Financial Adulting. Ashley Feinstein Gerstley
to pay. So if you plan to move August 1st but have to pay the first, last, and security a month earlier, you'll want to have it saved by July 1st.
How Much Do I Need to Start a Family?
The costs to start a family can vary widely, depending both on circumstance and preference. Fertility treatments like IVF may or may not be covered by your company's insurance and, if not covered, can create out-of-pocket costs of, on average, $23,000 per round.2,3
Once pregnant, the largest costs in the first few years are the health bills associated with giving birth (more on this in Chapter 10), getting set up with the baby gear (nursery, stroller, car seat, etc.), and then childcare. Childcare costs depend on where you are located, what childcare choices are available, and whether you have family available to help.
Add up the total one-time costs and the total ongoing costs. Once you have an estimate for the upfront cost, divide it by the number of years (or months) you estimate until you will need the money. This gets you to your goal contribution amount. For the ongoing costs Lauren recommends creating a budget based on your new child expenses and current income (I'll show you how soon). The total cost of the first year of a child's life generally can range from $16,000 to $50,000. That doesn't mean you need to have that amount saved in cash, but to be prepared with a combination of savings and lifestyle adjustments.
With goals like this that seem more ambiguous it can sometimes feel silly to plan, but it's so much better to have something set aside than to wait until you have more information. You can and should adjust these goals as you learn more or things change, but don't wait to start!
How Much Do I Need to Take Care of Family or Elder Dependents?
For many, caring for parents or other chosen family is part of the financial plan. It might be a current reality or a reality in the future. This can influence where you choose to live (because you'll need more rooms), savings plans, retirement plans, and, really, all the plans.
One of the hardest parts of making a plan is having a conversation with the individual(s) you may want to take care of. Understanding their wishes as well as what resources they have available, if any, will help tremendously in your planning.
Much like other financial goals (like retirement), there are many things you won't know. Do your best to make an educated estimate and adjust as you have more information.
How Much Do I Need to Start a Business?
This depends so much on the business but doesn't have to be expensive. Are there any one-time costs to get set up? What costs are ongoing? For example, you might pay $200 to get your website set up initially but then the cost of maintenance is $10 per month. You'll want to incorporate both types of costs into your plan.
How Much Do I Need to Take Time Off to Travel?
Cinneah El-Amin, a personal finance travel creator and the founder of Flynanced, walked me through her four-step process for mapping out the cost of travel.
1 Start with flights. Cinneah searches Google flights and sets up an alert as soon as she has the idea for a trip.
2 Think about accommodations. For group travel, Cinneah prefers Airbnb and loves Booking.com for smaller, more intimate trips because there is no prepayment and cancellation is free.
3 Plan for trip “extras.” Cinneah then gets a quote for travel insurance (look to see what you already have covered if you're using credit cards) and checks whether there are any visa requirements, that her passport is up to date (if it's an international trip), and if there are any COVID test requirements and fees.
4 Give yourself spending money. Cinneah recommends budgeting for daily spending money so you're not relying on credit cards or savings to fund your daily expenses.
5 Add it all up. This is what you want to have saved in your travel fund (more on this in Chapter 5).
Now that you know “how much,” adjust your SMART goals accordingly.
For the Love of Money: Money Goals with a Partner
If you are partnered up, it's great to do this exercise on your own, but then you'll also want to include your partner in your goal planning. You might have some shared goals and some goals that are just your own. You might agree on the priority ranking for some and disagree for others. This is all okay! What's most important is that you have a conversation and come up with a plan together.
Maybe you contribute jointly to certain goals and then you each contribute to your respective individual goals. If you disagree on the ranking of a goal, you might compromise and contribute to two at the same time and/or encourage one another to contribute to individual goals. There are a million and one ways to figure it out, and know that the plan you come up with isn't set in stone. Try some things out and see how they go. Adjust from there.
Decide How Many Goals to Work Toward
If we focus on one goal, we achieve it more quickly. That being said, choosing one goal can be really difficult when we have lots of things we are excited to accomplish. Also, a goal like retirement is something we may be working toward until we get there, and we probably want to make other things happen in the meantime.
On the other hand, if we focus on too many goals at once, we won't see any real meaningful progress because the money is spread across too many areas. That's not motivating. Choosing two to five goals is usually a good sweet spot.
Write down the goals you plan to work toward. If you choose to work toward three goals, write the top three goals from your list. If seeing it this way has you wanting to reprioritize, go for it!
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Make a Preliminary Plan
Break each goal you plan to work toward down into monthly contributions. You can do this by dividing the amount you need for the goal by its timeline. If I want to save $3,000 for my rainy-day fund this year, that's $250 per month ($3,000/12). If I want $50,000 for a down payment in three years, that's $1,389 per month ($50,000/3 years = $16,667 per year/12 months = $1,389). If you prefer to contribute biweekly or weekly, do that instead.
It might be unrealistic to save $250 or $1,389 per month. That's just a starting point to give you an idea. You can start small and go up from there. If you receive one-time or less frequent sources of income like a bonus, commission, inheritance, or payout, that can also go toward your goals.
Important Reminder: Not everything has to go toward your goals. You might decide on a celebration gift for part of the money as well.
When making your preliminary plan you'll also want to decide where the money goes. If you're paying down debt, the money will go directly to your debt payments, but if you are building your rainy-day fund, you'll want to have a savings account for that.
| Goal | How Much | How Often | Where |
|---|---|---|---|
| Example: Minimum Rainy-Day Fund | $250 |
|