Allocating Our Income
Well Heeled’s post about having enough income needed to hit her long term goals really got me thinking about long term goals and how we’ll be able to afford them.
I almost never feel like we need more income to meet our goals. I’m generally optimistic that when we are ready for the big next steps in life, the income will be there to help support them. Maybe this is a bit naive. Maybe I just don’t spend enough time clearly defining the long term goals. Maybe I just will move the big goals until we do have the money for them. My approach to meeting my long term goals is to save as much as possible now, so we’ll have more freedom to choose later.
We have 1-2 fairly major expenses coming up in the next 2 years ( post coming soon!). My strategy is to save whatever cash is left towards the furthest priority – a down payment on a home.
Year after year, we make the best decisions we can with our savings and spending. Just because I say that I want a house in 3 years doesn’t mean we’ll actually be able to allocate any more money to housing without sacrificing things that I think are important enough not to sacrifice. Also, I don’t want a house until it is clear it makes the most financial sense for us.
I prioritize travel at this point in my life, because it is a passion of ours and we don’t have kids. This is one place we could make major impacts on our savings, to the tune of $5-$10k a year (for the past 2 years). I prioritize retirement because I have no kids and I have a good salary, and it just seems like the right time to be saving for the super long term. I have not (in the past) prioritized saving for cash for a home. We don’t know where we will be living in the long term (though most likely, a high cost of living area), and we don’t know what our salaries will be. But I think we’ll be able to pull it off, when the time comes. I don’t want to change any of my current priorities, so there seems to be no sense worrying about the future.
It was weird for me to realize how few plans I have for a home and kids and anything 10 years down the road. I am a planner, after all! But I trust in myself and my husband, and therefore, I trust in our future. We’ll make the best choices we have and deal with whatever surprises life throws at us.