Today, I thought I’d share my progress toward my long-term savings goals. As I shared in my last blog post, Journal Entry 10 (click here to read), I focused on my long-term savings goals after consolidating my bills.
When I started working overtime at the start of this year, I increased my company retirement plan (457B, similar to a 401k) from 10% to 20%. In the past, I never maxed out my company retirement account. Looking back, each year, I regretted it because I was just a thousand or two short of meeting the maximum distribution amount.
This year, as part of my long-term savings plan, I plan on maxing out all of my tax-advantaged accounts that will benefit me. Some of these tax-advantaged accounts will also decrease my taxable income. Hopefully, this will help me out come tax time.
Some of these tax-advantage accounts include my FSA, a flexible spending account that I can use towards many things. For instance, I can purchase sanitary napkins, SPF, allergy medications, and so on! I even bought a bidet with my FSA card. Recently, I learned I could purchase a Peloton with my FSA card, too. I don’t think I will, but knowing I can is great.
I suggest keeping the card in your wallet just to make purchasing easier, instead of requesting a reimbursement. The max contribution for FSA is $3300.
My company renews the FSA contribution every August. This August, I plan on contributing $3300 to lower my earned income and max out my FSA. Essentially, the goal is to avoid being double-taxed. If I made a purchase, I would have to pay sales tax and taxes on my income.
Before, I contributed a small amount, like $800, and each year, I slowly increased by a couple hundred more when I found that my eye prescription and my daughters’ eye prescriptions alone cost $800. In 2024, I contributed $1800 to my FSA.
Other tax-advantaged accounts include my 457B, as mentioned above. It’s like a 401 (k), but since my company is a state and local public company, we have a 457B instead.
My paychecks are every two weeks, so I make a 20% pre-tax contribution to my 457 B every two weeks. Because I make a 20% contribution, my earned income is reduced, and my remaining earned income will be taxed.
In addition to my long term savings goals, I have two Roth IRAs, a high-yield savings account, and four stock investments. Two are index funds, and the other two are direct company stocks.
The contributions I make to these accounts are not tax-advantaged except for my Roth IRA. I don’t reap the tax benefits of my Roth IRA on initial deposit, but I hope it will save me on taxes upon withdrawal.
Since I’m focusing on depositing 20% into my 457B and maxing out my FSA, I am not depositing as much into the other non-tax-advantage accounts. In total, I’m depositing $1160 into several accounts. When I write it out like that, that does seem a lot.
Let’s break down where that $1160 is going:
Betterment
I have two Betterment accounts: my Roth IRA and a high-yield savings account (HYSA).
Betterment Roth IRA: $300/month. Deposits $150 every other Friday.
Betterment HYSA: $150/month. Deposits $150 every 15th.
Fidelity
Fidelity Roth IRA: $250/month: Deposits $150 every other Friday.
CashApp
I have four accounts. Two are index funds, and two are regular shares. The two regular shares, I don’t contribute regularly to them. I just purchase when I see fit.
CashApp Index Fund SPY: $80/month. Deposits $20 every Monday.
CashApp Index Fund VOO: $80/month. Deposits $20 every Monday.
Credit Union
I created a relationship with them and have opened multiple accounts through them. For instance, I consolidated my external loans with them. As I mentioned in a previous blog, I also just opened a checking account with them. I intend to use this checking account for everything other than bills.
Credit Union Checking Account: $300/month. Deposits $75 every Friday.
I’m hoping to use this checking account for everything other than my bills. This second checking account was a recommendation by Tiffany Aliche, author of Get Good With Money. Click here if you’d like to learn more about her book.
In my blog post, Journal Entry 10, I list several books that have helped me along my financial journey. If you’re interested in reading it, click here!
Now, here’s the trick to my long term savings goals. If, like me, you are in debt, and think there is no way you can save anything. You have to think creatively, AND you have to PAY YOURSELF FIRST!
I had to get honest about my spending and stop using my credit card, which caused me to accrue more debt. I also had to find different ways to save more cash in my pockets.
One of those ways was to consolidate my loans, as I mentioned in the last blog, which you can find here. By consolidating my loans, I have $500+ extra in my bank account because it lowered my monthly payments.
However, you have to be very careful with doing this because you don’t want to keep moving money around consistently, and not pay anything off. You want to pay it off to become financially free.
Okay, back to my long term savings goals. Here’s the real trick to savings: I make everything automated and make it for small increments at a time. In the breakdown list above, next to the deposited amounts, I share when funds are deposited into each account. Some of the savings accounts are as little as $20 per week.
I did it this way because it looks less intimidating when it’s being deducted from my primary checking account. I usually don’t notice when it has been taken out.
Also, if necessary, I can stop some deposits should I fall short on paying my bills.
It may make more sense for some people to see $1160 and question why I don’t deposit that all into one account. That’s a great question. However, my answer is: I’m currently learning as I go, and saving my money the way that feels safer and more comfortable for me. Instead of putting it all into one basket, slowly diversify.
I might not be doing it the “right way”, but I am doing it the way that feels best for me. And like I said, I’m learning and will always be learning.
I plan on saving $36,000 in my high-yield savings account for emergencies. I have two Roth IRAs, one more aggressive than the other. My index funds are for educational purposes. I’m still learning about them and would like to invest more when I feel more financially confident.
My focus right now, honestly, is my retirement accounts. Since I’m 46, I am worried about my future. I only started saving for my retirement about 10 years ago.
At first, I didn’t track how much I was saving. After I finished balancing my budget, I finally had to track all of my savings. Now, in addition to my spreadsheets for tracking my bills, I also have a spreadsheet for my savings.
There you have it—a plan for my long term savings goals. It may not be much for some, but this is one of many small steps towards financial freedom for me. Although I haven’t kept up with my blogs routinely, I’m proud that no matter how busy I get, I still find time to keep track of my budget.
Even if things look bleak, I hope my journey inspires you to start. You have to put one foot in front of the other, and things will begin to fall into alignment.
As always, thanks for reading! I would love to hear from you! Please share your financial journey below.
Love, Sutivi.
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