How I saved 39k in 2023
New Year, New Goals. No, seriously. As someone who is obsessed with goal setting the new year brings me so much joy for two reasons:
New FSA contributions - which means I pay for medically eligible items like copays or prescriptions using pre-tax money (this also lowers my taxable income).
You have a fresh year to increase your net worth (as someone who is obsessed about financial independence).
Last year, I was scrolling through Tiktok and I saw someone post a map of how they were investing their money. I was both intrigued and inspired and wanted to see what my own 2023 money map would look like. Keep in mind that this individual and I have COMPLETELY different net worth and sources of income, so I created a map that made sense for me as a first generation individual who has no generational wealth and only one source of income. See below for what I came up with.
On this map I had projected saving / investing a total of $36,000 dollars on an $84,000 salary.
$22,500 to my 457(b) - the cousin to a 401(k)
$6,500 to max out my ROTH IRA - because tax free growth is queen.
$7,000 to my regular savings - this is money that I will someday buy a house with or new car (whichever comes first).
At the time the numbers seemed kind of scary and daunting. There was a little voice in the back of my head that was doubting whether I would be able to actually be able to save what I had planned.
Questions like: what if I lose my jobs, what if I quit my job, what if I need to cover some crazy large emergency.
None of those things occurred - keep in mind that this was the first time I was maxing out all my retirement accounts and this was also the largest amount of money I had saved in a year.
What did end up happening:
I invested $29,000 towards my retirement accounts (457b and ROTH IRA).
Saved $10,000 towards my life savings (My former low-income inner child could not be more in awe).
That is why I am a firm believer of pen to paper. I do feel like it trains your mind and sets the pace in order to make those goals happen. Yeah of course, the worst case scenario would be that I blast myself on the internet where only 66,000 people watch the video and try to meet my goal as close as I can. There is always next year, right?
That being said, let's set goals for this year, yeah?
SMART: I am sure if you have ever written down any new year’s resolutions, they always say to create Specific, Measurable, Achievable, Relevant, and Time-Bound.
Since this is a personal finance blog, some examples might look like:
Pay off my $5,000 credit card balance in 2024.
This is specific as it relates to money and we have a set figure.
It is measurable because we set a number that can be tracked each month.
This goal would be achievable if the person goal setting, had about $400 dollars extra a month OR would be in a position to make that money through a side hustle. etc.
$5,000 / 12 months in the year = $416.66 would need to be paid towards that debt each month. This is also equivalent to $208.33 per paycheck (assuming you get paid biweekly).
Relevant & time bound - if this individual was trying to pay off that debt amount within a year (assuming 12 months).
Other goals that can set an individual on a different financial trajectory could be:
Manage debt.
keep in mind this does not have to mean paying it off, instead that you will set a specific amount each month to tackle that debt.
Save for your next vacation.
Build a business.
If any of these sound achievable or this post was inspiring enough to create other goals, I would love to hear about it (elizabeth@firstgenrich.com). Happy goal setting!
