The Idealized Financial Life

I spend a lot of time thinking about my idealized life. How I would like it to be. They say that the first step towards achieving a goal is to first be able to set out exactly what your goal IS.

So what I’m thinking of is what my ideal life will look like in 3-4 years and what I need to do financially in order to obtain this life.

1: A good job that pays me at least $60,000/year

2: Vacations every year for at least 2-3 weeks to nice places around the world

3:  Fully funded emergency fund with no consumer debt

4: Eventually a house that I can retire into without a mortgage

5: Discretionary money for hobbies and activities I enjoy

6: Enough savings to retirement so that I don’t have to worry about “what will happen to me”

8: Save for my “future life” – a wedding? children? who knows?

So how does this all work out? How can one have all of the things that they want ideally in the “real world”?

First: the job. Making $60,000/year for me shouldn’t be an issue. My next position will be as a faculty member at a University. I don’t know where, or what the salary will be, but likely my starting rate will be between $55-75k/year.

So let’s say that I do make $60,000/year. That would come out to $5,000/month – which after taxes would be about $3,600/month (BTW… it seems REALLY crazy to me that a raise of $23,000/year only nets me  an extra $1,000/month).

I’ve decided that in order to travel like I want to, I need to save 10% of my income. So each month I’d need to save $360 towards travel. $4,320/year is more than enough for a very pleasant vacation for one for 2-3 weeks.

10% of my salary would go to basic saving – funding an emergency fund up to $10,000.

10% towards a future life – saving up for a wedding or child college fund.

10% perhaps towards a house down payment.

10% of my salary towards retirement (IRA, mutual funds, ect).

So there, 50% of my salary gone each month, just by the tings that I want to save towards. Thus, I’d need to live on $1,800/month for all discretionary expenses. Rent… clothes… food… fun… bills… In some ways that feels like so much, but in other ways it feels like so little. But maybe that’s because I’m used to so much of my salary going to debt each month.

And maybe I’m thinking about this wrong. Maybe I shouldn’t worry about saving a percentage of my income each month towards vacation funds or wedding funds – maybe instead I should be worrying about saving a certain amount each month.

Or maybe I should just start with the goal of getting a job that pays me at least $60,000/year and worry about how I’ll spend it/save it when the time comes.

EDIT: Why $60,000?

Jessie asked me, and I’m sure others are wondering. How did I get the number $60,000? I didn’t just pull it out of thin air, it is just a rough estimate of what I’m likely to be making in my next position.

I’m a Chemist, and my next job will be as a faculty member at a University. Lucky for me the Chemical and Engineering News (which is published by the American Chemical Society) puts out all the employment and salary information for just about any type of job a chemist could have. Here are the number published in 2009 (from 2008 data):

Since I will just be starting out in two years, I’ll be an “assistant professor” – keep in mind these are mean salaries. I will most likely get a position at a Ph.D. or Master’s granting institution – since these will be the positions that I’m applying for. Which means that my salary will be (mean) between $55k-65k. Sure there is a lot of variability – especially when you’re dealing with mean salaries, but if I have multiple places that want to hire me than it is likely that I’ll be able to get a salary that is above the mean. So since $55-65k is the range I’m looking at – planning around $60k and making adjustments when I actually get offers (won’t happen for another year and a half) – seems reasonable.

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6 Responses to The Idealized Financial Life

  1. Sign me up for $60,000 a year please! And I think once you get the raise, you should aggressively pay off your debt before you start saving for all of the fun stuff. Once that is done, you can save for all of the fun stuff and really get to enjoy it!

    • SS4BC says:

      Actually, the plan is to not have debt (at least no credit card debt) before I get my faculty position – so I’ll be starting “fresh” when I start my new job.

      I will probably have student loan debt, but at 2.625% interest I’m not *too* concerned about it since a lot of savings plans will earn more interest than I will accrue on the student loan debt.

  2. Jessie says:

    how did you come up with the ideal salary of $60,000? Did you do up an ‘ideal budget’ and figure out how much you would need?

    • SS4BC says:

      No, I based the $60,000 on what I was likely to earn in my next job – since it is “around” what I will be making. Also, because for calculation purposes it is an easy number to work with since it divides evenly by 12.

      I’ll address the “why $60,000” in an edit to this post for clarity.

  3. MPP says:

    That’s depressing about the number of taxes taken out. :-/ I like your percentage. I would love to be able to save/pay debt with 50% of my income and then live off the rest of it! One day perhaps we’ll be about to! 🙂

    • SS4BC says:

      I know right? Really depressing!!!

      If I wanted to DOUBLE my current take-home net salary of $37,000/year ($2,376/month) – I’d have to make $82,000/year ($4,736/month).

      82,000/37,000 = 2.2
      4,736/2,376 = 1.99

      –> thus, I would have to make 220% of my current salary to get 199% net take home pay. Guess that is the “benefit” of tax brackets, right?

      BTW… all these calculations are made using Paycheck City’s paycheck calculator.

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