How to save for your next big goal
This is a big topic! Pour a cup of coffee and settle in.
What do you really (I mean hell bent for glory, really) want to achieve next? I was saw a quote on Insta that said to write out your biggest goals… and then double them because humans generally have no idea what we can achieve when we try. I couldn’t agree more. It’s important to have purpose and conviction because saving isn’t always easy. There are temptations everywhere that plague even the most committed money goal-getters.
Maybe you desperately want to be debt free. Maybe you’re dreaming of owning a condo so you don’t have to rely on the whim of someone else’s real estate decisions. Maybe you dream of jumping on a plane and escaping to Spain for a month. Whatever it is, if you had the money, you’d do it.
Ok, there’s no time like the present. Let’s get you there.
First of all, you'll have to clearly define your goal. Download The Money Edit goal setting guide to work through your bigger vision and goals for the next few years, in any and every area of your life. If you just want to focus on one big goal, complete the workbook from that perspective.
Define the dollars
Next, figure out how much this goal is going to cost you. For example, let's say you want to buy a condo and it costs $400,000. Your goal is to put 20% down, meaning you need to save $80,000. Maybe you want to travel for a month. Your plane ticket will cost $1500 and you’re giving yourself a budget of around $100/day for expenses. You now know you need to save $4500, and could even round up to $5000. Great! Now we have a number to work towards.
Work backwards from G-day
The day you reach your big goal is called g-day. Let's get planning. Working towards achieving a big goal is a great incentive for you to figure out your financial situation. Check out The Money Edit basics to sketch out a picture of your current money situation. What is your net worth right now? What money do you owe? How quickly can you ditch your debt?
What's standing in your way?
Next, what are your top priorities and commitments. Is there a way to negotiate any of those that stand in the way of your big goal? For example, there was once a time that I said YES! to most volunteer opportunities. I was just building my career and felt obligated to contribute to my professional community. It was a way to learn & build connections. While some volunteering is wonderful, too much tends to eat up your free time. It was a hard lesson to learn but I eventually developed the strategic foresight to spend time focusing on what I really wanted, whether it be career advancement or financial freedom. If you’re spending a lot of time doing other things (a.k.a. achieving someone else’s goals) rather than focusing on your own money making activities, where can you create change? How can you give others an opportunity to take on some of the volunteer commitments that you’ve made?
Tighten the timeline
Calculate how long will it take for you to save the magic number at your current savings rate. Compare this to when you want the goal to happen. Is there a way to tighten your savings timeline OR achieve your goal differently?
Maybe you have your heart set on Spain, but it’s a lot cheaper to travel to Portugal. Would you consider shifting your goal to make it even easier to achieve?
Maybe you have your heart set on a condo near where you grew up. Have you considered other areas of town? Could you save money investing somewhere that’s up and coming? When you’re looking at various listings, is there an income generating opportunity on the property? Assuming your goal is to get the most value for your money, brainstorm ways to make this happen. Read about it, ask others who you admire. Get a great realtor who is working for you.
Commit to making it happen
Once you’ve cleared your slate and have time to focus on your goal, figure out exactly how you’re going to make it happen. Break it down month by month, step by step. Refer to the goal setting guide when you need a refresher. If it’s September and you want to travel by January, you have 4 months to save $5000. That’s $1250/month. You’ll probably spend the first month’s savings on the flight, and the next 3 months hustling to come up with the rest. If this is outside of your current realm of possibility, what can you do make up the cash? What money are you leaving on the table?
The last step: Surrender
While you're actively working towards your goal, you must surrender to the universe. Surrendering means acknowledging that while you have a plan, the universe is going to get you there. Everything is going to conspire to bring you what you need. As Danielle LaPorte says, You're worth it but you've got to believe it.
Speaking of surrendering and letting others help, I want to hear from you. What big goal are you working towards? How can The Money Edit community or my blogging support it? What questions do you have? In your experience, what does everyone need to know about achieving big goals?