Reflect. Once you have calculated the monthly savings needed for each goal, take some time to reflect on each one. In my example, I realized that I would be saving more for a vacation home than I would for a new car. To me, that doesn’t align with where I want to spend my money. Especially since the priority was higher on the car.
Adjust values. Start with the goals that have the lowest priority. Either increase the amount of time to achieve the goal, or decrease the total amount needed. Both of these will lower your monthly savings needed.
At this point, you are not trying to close the gap with your budget, but you are aligning your priorities. We will fit the plan to your other monthly obligations in the next step.
Calculate new monthly savings. Use the savings calculators from Dinkytown and Bankrate mentioned in Step 3 to recalculate the new monthly savings needed.
Repeat. Keep working on the goals until you are happy that the monthly savings, priorities, years, and total cost align with your values.
I extended the time for the vacation home. In doing so, the monthly savings dropped by $134. Now, it is more closely aligned with my priorities and has a lower monthly savings than the car.
Build a new house
Buy a new car
It may seem like we are circling back to the priorities, and you are probably asking yourself why we didn’t start with them? If we had, the last step would take forever. It’s much easier to state your ideal time and money and then adjust it, than it is to calculate one goal based on the other.
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