Checking In: 2019 Financial Goals

Hello and welcome back to Barlow Street! Let’s sit for a spell and chat about our financial goals for 2019.

I believe that, unless I proactively set goals for my dollars, they will slip right through my fingers. As a result, setting financial goals has never been about putting pen to paper for me; it has been about identifying and articulating my priorities and finding ways to spend my money in a manner consistent with those priorities.

Prioritize. Goal Set. Act. Evaluate. Repeat.

Being able to point to my values and priorities when I spend money keeps my “are you stewarding your money well” anxiety and fear at bay and is, therefore, critical to my mental health. Mercifully, since I already identified my priorities for 2019 – security, restoration and accountability – all I have to do is make sure my spending aligns with them.

To ensure I could actually meet my goals, I made sure that they were realistic, achievable and somewhat flexible. For 2019, I set five financial goals which align with my 2019 priorities.

  1. Max Out 401(k) (Security Priority)
  2. Max Out Roth IRA (Security Priority)
  3. Save or Invest 10% of After-Tax Income (Security Priority)
  4. Take a Vacation (Restoration Priority)
  5. Budget Consistently and Honestly (Accountability Priority)

To keep myself honest, I am checking in once per quarter to see if a goal needs to be modified or if I need to pick up the pace. I also have a financial “accountability partner” who can give me a gentle nudge if I’m giving myself “too much grace”.

Since I have this blog now, I figured I’d capture my Q2 “check-in” here. So let’s get to it.

1. Max Out 401(k) ($19,000)

With my salary, I have to contribute approximately 10% of each paycheck to meet this goal. I confirmed with my HR department on January 1st that my pre-tax contributions were set at 10%. I also confirmed that any excess contributions would count as an After-Tax Contribution to my 401(k), which I would count toward meeting goal #3.  I also receive an employer match but don’t count that toward my financial goal. (On Pace)

2. Max Out Roth IRA ($6,000)

In 2018, I contributed $500 a month to a high-yield savings account so that I would have the $6,000 required to max out my Roth IRA this year. Since I make too much to contribute directly to a Roth, I contribute to my Roth via a “Back-Door Roth” contribution, an odd legal loophole in the tax code.

In January, I contributed the $6,000 in my sinking fund to an empty Vanguard traditional IRA and later that same week converted it into a Roth IRA. As highlighted below, I also began saving for my 2020 Roth contribution in March by contributing $500 a month to a high yield savings account. I track my savings in You Need a Budget (YNAB) to ensure I am on track for 2020.  (Complete)

Roth IRA Sinking Funds (in YNAB)

3. Save or Invest 10% of After-Tax Income

In addition to the After-Tax 401(k) contributions referenced in Goal #1, I automatically deduct ~$2,000 a month from my paycheck and send it to a high-yield savings account. I budget those funds directly into savings goals or toward my brokerage account which I use to invest in low cost index funds.

Like many, I have had some anxiety around investing this year (due to volatility in the market) and think I could benefit from a second set of eyes on my investment approach. Therefore, I’d like to meet with a financial planner by September of this year to discuss whether I have too much cash on hand and my current allocation. (On Pace)

4. Take a Vacation

I hate planning vacations and, besides milk, there is nothing that makes my stomach cramp up more than thinking through the details of getting away. As a result, I never get around to using my vacation days. However, I’ve been feeling a bit burnt out so I made taking a vacation a priority this year.

This image has an empty alt attribute; its file name is 2-1.png
Vacation Sinking Funds
(in YNAB)

To fund this vacation, I have been setting aside $200-300 a month in a “Vacation” sinking fund and tracking my credit card rewards in similar sinking funds since 2018 and I’m finally going to use some of that money.

I am taking (and already booked!!) two trips: (i) one to France in July and (ii) one to Iceland in October using rewards and a small bit of the cash sinking fund. Since Paris is up first, I am already researching the best place to grab coffee and eagerly awaiting early July. I’ll definitely keep you in the loop as to how vacation goes. (On Pace)

5. Budget Consistently and Honestly

As highlighted in the screen shots above, I’ve been budgeting with “You Need a Budget” (YNAB, affiliate link) for the past twenty months (or so).  In 2019, I hoped to better align my spending with my priorities and to continue growing my net worth. So far, I’ve been successful, thanks – in part – to YNAB.

I love how YNAB encourages intentional spending by forcing you to decide where to put each dollar in your budget. By setting realistic “dining out” goals and setting aside money to grab tacos with friends, I am finding less reasons to feel bad about my spending. I’d like to continue this trend for the rest of 2019. (On Pace)

What about you? What are your financial goals for 2019? How are you planning to meet them?

-Barlow

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