Windfall season is upon us! Extra paycheck month and tax time are both nearly here. Of course, I know I’m not actually coming into any money that isn’t already mine. In fact, if I wanted to go all Debbie Downer on you, I’d point out the fact that this is actually money I’ve already earned, and my work and the government have been earning interest instead of yours truly. But I’m a glass-half-full kinda gal, so let’s just breeze past that for now.
So we’re set to come into at least a few thousand dollars, and the question becomes: what do we do with it? In the past, I’ve kicked around a half dozen ideas for an extra paycheck. This quarter, we have it narrowed down to two options: our retirement accounts and our baby fund.
Our Roths for 2016 are just a bit shy of full. Normally, we each put $200 a payday towards our Roths, and then we top it off with tax refunds, assuming we get one, and side hustling. We haven’t touched 2017 yet. Cue the anxiety.
But wait, there’s more. More money and more anxiety, that is. We also have a fully-stocked emergency fund that will float my 12 weeks of unpaid leave, the cost of labor and delivery, and baby needs basics. The thought of watching that money run through our fingers keeps me awake at night. Of course, that’s what it’s for. But I’m only just now figuring out when and why to spend.
So this is where you come in, friends. Which of these scenarios seems right to you?
Invest Then Save
Despite the doom and gloom that plagues my Twitter feed, part of me wants to shove as much money into our Roths as possible now and then focus on stockpiling our savings later. After all, it’s the oxygen mask on the airplane thing, right? We can save for future expenses for Baby, who Revanche at a Gai Shan Life has named Half Pence, but forgetting about ourselves could be devastating. Boomers catch a lot of flak for a staggering number of them having no retirement savings. And rightfully so. I can’t think of a faster way to take the glimmer out of my golden years than having an empty account. I’m in no rush to join that club.
Save Then Invest
We can always save as much as we can this year and then move the money into our Roths at the year end assuming that there’s anything leftover. After all, this isn’t just about saving for the distant future. We intend to chip in for college one day. But what if there are unforeseen medical expenses after the birth? What if Half Pence doesn’t have glistening pearly whites and needs orthodontia? Maybe we’re bringing a musician, a dancer, or an athlete into the world. Or maybe Half Pence will take up scouting, and we’ll be stuck buying truckloads of Thin Mints or popcorn ourselves. You know, strictly to keep the burden from falling onto our relatives, neighbors, and friends. With all of this looming on the horizon, is it really possible to save too much?
Do Both Equally
A compromise of sorts would be to put a bit into both baskets. In one way, this should quell my concerns in both regards. Our retirement accounts will grow, as will our baby fund. Slow and steady works well for finances, but I’m not sure that’s the appropriate tempo to align with either of these goals. Is it?
So Tell Me…What would you fund? Let’s dream big and call it $4,000. Roths? Baby fund? Both?