Saving Without a Goal
For the past few months, I've been in a strange place with my financial journey. My retirement needs are met, as are my daily living expenses, so all I need to worry about is saving for short- and medium-term goals. That's great — except I don't have any. I can't decide whether this is a problem or not.
When I was younger, not having financial goals absolutely caused problems. Because I didn't have anything specific I wanted to spend my money on, it didn't matter to me how I spent it. Because I had no goals, one choice seemed as good as another. As a result, I spent my cash on comic books and computer gadgets and lots of Stuff that simply had no meaning or purpose.
As I developed financial discipline, however, I learned the joys of targeted savings. Using an online high-yield savings account, I split my money into several different subaccounts, each of which I designated for a specific goal.
My first targeted account (which was actually held at a local credit union) was used to purchase a Nintendo Wii. This was a huge deal for me since it represented the first time I'd actually intentionally waited and saved to buy something I wanted. (In the past, I would have simply bought it on impulse.)
Eventually I learned to use targeted savings for all of my big expenses. For instance:
- I saved for my Mini Cooper with a designated account at ING Direct. (ING Direct is my online bank of choice; there are lots of other good options though.) For the past few years, I've been gradually building savings in the same account so that I can afford a replacement car when this one dies.
- As I've traveled over the past few years, I've used targeted accounts to save for my trips.
- I've used targeted savings to save for other miscellaneous large expenses since 2007, including new furniture, season tickets to the Portland Timbers, and more.
Targeted saving is great, and I recommend it to save for your goals. So what's the problem? Well, I've reached a point where I don't have any specific goals.
This isn't because of aimlessness or lack of focus; it's because I'm (mostly) content with what I own and do, and I no longer have any big expenses I'm wanting to save for. Yes, I still have my emergency fund, my car fund, and my travel fund, but they're each full at the moment. That means there's room to put some of cash money into something else. But what?
Would it be silly of me to start a catch-all account for the cash I'd normally be using to target something specific? To start some sort of “dream fund”?
Obviously, this is a nice problem to have. This is the sort of problem that I could only dream about when I was still trying to get out of debt. But I suspect many people find themselves in a similar situation once they've established good habits and taken care of their basic needs — they have money to save, but nothing specific to save for.
So I guess for once, I'm coming to ask you for your advice (instead of offering advice of my own). What would you do in my situation? Is it okay to not have financial goals if you're taking care of your responsibilities? What then should you do with your extra income, the income that could be saved for specific goals? Is this a pretty clear-cut case of where I should be donating money to charity? I'm curious to hear what other people do (or think) in this situation.