How to Set Financial Goals for the Year

How to Set Financial Goals for the Year | CorporetteToday’s topic in Tales from the Wallet: do you set financial goals for the year? I started setting explicit financial goals when I left my cushy BigLaw job a few years ago — I had been so comfortable there that I could easily move every other paycheck to an interest-bearing money market fund, and then I took a job at a nonprofit, making about a third of my former salary. Suddenly faced with the prospect of austerity, I decided to set financial goals for the year.

Every year, I’ve kept my goals short, choosing just three or four, and I’ve gone back at the end of the year to see how I did. In 2010, my goals were to “1) bank all Corporette income, 2) renovate kitchen within budget, 3) max out 401Ks, and 4) pay down at least $10K of (my husband’s) student debt.” A few years later, when my first son J. came along, the goals were to “1) save 10% of our income, 2) max out J.’s 529 on top of our savings, and 3) assess all investments and figure out fees, performance, etc.” (That last one was a doozy and I wrote about it in our post on asset reallocation.)

(Pictured: Everyone says Comme des Garçons makes the best wallets — this gorgeous red continental wallet looks lovely.)

The “save X% of our income” goal is a mainstay on the goal list for me (sometimes 10, sometimes 15) and I’ve usually done a bit of planning to figure out how to get there. For example:

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Tales from the Wallet: What to Do When You’re Facing “Frugal Fatigue”

frugal fatigueHow do you prevent “frugal fatigue,” also sometimes called “savings burnout”? It’s that feeling that you’ve been scrimping and saving and you have no money and the debts are still there and you’re not getting anywhere and dammit you just want to not think about it and buy what you want for a little while? I know readers have talked about this, and when I was writing the post about my budget spreadsheet, I realized that I have another spreadsheet I use also that, for me, prevents this kind of frugal fatigue: my “snapshot spreadsheet.”  This is how I personally prevent frugal fatigue, but I’m curious to hear from you guys — ladies, how do you prevent savings burnout? Do you rely on Mint or YNAB to give you an accurate picture of your net worth? How do you track net worth changes? Do you have similar ways of recognizing and patting yourself on the back for major monetary accomplishments, like debt payment or saving? (These particularly are helpful in guarding against savings burnout!) 

Pictured: Vera Bradley Georgia Wallet, $98 at Zappos in six colors. Love the fun inside lining! 

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Tales from the Wallet: How to Make a Budget

how to make a budgetFor today’s money feature, let’s discuss living within your means — how to make a budget and stick to a budget. What does “budget” mean to you? What tips and tricks have you used to set a budget, pay down debt, save money and protect against lifestyle inflation — and what alarm bells have you used to tell you that it’s time to reassess? 

The No-Budget Budget

I’ve mentioned before that I don’t think every person needs to make a budget — there were years in BigLaw where I would automatically move my second paycheck to savings/investments, living entirely off my first paycheck (and auto-contributing to my 401k). That was enough of a “budget” to me, with no further thought. I knew then and know now I was lucky in those years, and I’m still so grateful for them — that simple decision has laid a great groundwork for me and for my family.

Pictured: MICHAEL Michael Kors ‘Jet Set’ Travel Wallet, on sale for 40% off in purple; at full price in several other colors.

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Tales from the Wallet: Paying Down Debt vs. Saving

paying down debt vs. savingIt’s the New Year, and I heard a lot of chatter among commenters about when they should be paying down debt vs. saving. It’s a huge question, and we’ve talked about some related things (like how to pay off huge student loans and live within your means), but we haven’t talked about when to save vs. when to pay down debt in too long. Readers, what are your best thoughts on paying down debt vs. saving? When is getting out of debt a priority?

(Pictured: Comme des Garçons ‘Super Fluo’ French Wallet, $204 at Nordstrom.)

A few thoughts from me:

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Tales from the Wallet: Stashing Your Cash

where to keep emergency fundManaging your money can be one of the most important things you do when you’re just starting a job — but it also can be super difficult.  We’ve talked about the importance of an emergency fund, but we haven’t really had a good conversation about where to stash your money in general — a high-yield savings account? CDs?  Treasury bills? The stock market? (Pictured: Emilio Pucci Print Flap Wallet, available at Nordstrom for $295.) (As always, please keep in mind that a) these are huge issues with a lot of nuances, and many personal finance sites, magazines, and books do a much better job with them, and b) I am by no means a personal finance guru — this is just some common, fairly basic knowledge that I’ve learned over the past 10 years or so.)

Before you decide where to save your money, though, you need to know the answers to some important questions first, though:

1) How much money do you need to live on before your next paycheck comes? What money is needed to pay recurring bills that will come due before then? [Read more…]

Tales from the Wallet: The Emergency Fund

Picture 22014 update: you may want to check out our latest discussion of emergency funds.

We noticed that our post on savings seemed to be a popular one, so we thought we’d start another discussion on money and investing. Today we’re wondering, dear readers, about your emergency funds: how did you calculate the amount, how do you store it, and how often do you reevaluate the amount and the storage situation?  (Pictured: Comme des Garcons Large Zip-Around Wallet, available at Saks.com for $325.)

A caveat, at the beginning: we are not experts in financial advice.

The emergency fund, though, is one of those basic topics that you read about.  If you’re in debt, they say, save for your emergency fund first, and then begin paying off debt.  If you’re not in debt, they say, save for your emergency fund — and keep it liquid — before you start investing in the market.  The emergency fund is supposed to be there as a a cushion in case you or your spouse lose your job, or if some other emergency comes up, such as medical needs or a car accident. [Read more…]

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