I’d like to do X, but I don’t have any money right now

I can’t tell you how often I hear the above sentence mentioned by colleagues, friends, and acquaintances. The other variant is “I wish I’d had the guts to do X when I was young“.

Granted, there are those who would say this simply to make me feel better about my own reckless decision to quit my job to earn basically nothing while pursuing my own lofty, idealistic goals. But for every appeasing conversationalist, there’s always one or two who are eager to engage in a discussion about how to actually ‘do it’.

While I don’t claim to have all of the answers, my aim is simply to get you started, so that you can eventually find your own way. This post is dedicated to the logistics of ‘doing it’: how to actually start saving for your dreams.

So how should I start saving for my goals?

Back to your goals. If you’re like me, some of your goals might require a significant chunk of change to fully chase down. Whether it’s quitting your job to travel, starting an online business, paying down your loans, or saving up for grad school, you’ll probably need some cash to pay for it. Let’s make a financial plan for getting you there.

1. Have a figure in mind

At the risk of sounding pedantic, before you can start saving, it’s a good idea to assign a dollar amount to each of your objectives, and a realistic deadline for when you’d like to achieve it. This will be the boiler plate for your calculations, and a yardstick upon which to gauge your progress.

For example, I’d like to:

  • Travel in Southeast Asia for 4 months:
    • Cost: $5000 (~$35/day according to most travel blogs)
    • Deadline: 1 year from today
  • Work on my own online business for a year:
    • Cost: $15,000 (frugal rent, food, misc. in a Boston-area suburb)
    • Deadline: 5 years from today

Sound too ambitious? Let’s find out.

2. Calculate your monthly commitment

This part’s easy. Given the goals you’ve outlined, how much will you need to save per month to satisfy each of them?

  • To save $5000 to go travelling in a year, I’ll have to set aside $5000 / 12 = $416/mo
  • To save $15,000 to quit my job and start an online business in 5 years, I’ll need to set aside $15,000 / 60 = $250/mo

To satisfy both of the above goals, I’ll need to save $666/mo ($416 + $250) for the first year, and an average of $250/mo thereafter.

3. Cut costs

Okay, now that we have a paper requirement, let’s analyze your actual bills to see if we can actually meet them!

Stick with me – this is the most important part.

Let’s say you make $55,000/year, and take home roughly $35,000 of it after taxes and retirement contributions. This amounts to a paycheck of about $3000/month.

Looking at your past bills, here is what you spent on a monthly basis (this is actually a typical breakdown of what my expenses looked like living in Boston, MA a few years ago):

  • $1160 on rent/utilities
  • $300 on groceries
  • $250 on bars/restaurants
  • $250 on car insurance/gas/repair
  • $200 on misc online shopping
  • $150 on lunch at work
  • $100 on phone bills
  • $70 on gym membership
  • $60 on TV/internet
  • $60 on a food delivery service

= $2,600/mo spending. This leaves about $400 extra per month to throw at your student loan.

Your bills might already seem tight, but there’s always wiggle room. Let’s take a look at what would be required to save an extra $666/mo:

  • Save $300: Change apartments to a slightly less convenient location, perhaps with more roommates
  • Save $100: Bring your lunch to work most days
  • Save $60: Find a less costly cell phone provider (I switched to Google Fi)
  • Save $60: Cancel your food delivery service subscription
  • Save $50: Cut down on pricey ingredients and buy more items in bulk
  • Save $50: Find a budget car insurance provider, perhaps one with a bundled rate (I switched to Progressive to take advantage of their safe-driver benefits)
  • Save $50: Find a budget gym, slightly farther away (I switched to Planet Fitness)
  • Save $40: Cut the cable subscription, opting instead for your friend’s Netflix account

= $700/mo in savings. You’ll notice we didn’t even have to touch your bar/restaurant/entertainment/shopping budget to arrive at this figure! These are other potential areas to extract savings. You’ll also notice that your student loan payment – perhaps the most fiscally-responsible expenditure in the above list – also remains intact.

What could you do with an extra $700/mo?

Well, according to your plan, accomplish BOTH of your goals of course!

Another perspective: if you decided to invest this money starting at age 25 into a diversified 3-fund portfolio (more on this in a later post), this could grow to $1,000,000+ by age 63 – enough to retire without any other benefits.

Preparing to start the Half Dome ladder climb (Yosemite NP)


I know what you’re thinking – sure I could accomplish my goals, but at what cost? Life is for living – why suffer now just so that I can be happy later? What if I never even make it to “later”? Well, you’re absolutely justified in your concerns.

In order to maximize our happiness, we first need a good idea of what makes us happy – something at which humans are notoriously terrible.

According to several recent studies in social psychology, having money does not correlate highly with being happy. While having a minimum amount of cash for basic survival certainly does correlate, the correlation tends to fall flat above a certain amount (~$50,000/yr) [4].

So what does make us happy? Positive life experiences, helping others, healthy relationships, and fulfillment of our goals.

Does having an apartment close to the train station really make you happy? Or is it really the humans with whom you surround yourself that do. Is it possible to preserve these relationships while commuting a bit farther to work each day?

Let’s take a more extreme example. Does paying for a $100/mo cable TV subscription make you happy? If so, how happy? At age 21, cutting this $100/mo bill could save you $190,000 by retirement at 64 (a $1200/yr investment at 5% inflation-adjusted interest), according to my compound interest calculator. At a flat $55,000/yr salary (also inflation-adjusted), this amounts to 3.5 years of your working salary – years that you could have spent retired and spending more time with your family. Is having cable TV really worth sacrificing 3.5 years of freedom in your adult life?

So before you balk at reigning in that $60 Blue Apron subscription or $200/mo luxury membership at Equinox, think about what this money is really costing you. Is it your freedom? Are there alternatives to these expenditures with which you could still be happy? And furthermore, noting the article linked above, are these luxury purchases really making you a happier person?

Saving is easier than it looks

Implementing your new cost-cutting measures might seem daunting – unrealistic even – but really take a moment and think about what matters to you.

If price-shopping at a few auto insurance companies, biking to the nearest commuter station each morning, and driving an extra 20 minutes to the gym twice a week seems like a great hassle, try lying in your deathbed at 85 and wondering why you never made a plan to go backpacking when you had your health, started your own side business in extreme wilderness photography, or visited your friends in Italy when you had the chance.

Even with your newfangled saving strategies, costs can creep through in a number of unexpected ways. It’s a good idea to check in every month or two to see how you’re progressing toward each of your goals. To help track your expenses, I have found that online tools such as Mint or YNAB seem to help.

The point of this article is to tell you that saving for your dreams is possible – and is probably more within your reach than you’d expect.

So the next time you hear somebody regaling the audience about their amazing 3-month backpacking adventure over Nepal’s stunning Annapurna Circuit in the dead of winter, and you see some bystander lamenting the fact that they never got the chance – relish in the comfort of knowing that you’ve made a plan for accomplishing your own dreams, whatever they may be. Future you will thank you for it.

Jumping at reaching the Arctic Circle sign on Alaska's Dalton Highway!