During my last year of college, I had one goal: Save enough money so that I could travel for a year around the world. My first estimations were that I needed around $25,000 to pay for flights and daily expenses. On the day I graduated, I had already piled up $25,000 in savings, and I wouldn’t even spend all of it to go around the world. This is how I did it.
In the last year of business school, I was earning around $1,300 a month at my internship, and getting about $500 in scholarships. My rent was $500. Add in my other living expenses, and my monthly budget was $1,000. That left me with about $800 each month. But saving $25,000 in a year — by June — was impossible. Still, I made it. Why? Because I had a goal, and I was fully committed to it.
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I wasn’t defeated by reality. Why not aim for the moon, and land among the stars? If I managed to save “only” $8,000 over the next 10 months, I still could go on a nice trip.
There is no point wishing that I had started to save money for my world travel plans a year earlier. I had one year and I had to get it done by the end of that year.
I started by drastically reducing my expenses. No more going out. Instead, I invited friends over and asked them to bring drinks while I served a basic dish of pasta or a salad. No more shopping for clothes, beauty products, or anything but travel gear and guidebooks.
That cut about $200 off my budget – not good enough. So I had two more options: Work more to earn and save more money, and try to get what I needed for my travel plans for free. I started waitressing on weekends, found some kids to tutor after school, and generally hustled on every possible occasion.
I also wrote a 20-page document with details of my trip, my budget, what I needed in terms of equipment, and sent it to companies and foundations asking for sponsorships.
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The response was quick. I received $3,000 in cash sponsorships, a laptop, a video camera, guidebooks for every country in my itinerary, a tent, and even a year of free international travel insurance. I asked my family to give me a backpack and some hiking shoes for Christmas. In total, that was over $5,000-worth of free stuff.
By the end of the school year, I had $25,000 on my savings account. If you had asked me to live lean just so I could see five figures on my bank statement, I wouldn’t have done it. But every night that I didn’t go out? Every Monday morning that I listened to my friends talking about their awesome weekends while my feet still hurt from standing and carrying food trays until 2 a.m.? That didn’t matter. I was buying the trip of a lifetime.
Without a goal, I would have ended the year with a zero-dollar balance.
If you save without knowing why — chances are that you won’t make it. With saving, you are depriving your present self of instant gratification so that your future self can have something better. You need to visualize that to make savings easier.
The $20 that I saved on Saturday nights was a full day of exploring around Macchu Picchu. But your goal doesn’t need to be so specific. You may not want to save your money just so that you can travel like I did. Say, saving $100 today is one less day you will have to work in retirement. Look at the 75-year-old bagging groceries at your supermarket. You deserve to enjoy life in old age – you shouldn’t be working that long. Would you rather save $100 or spend an extra day at work when you are 75?
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If that seems too far away, think about a mid-term goal. You want to save money so that your kids can go to college. So that you can buy that outfit you’ve had your eyes on for a month. So you can finally replace your noisy fridge.
You can even make a graph. Fridge fund: $1,500. I want a fridge 10 months from now, so I need to save $150 a month. Put your progress on the graph. Break your goal into a smaller goal. If you’re saving $150 a month, then that’s only five dollars a day.
Every day, drop a five-dollar bill in your fridge jar. Make a little change to your lifestyle – like brewing coffee at home instead of buying it at Starbucks – and put your savings towards your fridge fund. Now you know why you are saving. Imagine your sleek new fridge in your kitchen. Do you want it more than a cup of coffee? Probably.
I certainly wanted that ’round-the-world trip more than anything else at that stage in my life. Saving money to travel didn’t seem so hard after I visualized myself hanging out on the beach with my feet in the warm sand, sipping an ice-cold drink while my friends were spending 40 hours a week in separate-but-stuffy cubicles.