Now I ain't Sayin' she a Goal Digger

Hello ladies and gents! Did I catch you on the couch watching Netflix?
No judgment, I am there too.

I hope everybody is healthy during this very sick season that has been hitting us lately. Including myself.

This week’s topic might just be something you can do in this colder days:

• Now I ain't sayin' she a goal digger - financial planning for 2024

• Closing the gap - Greta Gerwig

• Book of the month - Psychology of Money - part V

LET’S COVER THE BASICS

Don’t panic, just plan

With December just a few days away and Mariah Carey with her “All I want for Christmas is you" song already on high volume in every shopping mall, it’s no better time to start planning how your 2024 will look like. Financially of course.

But first of all, I will take the full freedom and rename financial planning to “making money moves”. Sounds more fun.

First thing that you need to figure out, before making your money moves, is the motivation behind.

What is your north star that will keep you following the plan you will set for yourself? Is it because you want to retire early? Is it because you want to provide the security for yourself or because you want to enjoy more freedom in life?

Whatever that might be, try finding it and remind yourself of it when going gets though. Because it will at some point.

For me it’s very simple. I want to take advantage of the money that I am making now, to hopefully buy me some freedom of time in the future. Especially for the time when I’ll have family. I want to be a present mother when I have kids and hopefully making some right choices now, will allow me to do that.

Hold up! I didn’t even explain what financial planning a.k.a. making money moves even is. My bad.

It’s basically a plan you make for your money. OK, moving on.

When you find your “why”, I suggest you write down the things that you would like to have in life that will serve your why - an emergency fund, a house, car, early retirement¹, long vacations each year, new Valentino pumps, whatever that might be.
Write all of them down, but don’t go making a list of 100 things even though Santa is coming soon. Be realistic about what you actually want, makes you truly happy and what you can achieve with the income you have right now.

Disclaimer - you can adjust your wishes later if you get a bigger paycheck or find a hubby that will help you out with navigating this thing called life.

Ok. Once you finish the list, you need to also write a timeline or a date up until which you want to get this done. Again, be realistic about it. If you make the timeline unrealistic and you’ll be stressing about how much money you need to save each month, you’re never gonna buy that house. By all means, dream big, but stay grounded at the same time. Also, keep in mind that anything can be achieved with a long enough time horizon.

I suggest that when making the timelines, you go back to the beginning and ask yourself what is your motivation behind making this plan. What is important to you? What do you want out of life?

When you have them all written down, now you divide them into the following categories:

• short-term - should be achievable in a year or even less - vacations and new Valentino pumps fall into this category

• mid-term - 1-5 years, depending on the amount you want to save + the income you have at the moment - down payment² for a new house or an apartment and a car. Early retirement might also fall here if you make enough money.

• long-term - over 5 years timeline to achieve those - retirement and paying of the house or the apartment

This will help you sort them and basically prioritize them in a way. It will give you a picture of how much money should you put towards each of them monthly.

Do you remember when we spoke about the budgeting rules? Well, now is the time to read them again and figure out which suits you. They are very much related to the time in which you’ll achieve things you set out for yourself, because that part of your budget that is meant for wants and savings/investing, is the one that gets used here.

If you are fine with getting to your goal slowly, just use the savings/investing part of your budget. If you want to get that house/apartment quickly, use also the “monthly wants budget” to get there sooner and say goodbye to occasional shopping sprees.

There is no right or wrong way of doing it, you have to figure out what works best for you and make a plan that you can follow.

But enough theory. Let’s look at some examples.

Let’s say you want to save for a down payment on an apartment and you are ready to spend around 200k on an apartment (them crazy prices I know). Usually the down payment is around 20% of the apartment price, which means that you need to save up 40.000 €*.

The math is very simple.

40.000 € / 5 years = 8.000 € that you need to save up each year
8.000 € / 12 months = 666,66€ that you need to put aside each month

*I know everybody usually uses $ when writing about money, but where I come from we use €, so € it is.

Do that for all your wishes and shift the timelines around if you need to. Maybe that vacation to New Zealand next year is not that important and you extend the timeline for a year if saving for the apartment is more important to you.

Also, even though saving up for those very cute Valentino pumps might be the easiest goal to achieve and it does fall into the short-term goals, it does not mean you need to start saving for them tomorrow. Try to get to that apartment first. Start saving for them when you get to halfway point of your down payment budget. The shoes will wait. 

Now, when you’ll crunch all the numbers for all your wishes, it might be a lot to handle. It will look like there is so much money that you need to earn and save till you get to your goals, that you’ll just want to give up before even starting.

Don’t you dare.

You are a young woman and you have more life ahead of you than behind you and you can get it done. You just have to start.

Also, did you catch that Cardi and Kanye references? 😏 There was a rap playlist rolling when I was writing this.

GLOSSARY

• ¹ early retirement - the common definition of early retirement is a situation in which a person stops working way earlier than at the usual statutory retirement age. Lately it has been very popular for people to achieve FIRE (not an actual one) - Financial Independence, Retire Early.

• ² down payment - a sum a buyer pays upfront when purchasing an expensive good such as a home or car.

CLOSING THE GAP

Greta Gerwig

For those yet to be captivated by the magic of Greta Gerwig, let me introduce you to a cinematic powerhouse who has been reshaping the narrative in the film industry.

But I think most of us went to see the Barbie movie so you know who she is.

Greta Gerwig is a director, screenwriter, and actor. She began her career primarily focused up on acting, particularly in independent films. I remember her from a small role she had in the movie “No strings attached”. Funny movie. Just rewatched it when I was sick.

Just this Monday she was named the recipient of the Palm Springs Film Festival‘s Director of the Year Award for Barbie, that became the year’s biggest box office hit grossing $1.44 billion worldwide. Barbie grossed $356 million in it opening weekend, marking the biggest debut ever for a film directed by a woman. Go Barbie and Greta!

Besides all of the above, Greta has also been an outspoken advocate for gender equality in Hollywood, using her platform to address the industry's gender gap and championing more opportunities for women in various roles.

True role model.

BOOK OF THE MONTH

The Psychology of Money - part V

by Morgan Housel

In one of the last chapters Morgan lists a bit of a summary of the book, but he starts with saying the following:

I can’t tell you what to do with your money, because I don’t know you.
I don’t know what you want.
I don’t know when you want it.
I don’t know why you want it.

And since I already wrote quite a bit about this book, I will finish it with only one quote from the summary.

Because sleep is important.

It is very hard to convey the lessons from these chapters, so I highly recommend buying this book. Or, if you prefer listening/watching instead of reading - Morgan Housel was recently a guest on a podcast that I love listening to called The Diary of a CEO. You can find it on Youtube or wherever you listen your podcasts to (Apple or Spotify).

Also, next week we are starting with a new book - The Intelligent Investor by Benjamin Graham or as I like to call him B3. It’s a joke. My friends will understand.

SOME NEWS

• Do you want to also plan other goals for 2024 besides financial ones? This framework might help you.

• Health is another great investment for life. Your gut instinct might just be more important that you think. 

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