Saving Without Goals
I swear you can’t go three clicks on the internet without someone talking about goals. How to make goals. Software to track your goals. How this or that system will help you achieve your goal. How making goals changed the author’s life.
I have a statement to make. We have an investment account that we contribute to every month. It has absolutely no purpose other than simply saving. I have no goal.
Is that wrong? I don’t think so, but I fully accept I could be wrong on this. Some day that money will find a purpose. As of right now, though, I have no idea what that might be. Daughter’s wedding? Seems likely. Own business? Possibly.
For a planning-type person, I’m strangely cool with this situation. I don’t think investing should be this rigid, formulaic thing you do. That’s why I think so many of the personal finance ‘rules’ never apply to everyone. I mean, seriously, have you ever encountered one of these so-called truisms that somebody didn’t say that it wouldn’t work for them?
Come to think of it, I’m not convinced having a formal goals ’system’ is all that useful. At least not for me. I’m not one of these guys who has a goal of saving $1 million by age 40. I mean, sure I’ve calculated our retirement number. I’ve figured how much it’ll take to send our kids to college. We’re saving toward those goals and making good progress.
I just don’t obsess about where I am on the path to achieving those things. I rebalance my 401(k) probably once a year. I open my quarterly statements. I haven’t formally calculated our net worth in well over a year.
And I have an investment account without a goal.
For the flip side of this post, see MEG’s “What are you saving for” at The World of Wealth (another PF blog).
October 10th, 2007 at 10:37 am
I think saving is a good thing in and of itself. Especially if you’re the responsible sort who will use the money wisely.
Writing down goals is good when, for instance, you have a specific event coming up (downpayment, wedding, car) or something you really want to do (start your own business, go to Thailand). But if you’re happy with your life and don’t have anything beyond, perhaps, retirement to save for, then saving for saving’s sake makes sense. You’ll need it someday.
October 10th, 2007 at 12:04 pm
Without an objective I would be meandering aimlessly. Which when I think about may not be that bad!
I guess goals are important but obsessing over them is counter-productive.
- Mark
October 10th, 2007 at 3:58 pm
I agree completely with this post. We too have an account that isn’t earmarked for anything, it’s just savings.
For “real” retirement we have our 401k and profit sharing accounts. We keep a bit of cash in what I call our “slush fund”, but really it’s an emergency fund. But then we still have money left over. So I put that in a taxable account. Who knows what we’ll use it for.. Earlier retirement perhaps? When we have to buy a new car, we use this fund to allow us to pay cash rather than finance. When we need to do home improvements we use this fund. But despite that, it’s growing quickly enough that it will soon exceed our “real” retirement accounts.