With the new year starting up, I wanted to write down some clear goals on paper regarding what we want to achieve financially. We are very early into our working lives, having just graduated college back in May, but we have big dreams regarding our future and our finances. To give us the best possible chances for success, we need to turn those dreams into realistic goals to keep on our radar at all times.
“Dreams without goals remain dreams, just dreams” -Denzel Washington
They need to be S.M.A.R.T. goals too: specific, measurable, achievable, realistic, and time-bound. While it is nice to say “save as much as we can” or “contribute to our 401k account”, those really are weak statements. The goals I want to set take that one step further. It’s easy to say “I want to lose weight”, but it’s another to say “I will workout for 30-minutes at the gym on Mondays, Wednesdays, and Fridays for the next 6 months.” That is an example of a S.M.A.R.T. goal.
With that framework in mind, here are the goals my wife and I have decided and agreed upon to pursue this year.
2006 Financial Goals
In 2006 we want to continue building upon the strong financial foundation that was started in 2005. Specifically, this year we are hoping to:
- Make the maximum allowed contributions to our Roth IRAs held at Vanguard as we’ve done in the past. This means putting in $4,000 for my Roth IRA and $4,000 for my fiance’s Roth IRA.
- Contribute enough into both of our company 401K plans in order to get the matching amount. The goal is to contribute at least $4,800 for my 401K (9.0% of salary) and at least $3,600 for my fiance’s 401K (12.0% of salary). I will start as soon as I am allowed to begin the plan in June/July 2006.
- Contribute $1,006 per month into our general investment accounts. This money will be invested into the S&P500 Index Fund at Vanguard and/or individual stocks at Ameritrade or Sharebuilder. The goal is to save $12,072 for the year in our general investment account, bringing the total amount in this account up to $31,000. This is money that could have been used to pay down the principal of our home mortgage, but instead is put to better use by investing in the stock market.
- Continue saving $1,000 per month into our “Future House Fund”. This money will be invested into the S&P500 Index Fund at Vanguard. The goal is to save $12,000 for this year for this purpose, bringing the total amount of our “Future House Fund” up to $17,500.
- Start contributing to an emergency fund each month with the goal of saving up two months of living expenses ($6,000) by the end of the year. This means saving $500 each month and placing it into our Vanguard Money Market account. This money should always stay in money market or our savings account, for quick and easy access during an emergency.
- Reach $90,000 to $100,000 in net worth by year-end.