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How to Fund Your Goals & Dreams
So much of our financial life gets tied up with bills, insurance, retirement, and so on that it's easy to forget that you once had a dream of spending a summer in Europe, buying a boat, or a goal of starting your own business.
So how do you reach these other financial goals without going into debt?
The first step in planning this is to ask when you want to achieve your goals and dreams. It's helpful to write these out in order of priority, but also write out when you want the particular goal or dream to happen, and how much money it will take (remember to adjust for inflation, especially if you're wanting something that's more than a couple years away).
Here's an example list:
- 3 months in Europe with Family - 5 years - $30,000
- New Whitewater Raft - 2 years - $7,500
- 40 acres of land in the mountains of Northern New Mexico - 10 years - $150,000
- Start brick & mortar business - 20 years - $50,000
These are all hypothetical numbers, but assume they're already adjusted for inflation. Let's take example 1 and calculate how much is needed to reach that goal. 5 years equals 60 months. Divide $30,000 by 60 months to find to reach goal #1, you need to save $500 per month. Is this realistic? Remember, you must be honest with yourself!
It's often helpful to set up an account specifically for goals and dreams. You don't want to fund goals and dreams from emergency, retirement or college funds, and you especially don't want to fund them on credit.
A savings account, money market, or non-retirement investment accounts are frequently used and it's usually easy to set up an automatic saving plan so you can put the achievement of your goals and dreams on auto-pilot.
Keep in mind that non-retirement (and non ESA or 529 and other tax advantaged) investment accounts have their growth taxed.
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