I wrote a blog post recently about trying to figure out our priorities for saving, and mentioned three areas I’d like to save for: an emergency fund, a vacation fund, and Killian’s preschool tuition.
I’ve made some headway in my decision-making and thought I’d share what I’ve decided to do.
Killian’s Preschool Tuition
I figured out that if I start putting away $150 a month in a savings account, beginning this month, that by the time Killian starts preschool a year and a half from now, I will have enough saved up to pay his tuition, if I then use that $150 plus money from the account to cover the difference. That is based on the cost of tuition for this coming fall, so things could change.
I know some people will think it’s irresponsible of me to save for or send him to preschool while we don’t have an adequate emergency fund. They’re entitled to their opinion and I can see where they’re coming from, but we are committed to our preschool for reasons that go beyond just him going to preschool, as I also wrote in a previous post.
Also, regardless of what the money is being saved for, it’s still money that’s being saved. If it turns out that circumstances change for the worse, then preschool is clearly off the table and we’ll redirect those funds to the emergency fund.
Where’s it going to come from?
I am earmarking money from the both the savings budget and the education budget to fund the account for Killian’s preschool, though I’m not certain how much from each I will use. We have a surplus in the education budget for now. I don’t expect any more education expenses, other than summer swim lessons, until it’s time to decide on curriculum for first grade in a few months.
My plan is to open a SmartyPig account for preschool and have it automatically taken out so I don’t even have to think about it. Yay for automation!
Emergency Fund
So whatever is left over in the budget after the addition of the preschool savings account will go toward the emergency fund. I still don’t know how much that will be, once Joshua’s new paycheck deductions are in place.
I’d like to put any surpluses from other budget categories toward this as well, but deficits in other areas each month (like health care) have been eating those up. Some of those surpluses are restricted, as they need to be saved from month to month (like dental), but others are gone when they’re gone (like groceries, etc.) and can be moved.
Of course, our new HSA will help with some of that, too, but that will take time to build up as well. Most of the budget categories that accrue from month to month are the health-care related ones, but there’s also quarterly bills like trash pickup, and once-a-year bills like the car registration. So I don’t want to over-save my surpluses and not have a buffer for the budget.
Vacation/Travel
This is the tough one. Between saving for preschool and the emergency fund, I don’t think there will be any money left for a vacation and travel budget. I suppose I could create one and then dissolve it for the emergency fund if we needed it (like I will be doing for preschool) but I haven’t decided. I think I’m going to wait and see how our budget evens out first.
Since we haven’t had a vacation budget, we’re scrambling trying to find money to pay for our upcoming trip to Texas. That’s a problem. I’m afraid our lack of planning is going to cause us to whip out the credit card to pay for the car rental and meals, which sets us back into debt repayment rather than savings. I’d like to avoid this in the future, so I’ve got to find ways to save and plan.
People will graduate, and people will get married, and people will die, and we will need to have money saved for travel expenses, even if we never get to go on a “vacation.”
The Bottom Line
I’m afraid that at the rate we will be able to save for an emergency fund after factoring in saving for preschool and traveling (or having to pay back debt for the latter instead), is going to be dismal, and is going to take years longer than we originally planned. Arrgh!
The reality is that in two years, there will be no more preschool payments, and in three years there will be no more car payments, which frees up a nice chuck of change - but that’s still years away. In the meantime, if crisis strikes, then we do whatever we have to do. I’m not afraid to liquidate all our funds and possessions or do what it takes to get us through whatever we need to get through.
I like living in San Francisco, having a car, and I enjoy the luxury of being able to homeschool my kids. I recognize all of that for what it is, but if we had to move out and sell everything we own and I had to take on two jobs to pay the bills, you’d better damn sure believe I’d do it in a heartbeat.
But right now - today - we don’t have to, and while it would be great to accelerate all of these goals, I don’t know if the cost it would take to do so would outweigh the benefits of the choices we have consciously made for our “lifestyle.” Perhaps for other people it would make sense, but for now, it doesn’t for us.
So we will plod along toward our goals for now and be happy with the baby steps we’re taking each month.
good points!!!
I find it easy to not do what is best for “us” to do what is prescribed best. Sounds like you two are making a life worth living.
Finally opened an IRA, spurred on by taxes due tomorrow. Nice to see a government tax incentive actually incentivizing us to do something, especially something I’ve been meaning to do for oh, 7 years. Thanks for your thoughtful money blogging!