When you’re saving for goals that occur at different times, juggling money across different types of investments takes some planning.
In most cases, your retirement savings are in accounts totally dedicated to your retirement goal. Because you probably have a pretty good idea of your retirement age, you can adjust the allocation of your retirement money without too much work [Hack #75] . The hardest part is remembering to look at all your retirement accounts as a whole. However, you might save for other goals that occur at different times—two children heading to college four years apart or start-up costs for your dream of starting a small business. You can manage each of these savings portfolios separately by creating accounts for each objective, but that could lead to an overwhelming number of accounts. A spreadsheet can help you develop one overarching allocation for the savings you need for multiple goals.
To determine an overall allocation, you must first know your allocation for each goal on its own. Allocations gradually switch to safer investments as your goal approaches. The spreadsheet in [Hack #94] calculates the distribution of money between stocks and fixed-income investments as you save and then spend a college nest egg.
If you track your allocations across additional asset categories, such as large-cap stocks, small-cap stocks, international stocks, bonds, and cash, you can add columns to your spreadsheet for each category you use.