Goals with numbers and dates
Turn a vague wish into an amount, a date and a monthly number, price the target where it will actually be when you get there, and know which lever to pull when it doesn't fit.
THREE PARTS
An amount, a date, and a reason
The amount is what the thing actually costs, priced today and honestly. The date is when you want it, written as a month and a year. The reason is the sentence you will read back to yourself in month seven, when you would much rather spend the money. Drop any of the three and the goal quietly dissolves.
"Save for a bike" is a wish. "4,000 for a used motorbike by March, so I stop paying for taxis to work" is a goal. Only one of those can be divided by a number of months.
From a wish to a monthly number
- Price it today
Look up what it costs right now, not what it cost when you last thought about it. Write the number down together with the date you checked.
- Put a real month on it
A month and a year. "Someday" cannot be divided by anything.
- Adjust it for where prices are heading
If prices around you rise quickly, the thing will cost more by the time you get there. Multiply by the expected rise, once for each year you will wait. This is the step almost everyone skips.
- Subtract what you already have for it
Only money already set aside for this goal. The emergency fund is not part of it and never gets counted twice.
- Divide by the number of months
That is your monthly number. It goes into the budget as its own line, beside the future-you amount from lesson 2.
Check yourself
Which one of these is a goal you can actually work with?
- Put away as much as possible every month from now on
- Build up some savings for a rainy day, starting as soon as things settle down a bit
- 1,800 for a replacement laptop by next September, because mine dies mid-call
- Get properly serious about money this year
Show the answer
1,800 for a replacement laptop by next September, because mine dies mid-call
Right. It has an amount, a date and a reason, so it divides into a monthly number: 1,800 over the months between now and September. The other three can never be missed or finished, because there is nothing to miss.
Reza wants a motorbike. It costs 4,000 today and he wants it in 2 years.
Prices around him have been rising roughly 30% a year.
The naive plan
4,000 / 24 months = 166.67 a month
Pricing the goal where it will actually be
in 1 year 4,000 x 1.30 = 5,200
in 2 years 5,200 x 1.30 = 6,760
6,760 / 24 months = 281.67 a monthNaive: 166.67 a month, and he arrives with 4,000 for a 6,760 bike
Real: 281.67 a monthThe gap is not small. Someone who saves the naive amount for two years arrives about 40% short and usually blames their own discipline rather than the arithmetic. 30% is an illustration here; use the rate you actually see around you.
Check yourself
Sara is saving for something that costs 3,000 today, and she wants it in three years. Prices are rising about 25% a year. Roughly what will it cost when she gets there?
- 3,000, because she is already saving the full price of it
- 5,859, because 3,000 x 1.25 x 1.25 x 1.25
- 3,750, since 25% of 3,000 is 750
- 5,250, because that is 3,000 plus 75%
Show the answer
5,859, because 3,000 x 1.25 x 1.25 x 1.25
Yes. Each year's rise is charged on the new price, not the original, so price rises compound: 1.25 x 1.25 x 1.25 is about 1.95, not 1.75.
Which part of the goal is allowed to move?
Fixed date, flexible amount
A wedding in the spring, a trip in the summer, fees due in the autumn. The date will not move, so the amount is what flexes: a smaller venue, a shorter trip. Plan these backwards: work out what you can put aside by then, and fit the plan to that answer.
Fixed amount, flexible date
A specific thing with a price: a motorbike, a piece of equipment, a deposit. The world sets the amount, so the date is your lever. But where prices rise fast, waiting is expensive, because the target grows while you are saving towards it.
Check yourself
Where prices rise fast, pushing a goal's date further out always makes the monthly amount smaller.
Show the answer
False
Not always. More months help, but the target grows while you wait. At 30% a year a price roughly doubles in under three years, so the extra months can be eaten by the rising target. Do the division both ways before assuming that waiting is the easier road.
Reza needs 281.67 a month for the bike in two years.
He can find 200. Three levers:
1. PAY MORE
281.67 - 200 = 81.67 a month to find
2. MOVE THE DATE CLOSER, buy in 1 year
price then 4,000 x 1.30 = 5,200
5,200 / 12 months = 433.33 a month (worse)
3. SHRINK THE TARGET, an older bike at 2,600 today
price in 2 years 2,600 x 1.69 = 4,394
4,394 / 24 months = 183.08 a month (fits)Only two of his levers actually help: more per month, or a smaller target.Notice what is missing from the list: "just wait longer". Where prices rise 30% a year, extra months buy you a bigger bill, which makes the deadline the weakest of the three levers.
Check yourself
Negar needs 400 a month to reach a goal on time and can manage 280. Prices around her rise about 30% a year. Which move does her the least good?
- Push the deadline out by another year and keep saving 280
- Choose a cheaper version of the same thing
- Find another 120 a month by cutting a want out of her budget
- Do a bit of both: a slightly cheaper version and a slightly higher monthly amount
Show the answer
Push the deadline out by another year and keep saving 280
Right. The extra twelve months come with a target that has grown by about 30% by the time she arrives, so most of the relief is eaten before she gets there. Where prices move fast, the deadline is the weakest lever.
Keeping goals alive
- Two active goals at most. With three or more, each one crawls, and slow progress is exactly what makes people quit.
- Give each goal its own place, separate from the buffer and from spending money. A mixed pot makes progress invisible.
- Automate the monthly amount on payday, the same move as the future-you line in lesson 2.
- Write the reason on the same page as the number. In month seven you will need the reason more than the arithmetic.
- Re-price every three months where prices move, and redo the division. Adjusting a plan is not failing it.
Check yourself
Match each one to what it actually is
Show the answer
- "I should save more" → A wish: no amount and no date
- A wedding next spring → Fixed date, so the amount is the lever
- A specific machine with a price → Fixed amount, so the date is the lever
- 25% a year, three years away → Multiply the target by about 1.95
- Pushing the deadline back a year → More months and a bigger target at once
Lesson recap
- A goal needs an amount, a date and a reason. Without all three it cannot be divided into a monthly number.
- Price the target where it will be when you arrive, not where it is today. Price rises compound.
- Some goals have a fixed date and a flexible amount; others a fixed amount and a flexible date. Know which lever is yours.
- Where prices rise fast, waiting is the weakest lever: extra months come with a bigger target.
- Two active goals at most, each in its own place, automated on payday and re-priced every few months.