3 Steps to Achieving Any Savings Goal
I decided this morning on my way to work that I’m moving to Hawaii. Not tomorrow, but before I turn 40. I walk to work, so I am acutely aware of the weather. And this morning the weather feels more like I should be shopping for Thanksgiving dinner instead of planning my Memorial Day picnic. My hair is a mess from the wind and mist, my umbrella useless. It’s the middle of May, for crying out loud. Why are my hands ice blocks? I’ve had it.
So I seriously started to think about where else I could live that would offer me career opportunities, decent weather year-round and a city that is conducive to walking and biking instead of driving everywhere. (That rules out Southern California and the entire state of Texas) Hawaii tops the short list of places that fit, and as I strive to keep myself open to all the possibilities in life, I have decided that instead of saying, “That’s silly, Hawaii is expensive and far away and you don’t know anyone there,” that I’m going to seriously look into it.
But first things first:
I have a lease that runs through August, 2014, so it will be at least 15 months before I can consider going anywhere without a significant financial hit to break that contract. As I consider whether I could really make this happen, that feels like a good timeline to explore the option.
First, I need to find out if Hawaii truly is somewhere that I’d want to live. Before I even start looking at job opportunities or rental rates for apartments, I need to physically check it out. In other words, I just set my first preliminary goal in possibly making a huge life change: visit Hawaii.
Here are the steps to plan any big trip or large purchase:
- How much is this going to cost me? I need to research exactly where I want to visit/potentially live, and then price out flights, hotels, car rental, food and other costs. I can’t forget to include other incidental costs like transportation to and from the airport, baggage fees, hiring someone to care for my cats while I’m gone and any loss of income from taking time off.
- How much do I need to save each month? Once I have the total cost of the trip, I need to figure out how much to save. I can approach this two ways: 1. By setting the date of the trip and dividing the cost of the trip by the number of months between now and then, or 2. By figuring out how much I can afford to save each month, then dividing that into the cost of the trip to tell me how many months it will take to get there.
- How am I going to save that amount? This is the tricky part. Let’s say I figure out that I need to put away an extra $400 per month. I can’t just go pick it off the money tree, so I need to take a hard look at my current spending and decide where I am going to cut back.
You might get to the third step in your own goal-setting and bail – if I had an extra $400 per month, wouldn’t I already be saving it? Not so fast… when I categorize every dollar that goes out of my checking account each month, I find that I spend WAY more money than I would have guessed on dining out. In order to make Hawaii happen, I’m not going to stop eating out. But I am going to have to be more mindful of it and set some limits. I’ll probably also think twice about adding clothes to my wardrobe unless I have a specific purpose for which I have nothing in my closet already.
I’ll set up an automatic transfer to a savings account that I’ll establish specifically for this trip to take away the temptation to procrastinate any payments. Capital One 360 is great for this type of savings – you can open up multiple accounts for various savings goals.
The tough thing about setting and achieving any financial goal isn’t necessarily the planning and figuring out how (although that’s a big part of it), it’s addressing your money mindset to ensure that you engage in the behavior that is going to get you there. It’s hanging tough and not raiding your savings when something else comes up. It’s reminding yourself on that next windy, cold, miserable walk to work that you have a higher purpose, which is why you’re not going to flag a cab.
What big thing in your life can you make happen if you follow these steps and tell yourself you can do it?