If you had a financial fairy godmother, what would you wish for? A new home? A robust retirement account? An emergency fund that could cover you no matter what?
Well, we don’t have a magic wand, but we do have the next best thing: real-life cases of people who’ve achieved enormous financial goals.
Plus, we even got some insight from a LearnVest Planning Services certified financial planner.
Read on to hear from the people well on their way to achieving their ultimate financial goals — as well as David Blaylock, CFP’s take on the lessons you may be able to apply to your own situation.
‘How I Saved $30,000 for My Wife’s Maternity Leave’
–Glen Craig, 41, Lynbrook, N.Y.
Where He Started: When Craig’s wife was expecting their second child in 2007, she couldn’t bear the thought of putting the baby in child care after the standard 12 weeks of maternity leave. Instead, they set a goal of saving enough for her to stay home for one full year: $30,000 in only seven months.
How He Saved: Since Craig, who was working in the advertising industry at the time, and his wife, who works in education, each earned about $55,000, they immediately started putting Craig’s paycheck directly into a savings account and got used to living off his wife’s alone.
While they had a comfortable emergency fund and continued contributing to their 401(k)s, they cut back on non-essentials like eating out, including lunches at work, premium cable, “and really any spending we didn’t think was necessary,” says Craig, who details his financial accomplishments on his blog Free From Broke. “We also made sure to be mindful of our spending. When we went to the store, we made sure to make a list of what we needed — and stuck to it! Impulse shopping had to end.”
The Hardest Part: “We were concerned with how well our savings would last, especially in the beginning,” Craig recalls. “But it didn’t take long to realize that the small sacrifices were making huge strides in our savings.
It didn’t take long to realize that the small sacrifices were making huge strides in our savings.
We thought we’d burn through them, but once the baby was born, we discovered that the changes we made allowed us to live comfortably on one income and we didn’t even need to use that money — instead, it made a nice start to the down payment for the house we eventually bought for our family. Our son is almost 7 years old now, and we still think it was worth it for my wife to have that extra time at home with him.”
Where He Is Today: “Since that leave in 2007, we’ve had two more children,” says Craig, who is now a stay-at-home dad and blogger. “For my wife’s last leave, we had to use a Cobra plan while she was out, since I’m now self-employed and couldn’t put the family on my health insurance as I had during previous maternity leaves. We had the money in savings to cover it, but now we want to build that back up for the next challenge, as well as continue to contribute to long-term goals like retirement and college savings.”
The CFP Says: “The main takeaway from the Craigs’ story is the importance of planning ahead. He and his wife weren’t thinking only about the cost of diapers, but also how they were going to cope with the expected loss of income during an extended leave. Not every dual-income family can transition to living off one salary, but everyone can anticipate the cost of a big life change and plan accordingly.”