With COVID-19 greatly reducing opportunities to travel, visit relatives, dine-out, and enjoy various forms of entertainment, I focused my attention on earning and saving in 2020.
Through frugality, expanding multiple streams of income, and because my main 9-5 job was not negatively impacted by COVID-19, my net worth increased +38.9% in 2020.
Net Earnings Overview
I consider Giving, Taxes, HSA Contributions, and 15% gross salary Retirement Contributions non-negotiable. Given this, I excluded these categories when reviewing my 2020 net earnings, outlined by the pie chart below:
Net Earnings Key Takeaways
Paycheck. In 2019, 91.2% of my net earnings came from my 9-5 job. In 2020, I not only earned slightly more at my main job, but the percentage of overall earnings from my main job decreased, primarily due to side gigs. Within 3 years my goal is to have my “non-job” income cover monthly expenses.
Side Gigs. With a smart phone and an internet connection, there has never been an easier time to earn some extra money. Drop-shipping, buying & reselling goods online, and dabbling in the gig economy accounted for 23% of my net earnings for the full year, and 34.9% of net earnings for the last 6 months of the year.
Rental Income. I’m a fan of the “buy and hold” rental real estate strategy. Assuming the same numbers for the other categories outlined in the pie chart above, once my current rental property is paid off by 2026, my net rental income will increase from 2% of net earnings up to roughly 12%.
Net Income Allocation Overview
As stated above, since I consider Giving, Taxes, HSA Contributions, and 15% gross salary Retirement Contributions non-negotiable, I excluded these categories when reviewing my 2020 net income allocation, outlined by the pie chart below:
Net Income Allocation Key Takeaways
Savings. In 2019 I was able to save 46% of my net income. In 2020, this number rose to 68%. The hope is to purchase a primary residence by mid-2021, and a strong savings rate the last couple years has helped in getting closer to this goal. By comparison, the average American only saves 7-8% of their disposable income.
Housing & Utilities. Housing & utilities for the 430 square foot apartment I’m renting totaled 13% of net income in 2020. With hopes of purchasing and moving to a larger, more-expensive primary residence in 2021, the goal is to keep housing & utilities at less than 35% of net income.
Groceries. With few options to dine-out, 7% of net income went toward groceries with another 1% on restaurant take-out.
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