# Budgeting to Achieve \$500k Goal Before Kids

As my long-time readers know, my “impossible” goal of hitting \$500,000 in individual net worth before I have my first child is somehow within sight. It’s still seemingly impossible, but I always aim high and see how far I can get. I’m not pregnant yet, so that gives me at least nine months to get there. Below, I’m going to detail my budget plan to take me from where I am today to where I want to be before my first child is born.

On 7/15/16, my networth calculations = \$379,412.

This leaves \$120,588 to save prior to having children.

For the sake of simplicity, I am going to say that I will have my first child – at the earliest – in 2017, getting pregnant in January. This means that from today until the day I give birth, I would at the least have 14.5 months – I’ll round that up to 15 to make the math easier.

That means I need to save \$8600 per month for the next 14 months starting in August to achieve my goal (combination of savings and interest earnings.)

Here is how I am going to get there… in theory…

Income non 401k months = \$9000.

August – December (net worth increase goal = \$43,000)

5 Months After Tax Income = \$45,000
– Rent = (-\$6750) = \$38,250
– Food = (-\$5000) = \$33,250
– Clothes/Personal Care = (-\$2000) = \$31,250
– Health = (-\$5000) = \$26,250
– Travel/Entertainment/Gifts = (-\$1000) = \$25,250
– Bills, etc = (-\$500) = \$24,750

This leaves a gap of \$18,250 to make up for in next 6 months, or with interest.

Income 401k Months  = \$7000 after-tax income

January – June

401k pre-tax Investment = \$18,000
6 Months After-Tax Income = \$42,000
total income = \$60000

– Rent = (-\$8100) = \$51900
– Food = (-\$6000) = \$45900
– Clothes/Personal Care = (-\$3000) = \$42900
– Health = (-\$6000) = \$36900
– Travel/Entertainment/Gifts = (-\$3000) = 33900
– Bills, etc = (-\$600) = \$33,300

\$33,300+\$24,700 = \$58,000

Ok, so in the above scenario – without any increase in interest from my investments, my networth as of having my first child next June would be approximately \$437k, not \$500k.

Now, to actually get to my goal there I’d have to find a way to save an additional \$63k in the next year. AND, this is all very hypothetical based off of keeping my job for another year, which is unlikely, so I probably won’t even get close to these plans anyway – but knowing the numbers certainly does inspire me to try my darnedest to keep my job until I have kids. It’s the only way I’ll get close to my net worth goals.

Assuming annual growth on current networth of 5% (which can be off since it can definitely go down too) that’s \$18,000, making the gap “only” \$45,000. If I wait six more months to have kids AND keep my job during that time, I can probably get pretty close. So, in order to achieve my goals I need to —

1. keep my job and current income with no breaks in it until January 1, 2018
2. save at a minimum the money listed above per month or ideally spend less than this budget
3. keep investing in the stock market so there is a chance the return over the year will be at least 5%
4. wait until March to get pregnant – at the earliest – so I have more time to increase networth

I think this is actually all somewhat do-able if I follow the steps above, most importantly, step 1. I also could seek supplemental income but at this point I think I’m better off focusing on doing well in my current job and keeping that as long as possible. Once I get to \$500k, life will be a lot less stressful. It’s not like I’ll be able to afford a house here or anything, but I just feel like \$500k is the right insurance for my mental health issues, especially before I have children. I hope I can get there.

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