Sunday, August 26, 2007

Setting savings goals

It's tricky to figure out what appropriate savings goals are while in college. Most of the advice out there is geared to folks who have a full-time jobs, bills, and a normal adult lives. College students are generally assumed to be nearly broke, except in the occasional articles focusing on very young entrepreneurs who suddenly became amazingly wealthy through creativity, luck, and insane drive

I fit into neither of those categories. Through good fortune with scholarships (and parents who were happy to not have to pay for tuition or room and board and have thus been overly generous in insisting on paying for some incidental expenses) I am in better financial shape than many my age. I have no school debts and have accumulated a chunk of savings by saving scholarship stipends and summer income. Today, not including loose change and after spending money on rent that will eventually be reimbursed, my net worth is $15,746.25.

Many months ago, the goal was to save $10,000 before finishing college. It's probably time to revise that goal. It seemed like a nice round number, attainable, and enough to live on for many months in a worst case scenario. Now, if I manage to avoid dipping further into my savings between now and when I get a "real job" rather than an internship that is technically a fellowship, I'll be able to fully fund a roth and still keep the emergency reserve. Would it be silly to try to not dip into my savings for the next year but spend the interest? Is it reasonable to take a hiatus from savings?

It might be good to scrimp and save for a down payment, but buying a house will be several years in the future. An extra few dollars a week now could make a fairly dramatic difference in my day to day life, and an extra couple hundred bucks in savings probably won't make much difference once I have a job. Yet, it feels irresponsible to slack off.

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