess if we were making any money.
Of our total income of $128,000, $20,000 was the tax-free ‘income’ we took from our investments when using The 4% Rule. I debated whether to include that figure, but as Jonny pointed out, when we retire and withdraw money from our investments, we would call it income. Therefore, it makes sense to include it now, and it shows that we don’t rely on one single source of income; instead, we had six different sources in 2024.
We used The 4% Rule this year.
On May 1st, we sold off 4% of our total investments. At that date, we had $500,000 invested across our KiwiSaver and ETF investments, 4% of which was a perfect $20,000. About $15,000 of this has been used for travel so far (a trip to Singapore and two cruises), but with four months remaining, it is not looking like we will manage to spend the remainder. Of course, I think, “Should we have left this money invested?” But I’m more than happy that we used The 4% Rule for a second year, as this has let us experiment with our money while still earning. The leftover is currently acting as the buffer I felt I needed to quit my job.
I’m not sure if we will utilise selling off 4% of our total investments in 2025; I’ll decide on May 1st. Because I’ve also been saving into multiple sinking funds, we may not need the money as things currently stand. I’ll let you know.
Expenses and creating a gap.
This year, we earned $128,000 and spent $77,000, give or take. Thus, we have a gap of $51,000 between our earnings and expenses. I’m happy with this. We always spend less than we earn and teach our daughter to do the same.
PocketSmith pinwheel showing our Earning and Spending for 2024.
How to read my pinwheel: Red indicates necessary spending, orange indicates nice-to-haves, and green indicates income.
I created a budget in PocketSmith for each category to give ourselves some guardrails. Due to a particularly cold winter, our electricity and heating costs were over budget. Our pet care budget blew out due to the treatment and euthanasia of our beloved dog. RIP Blue. Plus, our healthcare category spending was double what I predicted. The reason for this was my decision to get braces. Other categories, such as dining out, clothing, and petrol, came under what I budgeted.
Some of the categories I created budgets for in PocketSmith.
I created budgets for these categories (and others). For some, we got it just about right, while for others, we over- or under-budgeted.
We did three important things this year.
I finished my two-day-a-week job in late October, giving up $20,000 in after-tax income.
For the second year in a row, we sold 4% of our investments (which happened to be $20,000) just to see what would happen. Two things happened. We are using the money to have a great time while our share market investments continue to grow.
We switched from using an accountant whose business model is slow to using Hnry. It quickly gave us complete certainty over our weekly after-tax income. This has enabled us to take on extra work (if we want to) and ensure that our time is profitable.
Long term view
Our net worth has been tracking UP over the last decade. Are we heading in the right direction? Absolutely.
Our Investments are tracking in the right direction. UP!
We all track our pūtea differently!
You might be reading my numbers and scratching your head a little. We earned $128,000, spent $77,000, and invested only $28,000. Where is the remaining $23,000? Welcome to the ebb and flow of money!
That money is sitting in sinking funds, waiting to be spent on short-term things, or in The Happy Saver bank accounts, waiting to pay for the new laptop I need 😡 in 2025. I have learned about household budgeting that you are only on top of things for about 5 minutes because SOMETHING changes your financial picture. Maybe your partner just put $100 of fuel in your vehicle, money left your account to go to your investment, or your mortgage payment came out.
That is why I don’t, and I encourage you not to, get too tied up in your numbers. Be adaptable.
Not being mathematicians or engineers, Jonny and I prefer to discuss the nonscientific ‘vibe’ regarding our money to gain an overall picture of whether we are heading in the right financial direction. My crude graphs and the not-at-all-crude aides of PocketSmith and Sharesight show me that we are indeed tracking in the right direction.
My tip is to track your money loosely but consistently. Don’t get hung up on minute details. Money is in a constant state of flux, which is absolutely normal.
What are our plans for 2025?
More of the same.
We plan to continue adding the minimum to our KiwiSaver throughout 2025 and the maximum to our US 500 ETF.
I’d like to see our incomes increase and our expenses stay steady. This may seem like a strange statement for someone trying to retire, but if we can grow our investments, our passive income will increase. Plus, passive income will also increase if we can grow The Happy Saver and help more people. Also, with much of our time being our own, we can say yes to paid work that we enjoy. We have options.
We plan to shore up our plans for 2026 and beyond, which will mean helping our daughter transition from school to something else. Once she is settled, we will most likely sell our home. Will we stay in Alexandra or leave? We have no idea, but we always plan to own a house somewhere. For now, I can’t think of anywhere I’d rather call home, but you never know.
We have some trips planned for 2025 and will work around the school calendar.
The conclusion.
2024 has been an excellent year, although I am a complete optimist with a selective memory. We always try to ‘government proof’ our finances, by which I mean that regardless of who is in the Beehive, life goes on. This has been a challenge this year, with unforeseen costs piled upon us, both directly and indirectly, which, unsurprisingly, our $4.27-a-week household tax cut has not been able to cover. There is plenty more uncertainty to come.
If I could rate my adaptability, I’d give myself a 9.5 out of 10. However, I lost half a point for whining to Jonny about managing increasing expenses while trying to predict what might come next. We have continually adjusted our course, cutting back in some areas and spending more in others.
Even though my part-time job only paid me $20,000 a year, giving up that income during a period of economic uncertainty was only possible because we had a firm idea of where our money was and where we were going.
We would add or remove little from our budget and lives, but when I discover new information or think of something new, I’ll not hesitate to adjust. Nothing stays the same, so in 2025, I’ll look closely at our expenses, income, KiwiSaver, and ETF, tweaking and changing as necessary.
All that remains to be said is Meri Kirihimete, Merry Christmas!
Happy New Year, and thank you for your support in 2024. I’m constantly surprised at how far-reaching The Happy Saver is these days, and I’m continually humbled and delighted when people share that I’ve helped them in some small way. I fly under the radar of traditional media but straight into the inbox of those who need help. While I can’t yet be as generous as I’d like with our money, I can, and will continue to be, generous with my time. I’ve sent thousands of emails, met hundreds of people, and talked to the same number of people by phone, and I can’t wait to do more of the same in 2025.
Final tip: Spend less, earn more and invest the difference.
Mā te wā, see you next time.
