"Goals are dreams with deadlines" -- Diana Scharf

The Plan

This is our financial plan for the next five years, starting in January 2013: 

Goal 1: Build a nest egg (2013)

Our fixed living expenses (rent, utilities, car payments, and car insurance) are just over $2,000 per month.  Our first financial goal is to save $25,000, or enough to cover a full year’s worth of fixed expenses.  Having this type of cushion keeps us financially prepared for emergencies, job loss, or unplanned expenses.  Hopefully we won’t need to dip into these savings, but it’s always wise to plan for a rainy day.   

Goal 2: Increase retirement contributions (mid 2013)

Since I started working in July 2009, at least 15% of my pre-tax income has been invested into my retirement account.   This 15% is a combination of my own contribution, as well as a very generous match from my employer.   By mid-year, I plan to increase the total contribution to 20%.  Given that we’re 20-somethings, retirement seems a long way off.  However, now is the time for us to save aggressively for retirement; the earlier we invest the funds in our retirement accounts, the longer the investments can earn interest.  Plus, I’m certain that it will become much more difficult to save for retirement once we have a mortgage and start a family.   

Goal 3: Start investing (mid 2013)

I’ll be the first to admit that I know nothing about investments.  I own zero stock, except for a few shares of Nokia that my dad bought on my behalf when I was twelve.  I’ve always been very risk averse, so I’ve hesitated to buy stock.  As we inch closer to achieving our first goal (see above), it’s time for us to consider purchasing stock with the remaining funds we save after building that nest egg.  In the next few months, I need to do my research and learn the basics of investing.


Goal 4: Pursue professional development opportunities (late 2013)

I’ve been very fortunate in my employment situation thus far.  Several of my colleagues have served as mentors and have offered me ample opportunities to grow.  I love my current career and find it very fulfilling; it’s something I would love to do for the rest of my life.  However, my undergraduate and graduate degrees are in fields that are far different from my current career.  In the interest of professional development, I plan to pursue additional training, credentials and/or degrees to better position myself for future job growth. 

Goal 5: Buy our first home (Summer 2016-Summer 2017)

It pains us each month to write that rent check because we would truly love to be homeowners right now.  It’s so hard to be patient when interest rates are low and we keep hearing that it’s a buyers’ market.  But we also know that there are several reasons why we should wait to buy a house: we haven’t saved enough for a 20% down payment, we don’t need more space at this time, and we like having the option to relocate if a new opportunity arises.  If we are able to stay on budget, and if our employment situations do not change drastically in the next few years, we should be ready to buy a starter home in the summer of 2016 or 2017.  Of course, achieving this goal in our desired time frame will also depend on interest rates and the housing market over the next four years.

Granted, plans are just that: plans. As our lives change and new situations arise, we will need to be realistic about the feasibilty of the goals listed above. But, for the time being, these are our goals.

Note: Mr. W. and I were both extremely fortunate to complete our education without any student loans.  This provided us with a decided financial advantage over many of our peers and we will always be grateful to our families for the sacrifices they made on our behalf.  Our families saved diligently to ensure that we, and our siblings, would be able to attend the university of our choosing.  During graduate school, Mr. W and I both received graduate assistantships that covered our tuition and provided a modest living stipend.  As a result, we currently have no debt other than Mr. W's car loan.  Again, we have much to be thankful for and recognize that we were with provided opportunities that many others do not receive. 

1 comment:

  1. Whenever you get started with investing, a great resource to help you out is here: http://www.bogleheads.org/wiki/Getting_Started

    Good investing can actually be really simple. It doesn't involve picking stocks. You can actually implement a great strategy with just a single fund.

    That link should help you out, but I'd be happy to talk things through with you if you're interested (not for any kind of payment, just for the fun of it). Helping people get started investing is a passion of mine, and you're in the perfect place to start out well!

    By the way, this sounds like a strong plan. You guys are in a great spot to start off on the right foot and it's great that you're giving it so much thought. Good luck!