Understanding "savings"
I am doing a mid-year check on my savings efforts using ESPlanner. I could use some help in making sure I am meeting my savings targets.
I am saving for three objectives: 1) retirement, 2) children's education and 3) debt reduction. ESPlanner reporting shows that I need "savings" for 2008 of $13K and $20K in 2009. My interest on regular assets is $2K for both 2008 and 2009.
1) Using ESPlanner I set up my retirement accounts (e.g. 401k). My understanding is that the "savings" that is shown on ESPlanner reports (i.e. the $13K for 2008) does not include dedicated retirement savings.
2) I plan to invest $4K in 2008 toward children's education. My understanding is that this $4K is part of the $13K budgeted in 2008 for "savings" by ESPlanner. I also plan to invest $4K toward education in 2009 (with $20K budgeted for total savings in 2009).
3) I plan to pay down a line of credit by $7K in 2008 and $14K in 2009. I created Special Expeditures for 2008 and 2009 to specify this debt reduction. My understanding is that these amounts are part of the savings of $13K and $20K for 2008 and 2009 respectively.
So here is my budget in summary...
For 2008:
Education savings = $4K
Debt reduction = $7K
Regular asset interest = $2K
TOTAL SAVINGS = $13K
For 2009:
Education Savings = $4K
Debt reduction = $14K
Regular asset interest = $2K
TOTAL SAVINGS = $20K
Am I on the right track with this thinking or am I missing something here? Thanks in advance.
RSS
w.voit at sympatico.ca wrote:I am doing a mid-year check on my savings efforts using ESPlanner. I could use some help in making sure I am meeting my savings targets.
I am saving for three objectives: 1) retirement, 2) children's education and 3) debt reduction. ESPlanner reporting shows that I need "savings" for 2008 of $13K and $20K in 2009. My interest on regular assets is $2K for both 2008 and 2009.
1) Using ESPlanner I set up my retirement accounts (e.g. 401k). My understanding is that the "savings" that is shown on ESPlanner reports (i.e. the $13K for 2008) does not include dedicated retirement savings.
Correct, the savings for ESPlanner is savnings to regular assets. You specify what you are putting in your retirement accounts (contributions screen of the Retirement Accounts folder), ESPlanner tells you what you need to save in the way of regular assets every year to maintain your standard of living. That's the fundamental difference between retirment account investing (an input to ESPlanner) and regualar asset savings (an output of ESPlanner).
w.voit at sympatico.ca wrote:2) I plan to invest $4K in 2008 toward children's education. My understanding is that this $4K is part of the $13K budgeted in 2008 for "savings" by ESPlanner. I also plan to invest $4K toward education in 2009 (with $20K budgeted for total savings in 2009).
Yes, but to completely account for this aspect of regular asset savings, you should include your children's education expenses as special expenditures in the appropriate years (estimates are fine). That way you're sure that ESPlanner has you covered.
w.voit at sympatico.ca wrote:3) I plan to pay down a line of credit by $7K in 2008 and $14K in 2009. I created Special Expeditures for 2008 and 2009 to specify this debt reduction. My understanding is that these amounts are part of the savings of $13K and $20K for 2008 and 2009 respectively.
Correct.
w.voit at sympatico.ca wrote:So here is my budget in summary...
For 2008:
Education savings = $4K
Debt reduction = $7K
Regular asset interest = $2K
TOTAL SAVINGS = $13K
For 2009:
Education Savings = $4K
Debt reduction = $14K
Regular asset interest = $2K
TOTAL SAVINGS = $20K
Am I on the right track with this thinking or am I missing something here? Thanks in advance.
As mentioned above, include your children's education as special expenditures to make sure you've completely accounted for them but other that that, I believe you have things right.
Best,
Dick Munroe