This article may contain references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services. Nonetheless, our opinions are our own.
Everyone has financial dreams, both big and small. Unfortunately, these dreams often run counter to the everyday realities people face with regard to housing costs, saving for college, or expensive vehicle maintenance.
Sometimes financial burdens can feel so heavy that we can’t imagine spending a sizable portion of our income on personal desires. But most dreams are not as unattainable as you might otherwise think.
In fact, breaking them down into small, manageable chunks can give you a chance of fulfilling your deepest desires, without having to make major sacrifices.
Here are a few ways to start making your dreams a reality through small, attainable steps that will increase your budget:
Crunch the Numbers and Assess Your Budget
When first seeing the expensive price tag attached to some of your dreams and goals, you may very likely feel overwhelmed. This may be especially true if your dream is buying a new home or organizing a lavish wedding. But every achieved goal started with a plan — and realizing your own dreams is no different.
As a first step, determine how much your dream will cost you. Don’t get too stuck on the details. Instead, find a rough estimate with 10% to 20% accuracy and go from there. Next, decide on a target date to make this dream a reality. Then break down the total amount into monthly, weekly, or even daily targets that you’ll need to reach.
From there, print a photo that best represents your dream and write your mini-savings goal on it. Place the photo somewhere you can see it every day, which will kindle your motivation to stay on track. Finally, assess your income and expenses. If you don’t have an idea of how much money you spend each month, track it for a few weeks and analyze the data.
Create a Budget and Stick to It
Once you have an idea of your monthly expenses, it’s time to budget. Many financial experts recommend following the 50/20/30 budget rule, in which:
- 50% of your income is spent on everyday living expenses
- 20% is set aside and put toward savings
- 30% remains available for lifestyle expenses
Of course, this ratio can be altered depending on your financial situation. For instance, if you’ve racked up debt tied to tuition, credit cards, or a vehicle, you might want to redirect part of your lifestyle expenses toward paying it off. Regardless of your personal situation, adjust your budget to make the most of it.
Prioritize Your Dream
Now comes the time to decide what’s more important: your big dream or little daily luxuries? If your dream purchase means enough to you, it shouldn’t be too difficult to decrease or forgo daily coffee runs or a high-end gym membership.
Pinpoint any non-essentials you could cut back on and redirect this money toward savings. These could include eating out, monthly streaming service subscriptions, or impulse shopping. Alternatively, you could bike or take public transportation to get to different destinations and/or bring your own lunch to work instead of going out.
Take Willpower Out of the Equation
Relying on sheer willpower to save money is almost certainly doomed to fail; after all, it’s much easier to not spend any extra money if it’s not there. To reach your financial goal, you can set up your bank account to automatically transfer a portion of your paycheck into a dedicated savings account. Similarly, tools like the Monorail app can help automatize this process, giving you a clear visual reminder of what you are working toward and how far along you’ve come on this journey.
Start Saving Before Actualizing Your Dream
The biggest mistake that robs people of their dream purchases is waiting for the right moment to start saving. Well, that moment might never come. As such, don’t wait for an opportunity to present itself; rather, do the hard work to make it happen. Start saving today and get one step closer to realizing any dream(s) you’ve been fantasizing about for months or even years. Your dream is waiting for you to act, so what are you waiting for? Get moving!
Reviewed and edited by Albert Fang.
See a typo or want to suggest an edit/revision to the content? Use the comment form below for feedback.
At FangWallet, we value editorial integrity and open collaboration in curating quality content for readers to enjoy. Much appreciated for the assist.
Did you like our article and find it insightful? We encourage sharing the article link with family and friends to benefit as well - better yet, sharing on social media. Thank you for the support! 🍉
Article Title: How to Start Saving for Your Dream Purchases
https://fangwallet.com/2022/03/22/how-to-start-saving-for-your-dream-purchases/
The FangWallet Promise
FangWallet is an editorially independent resource - founded on breaking down challenging financial concepts for anyone to understand since 2014. While we adhere to editorial integrity, note that this post may contain references to products from our partners.
The FangWallet promise is always to have your best interest in mind and be transparent and honest about the financial picture.
Become an Insider
Editorial Disclaimer: The editorial content on this page is not provided by any of the companies mentioned. The opinions expressed here are the author's alone.
The content of this website is for informational purposes only and does not represent investment advice, or an offer or solicitation to buy or sell any security, investment, or product. Investors are encouraged to do their own due diligence, and, if necessary, consult professional advising before making any investment decisions. Investing involves a high degree of risk, and financial losses may occur including the potential loss of principal.