Between a new job, higher salary, a move, and a bunch of related extra expenses, 2015 felt like a pretty up and down year from a financial perspective. Now that things are a bit more settled, I’d like to set out some specific financial goals for 2016 to work towards.
I typically save at least 30 percent of my after-deductions and after-tax income every month – with a tight budget, this means about $1000. This is good, but it hasn’t been allocated in a specific way. I just saved as much as I could and let it sit, which isn’t really all that useful unless you like having a large emergency fund and no plan to speak of.
This year, I have a few things in mind that I’d like to save towards in a more deliberate way. I’ve very intentionally focused on base amounts that are grounded in numbers that I know about – primarily my work income. I’m keeping the budget tight around these numbers to save as much as I can with a plan to top them up with amounts that are somewhat less certain – tax refunds, travel reimbursements, and reducing spending in other areas.
Net worth – This is a bit hard to calculate as my pension plan is defined service rather than defined amount. Every month, $600 is automatically deducted from my pre-tax income. This means I’ll be contributing $7200 per year to the plan. This amount is matched by my employer, leaving me at a $14400 pension contribution for the year. But…it doesn’t retain a specific value and instead is converted to years of service. Since I’m not sure how to make that conversion yet (I know it was $46000 to buy in), I’ll be leaving it out of my net calculations for now. Excluding my pension plan, my net worth currently sits at around $91 000. For 2016, my hope is to increase that to at least $108 000.
Down payment – I’m hopeful that sometime this year or next I’ll be buying a house. To that end, I’ll be setting aside $10 000 toward the down payment. I’ll be setting aside $450 per month, plus I’ve got myself a side gig teaching lined up for the first four months of 2016 which should bring in around $1000 per month after tax. I’ll also put in whatever comes in from my tax refund and any interest from my Tangerine accounts.
Retirement – In addition to my pension plan, I’d like to start investing on my own. I’ve earmarked another 450 per month, or $5400 annually. The down payment takes priority right now, but any money that I save from my regular budget during the month will get put in here too. I’m treating it like a challenge in the hopes of increasing the amount by a good bit.
Car – This is my first time owning a car and I’m planning for future costs already, especially since I drive a fair amount for work. I’ll be setting aside 100 per month into a car fund for eventual repairs, or $1200 annually. It feels a bit low, but I’ll also be adding to that anything that’s left over in my transportation budget category at the end of the month plus all of the reimbursements from my mileage claims.
As we move through the year it’s possible these numbers will change. I usually try to reevaluate a few times a year to keep myself on track and it’s possible that something like a house purchase could alter the numbers. Because of that it still feels a bit more nebulous than I’d like, but overall I’m pleased. The goals represent a bit of a challenge on my part to keep spending low and saving high and I’m looking forward to taking it on.