Much like resolutions to lose 20 pounds and stop swearing, I figured it’d be worthwhile to make a money resolution that I’ll keep for two weeks and then feel guilty about abandoning for the remaining 50 weeks of the year.
Kidding—I think a “reach” resolution is a good idea, because even if you don’t get all the way there, you’re going to be a lot closer to your goal than if you hadn’t set one at all. Aphorisms out of the way, here’s what I’m gunning for in 2019. Strap in, people, we’re getting lofty.
The lofty objective: Hit $50,000 in net worth before I turn 25
(I turn 25 on Dec. 22, 2019, effectively the end of the year.)
Keep in mind two things here. If you’re worth (or were worth) hundreds of thousands of dollars at 25 already, I assume you either started your own company, somehow managed to finagle a bitcoin victory, or inherited money from your family.
I did none of the above, so my net worth upon starting my average salary job was approximately a few thousand dollars of savings.
On the flip side, I have no debt. No student loans, no interest-accruing credit card debt, etc.—essentially, I started at net zero. Not a bad place to be.
To me, $50,000 in net worth (across all accounts—checking, savings, 401(k) money I can’t touch, a few different investment portfolios of my own making, etc.) is a pretty aggressive goal, considering it means I’ll have to save and earn more obsessively than ever before in 2019.
Whether that means taking on more Sculpt classes, discovering another stream of income I haven’t yet considered tapping into (announcement on this front coming soon), or getting even more crafty with the way I spend, I don’t think it’s impossible—it’ll just require the very simple equation of income > spending, by a lot.
Luckily, we live in the age of the Worldwide Web, where people have chronicled every possible avenue for spending frugally and saving aggressively. Join me, friends, and set your own financial goal. Here are the two major ways I plan to approach mine:
Tactic #1: Taking another, more critical look at my overall budget
Here’s where I currently stand with my spending limits—numbers I used to almost consistently go over. If you’ve never set a budget before and you need a benchmark of where to start, consider this radical transparency for your benefit! Adjust accordingly. Or, download the free budgeting tool on the side bar of this page.
Rent & Utilities: $1,015
Restaurants & Bars: $400
Gym: $120 (this budget is retired now since I don’t pay membership fees)
Personal Care & Shopping: $200
Total monthly spend, if perfectly on-budget: $2,455
Admittedly, when I look at this list, it doesn’t paint the picture of someone who’s depriving herself. $400 for restaurants? $200 for shopping? This isn’t indicative of someone who's spending really consciously (and yet, how EASY it is to spend this money month after month).
I’m going to make some adjustments where I see possible in 2019 to set a few tighter limits and cut down where I see tendencies to overspend. Stay tuned for where I net out.
To meet the goals I'll outline below, I need to cut about $235 out of the budget above and shift it to savings every month.
If you’re looking at this outline like, Holy shit, how does she know how much she’s spending in these categories? How did she even set these limits to begin with? This is ridiculous. Check out one of my first money posts about budgeting here. It might help you get on the right track for 2019 and decide a reach goal of your own.
Tactic #2: Not getting myself into an egregious budget hole
I started giving a genuine damn about money in May 2018 (I know this because that’s when I started my asset tracking spreadsheet), and I was already a couple thousand dollars over budget in multiple spending categories.
Through a combination of finding extra freelance work, taking on more classes at Corepower, and selling clothes on Poshmark (all while cutting way back on spending), I—little by little—got successfully back on track to close out 2018 in the black.
In 2019, I want to REALLY commit to being consistently under budget, not over—so I can save in excess of the standard 20% savings benchmark.
Ideally, I’d like my take-home pay "save rate" to be closer to 30%, separate from the money I’m saving in my 401(k) at a rate of 10% of my salary, for a total savings rate of 40% (plus our Company 401(k) match).
Hitting $50,000 in net worth is truly only possible if I stay on or under budget, consistently, and keep finding new ways to supplement my take-home pay through active or passive income streams.
Quick definition moment:
Active income stream: Money that requires constant work to continue earning a paycheck—e.g., my actual salaried job, teaching yoga, etc.
Passive income stream: Something that requires an upfront investment of time or money but then pays out over time with no additional work; e.g., selling an eBook, Airbnb-ing or renting your apartment (to an extent), etc.
Thanks to finding frugality late in the year, I was able to cut back on a lot of wasteful spending habits.
And if you're wondering how I tracked my progress every month in 2018, the tool that helps me is Mint’s “rollover” budget capability—I let overages (and underspending) roll into the next month for an excess of spending or some excess funds. This helps me see the overall picture of my budget so going WAY over-budget in the previous month doesn’t get wiped clean.
It's truly just math. And although budgeting isn't sexy, it actually CAN be fun once you have a concrete goal determining how and where you save. By setting up parameters and learning to live within them comfortably, your money functions to free you—not prohibit you.
If I know how much I need to save in order to hit my goal, I just have to work backward. Then it’s just a matter of follow-through. You can do the same thing. Maybe your financial goals are more aggressive—maybe you're already in the six-figure club and you're trying to hit seven.
Or maybe you just want to pay down a debt that's been hanging over your head. Whatever it is, I've found capturing the overall picture first is the best place to start. And when BETTER to start than Jan. 2, 2019?
If you need to look back at your expenditures for the year and get an idea of how you spend in order to make your budgets, you can download your data from your credit card company or checking account to see how the categories break down. It's eye-opening.
And now's a great time to start tracking all your assets, a process I outlined and explained a few months ago. Check out the original post for a refresher and make your own!
What's your finance goal this year? Let me know!
The young woman's money guide for all the things you're too embarrassed to ask your friends. Build the life you thought you were too broke to afford through managing your spending habits, travel hacking, and simple, smart investing.
Full-time Brand marketer at Southwest Airlines, part-time Yoga Sculpt teacher, occasional Waffle House Model and reformed materialist.
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