*Throughout this post, when I say “my income”, I mean our income, as my husband and I have combined finances.*
While 2013 was my year of paying off debt (actually it was more like my second year of paying off debt), 2014 is my year of saving. I’ve talked a bit about my savings goals in previous posts, but for those of you who are new to the blog, here is what I’d like to have accomplished in 2014:
- Have $6,000 in my RRSP
- Have $10,000 in my emergency fund
- Have $7,000 stashed for my planned trips
Altogether that’s $23,000 that I’m planning on having in my various savings accounts by the end of the year. That is one serious chunk of change. Up until this point I was reasonably sure I would be able to accomplish this, because of the income tax returns that I thought I would be getting, and the take home pay I thought I would be receiving. Today, things became a lot more clear. This is because I filed my income tax return. I now have some solid numbers to go on and I can input some these numbers to my savings schedule spreadsheet.
Oh yeah, I have a savings spreadsheet. It’s modelled after my debt repayment spreadsheet, and it looks a little something like this:
As you can see, it’s pretty standard. There are three columns to reflect my three different savings accounts, and within each column you can see the opening balance of each account, how much I plan on contributing that month, and how much I plan on earning in interest each month. All of these accounts are held at ING Direct, and offer competitive interest rates.
Saving $6,000 for Retirement
For my retirement account, I plan on saving $6,000 in my RRSP. That’s a regular contribution of $500/month. This account has by far been the hardest to get used to, because it’s very much a slow and steady wins the race situation. I’m much more used to gazelle intensity. If I contribute $500 per month to my RRSP, I should hit my $6,000 goal by November, as shown below (click to enlarge):
This is definitely the goal that I am the most confident about. The money is in my RRSP, so I’m not going to pull it out, even in an emergency. It’s also a pretty low risk investment and even if it does lose some value I can still meet the target before the end of 2013. The only way I wouldn’t hit this goal is if I experienced job loss. Hopefully that’s not going to happen between now and September! Once I hit this goal, I’m not going to stop. I’m going to keep right on with that $500 per month.
Now that I know how much I’m getting for a tax return, and for my New Brunswick Tuition Rebate, I have a good idea of how quickly I’ll be able to reach my goal of a $10,000 emergency fund. Here’s what I found (you can click to enlarge):
My regular contribution to my emergency fund is $400 per month. On top of that, between my husband and I, we usually can throw $140 extra in from freelance or overtime work. In March, I’m planning on putting 100% of my $1,643.92 tax refund into my emergency fund, for a total of:
$400 + $140 + $1,643.92 = $2,183.92
In April, I’ll do the same regular contributions of $400 plus $140, along with my New Brunswick Tuition Rebate of $2,851.52, for a total of:
$400 + $140 + $3,391.52
As you can see, this means I’ll have my emergency fund fully funded by the end of May. This is pretty amazing, considering in January it had a balance of only $2,610.
The travel fund is definitely last on my priority list, but it’s still important to me. While I’m saving for my emergency fund, I’ll be putting away $350 per month into our travel fund. In June when/if my emergency fund is fully funded, I’ll redirect that cash into the travel fund. (click to enlarge)
In June, I’ll keep my regular $350 contributions coming, plus I’ll boost it with the $400 I was sending to our emergency fund, and the $140 in freelance income, for a total of:
$350 + $400 + $140 = $890
If I stick to this path, I should have my travel fund fully funded by the end of November.
And that, my friends, is how I plan on having $23,000 in savings by the end of 2014. When I started out this year, I felt a bit wary of saving. I felt that saving wasn’t as scientific as debt repayment, because there were so many unknown variables at play. I was also dubious of my ability to save so much money, because while I’m a debt repaying pro, I’ve never really saved all that much. In reality, the truth is that saving is just as much of an exact science as debt repayment, all I need is a great spreadsheet to go with it. You can save, you just need a plan.
How are you planning on reaching your savings goals this year? Does your income tax return play a role?