Author Topic: Calculating allocations for my short/mid term, and long term buckets  (Read 2125 times)


  • Stubble
  • **
  • Posts: 130
  • Age: 34
  • Location: NYC
My expenses are now at a place that I am happy with. I am happy with my savings average, but it slightly fluctuates on a monthly basis. Excluding my emergency fund, I am sitting on a fairy decent stash that is constantly being devalued because it is all sitting in a savings account. I do not contribute anything to my 401k or IRA - but I do have some money contributed by my company.

I am having a difficulty with two items:

1. Calculating my stash allocation in the savings account between retirement fund, education fund and condo fund. I need to open an IRA, 529 Plan and another savings account, but how should I allocate the cash?
a) I was thinking of filling up the IRA to 100% for the year ($5,500)
b) I plan on starting school in fall'14. Annually, I can't imagine spending more than $15k. So I was thinking of my initial contribution to the 529 plan of $15k and then seeing how that will turn out, or should I contribute $5k biannually? The issue is that I don't know if I'll make any money but at the same time, I don't want to have more money than necessary if I do well.
c) Condo fund: put the remainder in a different account. I was thinking of splitting a portion of it to ibonds (10k) and the rest in a high yield savings account. Doesn't seem like I have many other options, as CDS have a terrible interest.

2. Calculating my allocation for future paycheck savings.
a) How do I calculate how much to contribute to my 401k? Since my savings rate somewhat fluctuates on a monthly basis, I feel kind of uncomfortable giving a set amount to the traditional 401k, especially since I don't know what my take home income will be once I start contributing and it could be that I spend more that usual (vacation, something breaks etc.) I guess a solution will be to have an extra buffer just in case I want to go on vacation, move etc. But how much should that buffer be?
b) How should I decide how much to contribute to my condo fund on a monthly basis?
c) How should I decide how much to contribute to my 529 plan on a monthly basis?
d) Should I have any extra cash left over after I am done allocating?

Financial goals:
Retirement - long term
Education - mid term, total cost $40k
Condo - mid term, down payment $90k