Dream Come True Calculator: How Long to Save for Your Dream?
It's a universal truth: we want things that are hard to get. We don't want to spend our holidays at our parents' place — we want to sip drinks on a Bali beach instead. Our wishes and dreams tend to get more expensive as our earnings improve. While some dreams might be completely unrealistic, most of them simply require us to save a certain amount of money. This calculator answers the vital question:
How long do I have to save to afford my dream?
Step 1: Get in the Right Mindset
We all have dreams, but if we don't start translating these dreams into plans, they will never come true. Here are tips for creating a plan that will actually work:
- Set a realistic goal. Make sure to analyze your finances and set a goal you can actually achieve. Saying you'll save 70% of your income is extremely likely to fail unless your expenses are minimal.
- Define the goal clearly. "I will put aside $50 a week" is a concrete, measurable goal. "I will save excess money" is not — it invites excuses.
- Think about quick wins. Work smarter, not harder! Finding a flight $200 cheaper means four weeks less of saving.
- Anticipate problems. Form "if-then scenarios." For example: "If I go out with friends, I only take a limited sum of money with me."
- Be ready to tweak your plan. Revisit it monthly and adjust it to your current financial situation.
Step 2: Build Your Saving Strategy
Before you assess how much time you need, you need to answer three questions:
- How much will my dream cost? The price might be anywhere between a few hundred dollars (a new phone) to a few thousand (holidays) or even hundreds of thousands (a dream home).
- How much do I already have? What part of your current savings can be dedicated towards this goal? If you haven't saved anything yet, don't worry — you can begin today!
- How much can I save every month? The more you can save each month, the faster you will afford your dream. Try to make this number as high as possible.
Step 3: Put Your Savings to Work
Here are some options for your savings:
- Savings account — Easy to set up with regular deposits. Interest is modest but risk-free.
- Bonds — More profitable than a savings account. Government bonds are among the safest options to earn money while saving.
- Mutual funds — You buy into a "basket" of shares managed by a fund. Less work for you, reduced risk compared to individual stocks.
- Real estate crowdfunding — Online platforms allow participation with a couple of hundred dollars as a starting investment.
Remember: when it comes to investing, there is always risk involved. Pick the type that best suits your needs.
Step 4: The Formula
Our Dream Come True calculator uses the following formula to find the time T (in months):
Where:
- P — Price tag on your dream (goal amount)
- M — Monthly savings contribution
- I — Initial balance (already saved)
- R — Monthly interest rate (annual rate ÷ 12)
- T — Time in months
When the interest rate is 0%, the formula simplifies to: T = (P − I) / M
Example: Saving for a New Car
Suppose you are saving for a new car at the price of $33,000:
- Initial savings: $5,000
- Monthly contribution: $1,500
- Annual interest rate: 5% (monthly: 0.417%)
- Result: approximately 18 months (1.5 years)
You will be able to afford a new car after approximately 18 months — or 1.5 years!
I Saved for My Dream! What Now?
Congratulations! Withdraw your savings, go ahead and buy the thing (or the experience) you were saving for! It's also a great moment to share your happiness with others. With your determination and ability to save, why not make someone else's dream come true? Donating to your favorite charity is a sure-fire way to fulfill the wishes of others, however small they may be.