Now it’s time for step three: figuring out the cost. For many people, this area is one in which obstacles often arise. They have lived with the idea that their dreams are probably unattainable. They don’t want to look at the cost of their dreams because they are afraid they can’t afford them.
That was Abbey’s response. How could she possibly go to a Christo exhibit when the events were always in another country?
“How much do you think it would cost you?” I asked.
“A lot.” She responded.
“Well, you’re never going to save ‘a lot’ of money,” I said. “Let’s figure out how much it will really cost. Although we don’t know which country you’ll be traveling to, a good estimate for international airfare is $1,000. When you are there, how long do you like to stay?”
“Well, I’d really like to stay . . . a week,” Abbey responded.
“Okay, let’s put in a figure for six nights at a hotel and food for seven days.”
We came up with a specific amount for breakfast, lunch, and dinner. We added in some miscellaneous money for gifts or side trips she might be interested in, as well as a small contingency fund.
Once we went through that exercise, we discovered it would cost her $3,000 to go to an exhibit every three years. We divided the $3,000 into 36 months, and the result was that she would have to save $83.33 a month in order to accomplish her goal.
“Well, I can do that!” she exclaimed.
She set up a savings account and began to deposit $85 a month toward her trips.
Eighty-five dollars a month was an amount she could grasp, and it certainly was a lot more achievable than “a lot of money.” Passions and dreams do not have to be denied because they seem expensive. Once you know exactly what they will cost and commit to working toward them, they are often achievable.
Another client, Maureen, has a simple passion—her friends—so she includes an amount in her Personal Spending Plan called “community.” It provides for two weekends away with friends per year, one social dinner a week, and enough money to do six random acts of kindness. This is her number-one financial goal, and she sets aside $163 a month for this category.
Dining out is personally one of the joys of my life. When I was growing up, we could rarely afford to do so. When we did, it was a big thrill. It still is. Going to a restaurant with my family is a special event. My daughter Annie always puts on a fancy dress, and it’s a great occasion. If I walk out in my jeans, she says, “Mom. We’re going out to dinner. You need to dress up!” Going out to dinner once a week is in my Personal Spending Plan. It doesn’t cost very much money to bring my family the pleasure and happiness that our special weekly dinners create.
Once you have determined the cost of a goal, divide this by the number of months left until you want to accomplish it. Come up with the monthly amount necessary to save. Don’t try and figure out if it is possible yet; just do the work. It might be $25 a month to provide a family in India with a new home twelve months from now. It might be $75 a month to help fund part of your child’s college education. It might cost $167 a month for a down payment for a new house in the country ten years from now.
If you have completed the process outlined, you should have your top nine goals: three Immediate, three Short-term, and three Long-range. Beside each goal should be the total cost, when you want to accomplish it, and a monthly amount necessary.
Now, it’s time to put it all together…coming soon in next week’s post!