I also used to buy a large cappuccino for $2.00. The cappuccino comes from a Nescafe vending machine that they have at the bakery (it doesn’t sound good, but it is). However, one block further down there’s a pharmacy that has the same cappuccino vending machine, but they sell the large cappuccino for $1.60. Therefore, what I’ve started doing is the following:
- I walk to the bakery and buy the bread and the cheese.
- I walk another block and get the cappuccino from the pharmacy.
That is, I’m saving 40 cents a day. Now, you might be telling yourself that 40 cents is a miniscule amount, but hear me out. Those 40 cents a day comes to twelve dollars a month. And that’s just the start.
At noon on weekdays I walk to a club that I belong to, with my laptop, and I work from there. (See the image at the top of this blog post; that’s where I work.) Since I’m there for about three hours, I order a soup for lunch, and two cappuccinos. I order one cappuccino with my lunch, and I order another one about an hour later. Each cappuccino costs $2.50, so that’s $5 a day, or $25 a week ($5 x 5 weekdays).
This week I decided to limit myself to one cappuccino at the club. If I continue to do this, I’ll be saving $12.50 a week, or $52.50 a month ($12.50 * 4.2 weeks).
In addition, since I don’t have a car (that’s a story for another day), last month I rented out my parking space to someone in my building for $50 a month. This means that I’m going to have an additional $50 coming in each month.
If you add up these three sums—the $12 a month that I save by buying my coffee at the pharmacy instead of buying it at the bakery, the $52.50 a month that I save by having one coffee at the club instead of two, and the $50 that I’m getting for renting out my parking space–you get $114.50 a month. That comes to $1374 in twelve months, or one year.
Why am I telling you this? Because you can do a lot with $1374. You can buy a new computer and start doing some freelancing on the side; you can finally visit New York City; you can buy Christmas presents for your family; or you can set the money aside to finance a larger goal further down the road.
Based on this analysis, follow the eight-step process for financing your life goals that’s laid out below.
Eight Step Process For Financing Your Life Goals
Here’s the eight-step process you should follow for financing your life goals:
Step One. Create a list of life goals. Take a look at the following phrase: “If I only had the money I would . . .” Quickly, without thinking or judging, write down anything that pops into your head. There’s your list.
Step Two. Go through the list of goals that you just came up with and create an estimate of how much each one is going to cost you. Choose a goal that’s important to you and that you estimate would cost around $1374.
Step Three. Take out an envelope and write “Goal Envelope” on the front. In addition, write down the following:
- Your goal.
- Today’s date.
- The amount that you estimate that you’ll need in order to finance the goal (around $1374).
- The date by which you want to have all of the money that you’ll need (one year from today).
Step Four. Find a way to save 40 cents a day without cutting back on anything. That is, without making any sacrifices. Think of my morning vending machine cappuccino example. By getting the cappuccino at the pharmacy, instead of buying it at the bakery, I’m getting the exact same cappuccino, but for 40 cents less.
I could get a smaller cappuccino for 95 cents (and save $1.05 a day), but I don’t want to cut back on the amount of caffeine that I have in the morning (coffee drinkers know what I’m talking about). I could also just make coffee at home; that would be even cheaper. However, I like the coffee from the vending machine, and I like the walk to the bakery and to the pharmacy.
The idea is to make a tiny cut in your expenses without making any sacrifices. For you this could mean calling around to see if you can get a better price for your long distance calls– while keeping all of your current benefits–, getting a better price for your car insurance– without increasing your deductible–, and so on.
Step Five. Find something you can cut back on that would allow you to save $2.50 a day. For this step you are going to cut back on something, which means that you will be making a sacrifice. However, it has to be something that’s not a big deal for you. That is, it’s a very small sacrifice.
In my example, cutting back on one of the cappuccinos that I have at the club is not a big deal. After all, I have the vending machine coffee in the morning and one coffee at the club. That’s plenty of coffee for one day.
I could stop going to the club altogether and just have lunch at home. That would save me a lot more money. However, I love having lunch at the club and spending a couple of hours working there. Here are some of the many benefits that I receive by going to the club:
- I get to look out at the ocean.
- There are always tons of birds around. There are humming birds, blue birds, and black birds with red bellies. The other day a small falcon landed three yards away from where I was sitting.
- It’s out in the open. I get to be out in the fresh air and feel the breeze.
- The waiters are really nice to me.
Therefore, ending my lunches and work time at the club is not a sacrifice that I’m willing to make. Once again, step five does involve making a sacrifice, but it’s a very small sacrifice that really doesn’t hurt that much.
Step Six. Find a way to make $50 of extra income a month. If you told yourself that you have to make an extra one-thousand dollars a month, that would require a lot of thinking and a lot of work. However, if you sit down for an afternoon and brainstorm ways in which you can increase your income, it’s very likely that you’ll be able to come up with a way to make $50 of extra income a month.
Step Seven. Each time that you follow through on your plan and you save or make some money by following the steps above, put that money in the “Goal Envelope”. When you put money in the envelope, write down on the front of the envelope how much money you deposited. That way, you can keep track of your progress.
Step Eight. If you find ways to save even more money here and there throughout the year–a product you buy often goes on sale, your favorite restaurant starts giving out a free meal once you’ve eaten there ten times, and so on–or you make money you weren’t expecting–you sell something on eBay, your Google Adsense account finally reaches $100 and your funds are released, and so on–don’t spend the money. Instead, put it into your “Goal Envelope”.
Get a Head Start
You can get a head start on your goal financing efforts by doing two things. First of all, put five dollars in the envelope right now. Five dollars may not seem like a big deal, but it’s seed money. And what happens to a seed? If you water it and give it nutrients, it grows.
The second thing that you can do to get a head start is to have a no-expenses weekend. This weekend, don’t spend a cent. Eat the food that’s already in the pantry and find free ways to entertain yourself. It’s just for one weekend. Estimate how much money you saved by doing this and put that money in your envelope. You now have a head start on your $1374.
We have a tendency to think that our goals are going to be more expensive than they actually are, and to think that it’s going to be more difficult to come up with the money than it actually is. The process above is simple, it’s doable, and it gets results. What are you going to do with your $1374? Please share in the comments section below.
1. How to Live Your Best Life – The Essential Guide for Creating and Achieving Your Life List
2. Make It Happen! A Workbook for Overcoming Procrastination and Getting the Right Things Done
3. How to Be More Creative – A Handbook for Alchemists
4. The One-Hour-A-Day Formula: How to Achieve Your Life Goals in Just One Hour a Day
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