You took our quiz, and you’ve figured out it’s the little purchases that are holding you back from your short- and long-term savings goals. You’re working hard to break your bad habits (nice job passing up that nail polish on your last drugstore run!). You’re on track to establish a solid emergency fund, and you’re starting to think about what really matters to you. Friends think you’re crazy, but you’d love to quit your job and spend a year living abroad. For most people, that’s just a fantasy — but if you’re smart about saving, you can absolutely make it a reality. Having an amazing goal to focus on will make saving so much easier, and you’ll be living proof that saving isn’t about deprivation, but about immense freedom.
First, you’ll have to do the math.
Where do you want to live, and how much will it cost to make that a reality? Let’s say you’ve always wanted to live in Thailand. Research the cost of living there — look at rent, food, transportation, etc. Don’t forget the boring stuff, like health insurance. Would you want to work while you’re abroad? Think critically about how long it might take you to get a position, and what you might reasonably earn. Also consider what the numbers would look like if you had no income at all that year. Then consider any costs you’ll need to cover on the home front, like renting a storage unit for your furniture and belongings. And always give yourself a buffer in case of emergencies.
Try out a long-term savings calculator to see how much you’d need to save. If you estimate you’ll need $30,000 to support your lifestyle, you need to save $115 a week for the next five years to arrive at that sum. Saving $50,000 would require $192 a week, and saving $70,000 would require $269 a week. Keep your money in a high-yield savings account with an online bank so your funds are accessible.
Think about what you can cut out to get to your goal.
Consider every single expense in relation to your dream year abroad. What will give you more happiness in the long run? Could you swap your afternoon latte for a cup of regular coffee? Maybe you could skip brunch in favor of a walk in the park. Don’t go full-on hermit, because you’ll be miserable without any social interaction or fun whatsoever. Make time to celebrate milestones with friends and practice self-care in the form of an occasional fro-yo trip, but keep your major goal in mind at all times.
It’s okay to change your plans.
If in five years Thailand isn’t that appealing after all, you’ll still be able to go on whatever adventure you want. Plus, you’ll have several years’ experience with aggressive saving, which is nothing to scoff at. Reworking your spending around a big financial goal is a tremendous achievement, and will make saving seem so much easier in the future.