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Whether or not you believe in resolutions, setting financial goals for the year can be a great way to make sure you are intentional about your finances. For me, this blog is one way I’m developing this intentionality. And so in this post, I’d like to share my financial goals for 2022.
2022 will be a year of transition for our family. My husband has been working on changing careers for the past couple of years now. Since he finally passed the last step in getting his license as a real estate broker here in Korea, he’ll be able to start looking for a new job in real estate soon. He’s understandably a little nervous about going from a job in finance, interacting with numbers and spreadsheets, to a job in real estate, interacting with humans, but I know he’s looking forward to the flexibility this job will give him in the years to come.
The exact amount of his future income, however, is a big unknown at the moment. Not only are we not sure exactly when he’ll land the new job, but we also aren’t sure exactly what the pay structure will be. Some real estate companies pay a salary in addition to commissions, while others are much more fully commission-based.
It also matters a lot what neighborhood he ends up finding a job in. There are some luxury neighborhoods near here, as well as other neighborhoods that are actively being developed, but other neighborhoods are for just average folks. Real estate offices in Korea tend to focus on just their narrowly defined immediate neighborhood, so his location will really matter.
Given the uncertainty about his income growth, I’m not taking it too much into account in setting our financial goals for 2022. Taken together, the financial goals I’m setting are doable (but a little bit of an uncomfortable stretch) even if my husband doesn’t raise his income hardly at all. In fact, in our 2022 budget, I have his additional income basically being canceled out by the added expenses that will come from the job change (car expenses, additional childcare, and culturally expected meals with colleagues).
I’m hoping we’ll be pleasantly surprised by his income, in which case we’ll adjust our goals to make them more aggressive. Until then, though, here are our financial goals for 2022.
Deposit on a new apartment
Our family is currently saving for a deposit on our next apartment. We aren’t sure when we’ll be moving or how much we’ll need, but it’s likely to be upwards of $50,000 in US dollars.
(The Korean real estate system requires hefty deposits which are then returned after the lease is up. Without getting into the mechanics of it, basically the higher your deposit, the lower your rent. Our current apartment had a deposit of about $12,000, but we’re hoping to upgrade.)
With our timeline and our final amount unclear, it has been tempting to put this goal on the back burner. We currently only have $2224 saved toward the goal. Even with the $12,000 we’ll get back from our deposit on our current apartment, we have a long ways to go.
My goal for 2022 is to save at least $500 per month toward this goal, or at least $6000 total.
If my business income or my husband’s income growth ends up adding more cushion to our budget than expected, we’ll throw about 30% of that extra money toward this goal as well.
I’d like to contribute at least $12,000 to our retirement accounts in 2022. Our current one year spending plan allocates $900 per month toward this goal, so we’ll need to find an extra $100 each month to reach the final goal. We should be able to do that with extra income or just by staying under budget in certain areas each month.
If my or my husband’s income ends up higher than anticipated, we’ll contribute about 40% of the extra money toward this goal.
Some people use a vacation fund to save for a specific trip, like Disney in the spring or Europe next fall. But for us, since travel to the US is something we try to do regularly, our vacation fund is more of a rolling sinking fund. We contribute to it regularly and pull from it whenever we want to go somewhere.
In 2022, we’d like for me to take our son on a trip to visit family in the US, and we’d also like to be able to go on more mini-vacations within Korea as a family. We have frequent flyer miles and credit card points we can use to subsidize some of our travel, but not all of it.
Our financial goal for 2022 for our vacation fund is $2000. Our current one year spending plan puts us at $1750 added to this fund during 2022, so we’ll need to find a bit more through extra income or from other categories in our budget.
We probably won’t increase our budgeted amounts by very much unless my husband’s new job is excessively better than anticipated.
We already have a 6-month emergency fund, but with inflation over this past year and with the increased childcare costs we’re expecting in 2022, it would be good to add a little more.
I’ve set our goal at just $1000 here. Our budget only allocates $120 toward that goal – essentially just the interest earned in the bank accounts that house our emergency fund.
We’ll make up the rest from additional income or staying under budget. One of my favorite ways to add a bit to our income during 2021 was through earning bonuses when setting up a new bank account. If I can do more of that during 2022, we’ll hit this goal without too much trouble.
In 2021, we paid off a high-interest loan for the $12,000 deposit for our current apartment. We also paid off zero interest installments for our fridge, our washer and dryer, and our air conditioning unit. We are becoming officially debt-free this last week of December 2021.
A financial goal for 2022 is to remain debt-free. In order to do that, we’ll use sinking funds to plan for irregular expenses, we’ll keep up our emergency fund, and we’ll just generally be intentional about saving for the goals we have.
Tutoring Business Revenue
My last financial goal for 2022 is specific to my tutoring business, Resolution Test Prep. Despite a slow start to the year, 2021 has ended up breaking my 2019 record for both revenue and profit. (2020 doesn’t count. I had a baby that year, and plus, it was 2020.)
In 2022, I’d like to increase my revenue by at least 25%, which I can do by remaining consistent with my marketing, sticking to the program offerings that have worked best in 2021, and a very modest increase in my prices.
I’ll reassess the salary I’m paying myself from my business at the end of each quarter, although I’ll only pull the trigger on increasing my salary if my business can truly afford it, even through the low months. My stretch goal here is to be able to give myself a $500 per month raise. I’ve calculated that I’ll be able to afford that if I can increase my revenue by just over 30%.
It might seem a little strange to have an income goal in addition to my business revenue goal, but there are two reasons I have both.
First, my business isn’t the sole contributor to our household income. My husband has an income as well, and there’s also any additional money we earn from random things throughout the year.
Second, even after expenses, I don’t take all the profit from my business as my own pay. Instead, I portion out a certain percentage (currently 65%) into a separate bank account, and then I pay myself a salary out of that. That helps stabilize my income, which makes it so much easier to budget and plan around.
My household income goal for 2022 is $60,000 (or rather, the equivalent in some mix of US dollars and Korean won). That number relies on only a modest income increase for my husband, so hopefully we’ll be able to smash this goal. A pay raise from my business would help significantly as well.
My budget spreadsheet contains a tab to track our progress toward our financial goals. I’ll be filling this in every month so that we can see how we’re doing.
If we meet all of these goals exactly, we’ll be devoting 35% of our income toward our major financial goals. Not too shabby. If we can get our income higher, I’d love for that percentage to go quite a bit higher as well, especially in our retirement savings, but I think this is a good place for us given our current situation.
I’m looking forward to posting updates to our progress month by month throughout the year.