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Saving for retirement and other things – the 10% rule revisited, and a plan for the rest of 2013

Moneys

Moneys

Back in June of 2012 I wrote a blogpost on how I was intending to begin saving 10% of my gross income towards retirement. Here’s what I wrote:

I’ve done ZERO retirement planning in my life so far. Sure, I’ve thought about it and what I want from life but I’ve taken very little action to plan towards it.

I currently have a $6,000 emergency fund, $2,000 in an RSP, $1,000 in a brokerage account, a few thousand in a rather volatile investment, and of course my largest asset, my house (mortgage and all, darn it) Obviously none of these will feed me much more than a few months (unless I want to eat my house?) so, starting with yesterday’s paycheque I implemented the 10% rule.”

I am sad to admit that after I updated the blogpost two weeks later, I didn’t follow through with this plan. After I began my bathroom renovation and went on a trip globetrotting, then there was school in the fall and a big reduction in income from Christmas until early summer this year. All in all, I didn’t save a dime towards retirement. From my monthly networth updates you might know that while I do still have a $6,000 emergency fund and while I have been investing in my house my renovating it, and while I have made progress networth-wise primarily due to my house value increasing and the very slow downward slope of my mortgage… I haven’t made any real, any dollar value of progress to my savings. Actually, since selling off my stocks I’ve decreased my liquid assets by $1,000.

This isn’t good. I also need to make a lot of sacrifices and aggressively save for the next year if I want to follow through on my plan to leave Canada for 3-4 months to figure out where I want to be.

I need to drastically improve my savings rate, restart contributing towards an account for retirement and cut all unnecessary spending. I feel a bit overwhelmed financially but I know I need to make a move, because not doing anything doesn’t get me any further. So, this is the plan for the rest of 2013:

1. I’ve set up an auto-purchase of my ING RSP of $20 every month going forward. It comes out on the 14th of every month, a random date I chose for no particular reason. This should be doable no matter what my budget looks like. It’s $20, it’s an auto transfer and I tend to do well with auto-transfers because it just becomes a regular bill once it’s been going for a while. $20 is a far cry from 10% of my gross income, but my primary goal here is to start with small contributions, get my other savings going and slowly ramp up the percentage of money being contributed to my retirement. I can only do this by carefully planning out my other expenses and plans, plus my immediate goal is not to put large sums of money to retirement. It’s more-so getting used to actually saving for something that’s still very far away instead of all the short-term stuff. Speaking of short-term stuff:

2. In addition to that $20 RSP contribution I’ve budgeted out that in order for me to have a $10,000 emergency fund by September 2014. (after which I am thinking of globetrotting for a bit) I need to save $300 per month for October, November and December of this year. And $400 per month from January – August 2014. I’ve planned this out in my budget and I should be able to swing it as long as no big projects or bills come up.

3. I of course need way more cash than just an emergency fund so I also need to start saving more in my misc savings, I’m currently contributing $50 a month towards a spring vacation to this account, I’ve budgeted an additional $150 to be saved in this account toward my living expenses, airfare etc. for this possible adventure. So, between now and the spring my miscellaneous savings account will hold money for two purposes; a spring vacation and my possible move.  I also eventually will need a means of transportation wherever I live, other trips etc. Building up a nice buffer in miscellaneous savings is important. This is a start. Once the emergency fund is full my focus will shift to this account and various other things to save for and increasing funding to my RSP.

I’ll keep tabs on these goals in future networth updates, I think it’s easiest to keep everything together in one monthly post, it will also be easier to see how much progress I’m actually making.

Discussion

6 Responses to “Saving for retirement and other things – the 10% rule revisited, and a plan for the rest of 2013”

  1. Good job on making the savings automatic :D I've been telling my other friends lately that another great vehicle for retirement that's often overlooked is the tax free savings account :) Lower to middle income earners will likely save more taxes in the long run by maxing out their TFSA contribution room before their RRSP, unless there is some sort of retirement contribution match by an employer. Good luck with your goals for the rest of 2013. I'm currently right on track for my retirement :)

    Posted by Liquid | October 23, 2013, 05:00
    • Thanks, you know, I didn't even notice the first contribution coming out because it popped up in my budget, i cleared the transaction and thought nothing of it until I went back and realized, oh hey! That went to my RSP! I love the TFSA, I plan to stick with that the the RSP for now. Stocks again in the future :) Good luck on your spaceadventures haha

      Posted by Renée | November 15, 2013, 19:26
  2. Been reading your blog off and on for a few months. I wouldn't say you've done zero retirement planning at all. Establishing an emergency fund and so forth are prerequisites for serious retirement planning. Also, the idea of automatic transfers is very sound! Don't be too hard on yourself. Just keep moving in the right direction. Good luck on your trip to the Netherlands.

    Posted by S. B. | October 26, 2013, 01:51

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Financial Progress:

Emergency Fund 2014
Goal: $10,000
Current: $3,450.22
34.5%

RSP 2014
Goal: $3,000
Current: $2,621.60
87.4%

Planned Travel
Goal: $1,500
Current: $282.18
15%

Misc Travel
Current: $1,115.09 + $175.50
Goal: $???
9.7%

Net Worth 2014
Goal: $70,000
Current: $55,420.53
79%

Last updated May 11, 2014

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