So far, I think 2020 has been a little rough on everyone, so with most of us going a little stir crazy it seems like it would be good to take our minds somewhere else for a while. There are only so many parks around Des Moines or Central Iowa to visit for short hikes, or walks to take around the neighborhood before I start dreaming a little bigger. Maybe you’ve been saving up for a big vacation, and now it just isn’t going to happen for a while, so let’s put that towards a BIGGER trip. Between SpaceX, Virgin Galactic and others, there is apparently a budding industry developing around “Lunar Tourism” as explained on this Wikipedia page: Lunar Tourism. This is a weird idea, but I like to think things through and see how they might apply to other areas. Let’s see how we can break down a big goal into the components that help us understand how the different priorities we all have can fit together.
Planning for a Big Goal
When thinking about large financial goals there are many different inputs to consider before working on calculations. Before anything else we have to look at the entire financial picture to see how a new goal can fit in with everything else. We’re usually saving for many things at once and need some kind of value system to rank our goals over the course of our lives. Priorities shift all the time based on changes in needs or values, or if unforeseen circumstances arise. We also have to make sure the longest-term goals stay in focus all the time because it’s easy to get distracted by shorter term ideas. In this case we don’t want our moon trip to come at the expense of a quality retirement or helping the kids with college, so that will have to be balanced with this “vacation fund” to ensure you aren’t stuck living in a van eating beans and rice upon return. So, what are the critical inputs we need to figure out before analyzing a new goal?
Calculating the Costs
We will take the Wikipedia article at face value for figuring out this goal. Landing on the moon is probably going to be out of the question, so let’s use the $150 million quote for a lunar flyby as our savings goal. Taking the kids is not going to happen either, but maybe this can be a retirement celebration. It’s going to take some time to save up this amount, and probably a good idea to let these companies work the kinks out first, so we’ll plan for a 25-year time horizon to save. We have a long time before the money is needed and will need to take some risk to be successful here, so we’ll estimate an 8% return on investment. Starting with a $25,000 initial investment, we should have all the information we need to start calculating our savings target. I normally use my financial planning software to model client savings goals like this so we can see how it fits in with the overall picture. For calculating a standalone goal, I like this free calculator to get a ballpark figure: Savings Goal Calculator. Let’s get our information entered and see how things look:
Ouch! Saving $156,364.56 per month for the next 25 years is probably out of the question unless you have a BIG raise coming down the pipeline. Some goals just aren’t very realistic no matter how much we plan for them, so in that case we need to start thinking about other options.
Thinking About Alternatives
This post is obviously a little farfetched (unless you’re Elon Musk or Richard Branson), but the point remains valid. We can’t afford everything, so while savings is extremely important, ranking our goals and thinking about realistic options is just as critical. I think I’ll probably just stick to visiting national parks and other interesting places around the US. There’s a lifetime of fun to be had for a fraction of the cost, so I’ll prioritize other savings before an off-planet expedition. Our financial lives are all about balance and figuring out the puzzle of prioritizing different goals and piecing everything together in a way that fits with our individual values. It all comes down to figuring out a starting point and adjusting along the way as things change and new information arises.
Who knows, maybe in the future a college education or our healthcare expenses will cost the same as a trip to the moon! We might as well start planning now and get a jump on those goals too. If you have big goals that you need help thinking about (the moon or otherwise), schedule a meeting to see how we can start planning for those today.