Saturday, December 1, 2007

Savings Goals for 2008

Patrick at Cash Money Life is going to give away an iPod to one lucky person who posts his or her financial goals for 2008 using a SMART format. (He explains what that is and how to do it.) Setting financial goals has been difficult for me, but if I don't have some aim in mind, it will be too easy to let my motivation lag.

My goal is to have $17,000 in savings set aside by graduation in May. I will set aside the$1,000 stipend I'll receive in January. I'll need to save approximately $30 a month as well and continue the compounding of interest on my current savings account and cd. This seems pretty achievable. It'll be a lot easier to meet this goal if I get the research grant I applied for as well; getting an extra $1,250 with which to pay myself would leave me with more money than I know what to do with.

I shouldn't count my chickens before they hatch, so I'm not including grant money in my projections. If I get the money, I should revise my target upward, but probably not by $1,250. Saving is well and good, but setting aside a bit of money for fun will keep me from coming to resent my budget.

The most difficult part of reaching this goal is to avoid frivolous spending that would force me to dip into my stipend or existing savings. By keeping my savings in an online account and a cd that doesn't mature until May, my money is less accessible and the temptation to spend it is minimized. There's also a possibility that I'll have to travel so there may be some additional expenses next semester. If I am unable to meet my savings goals because I have to pay for a plane ticket to go interview for my dream job, that's a perfectly acceptable trade off. Finding a way to pay for things like that without going over budget would be better, though.

I take great pleasure in knowing that I have enough in savings to live on for a year if I had to. If I begin work after completing my undergraduate degree, I'll be able to fund fully a Roth immediately and still keep a sizable emergency fund. If I pursue a master's degree instead, I'll be able to avoid student loans even if I don't get additional scholarships. Having assets instead of debts gives me a lot more freedom.