My wife and I have been stashing for about three months. We are having a baby in August, and we want to have lots of cash when the baby gets here. Other than my 401k, Any extra cash that we have each month is going into savings. Basically, after we have budgeted for the next month’s expenses in YNAB (yet another tool we will talk about, I’m sure), anything leftover goes straight into our “Family Coffer” category.
The Family Coffer is my name for this savings fund, and the purpose is to pile up as much money as we can between now and when the baby comes, This way, any hospital bills, baby expenses, or other purchases related to this life-event will be covered without any stress about debt or payment. If all goes smoothly, the hope is to have enough to pay off any of these baby expenses, AND pay off our car in full. The Family Coffer is being funded by money that would normally be used to make extra payments on the car (if I’m going to swing interest in my favor, I’ve got to get rid of these payments!). Additionally, when the dust settles, I still need to have my emergency fund in place.
As of now, my wife and I keep our typical emergency fund at $1000 (this is a Dave Ramsey baby-step, and is fairly comfortable for us while we work on paying off the car loan and my old student loan. So, here’s the breakdown of what our Family Coffer will represent by the time the baby comes in August:
$1000 for our Emergency Fund
$3923 for the car loan payoff
$4000 – This is an estimation of expense related to the baby. I’m basically shooting in the dark here, as I don’t know what to expect. But $4000 will make me feel pretty good.
So that makes my goal $8923 by August. We already have $1719 saved (this is AFTER paying $1250 to the OBGYN to payoff their part of the prenatal care and delivery. We need $7204 more to reach our goal. Including August, that means we need to save $1200 per month. I think this is doable. In fact, the math above doesn’t factor in the fact that we will continue making our regular car payment, so that will give us a small margin of error in case something urgent comes up.
To me, this is the fun of saving money; saving it for SOMETHING. We always have to have a goal in mind, whether we are saving for a baby, for a trip, for retirement, or for an investment. This makes every dollar that goes unspent that much more valuable.