Over the weekend my four-year-old niece and I slipped on our 3-D glasses and settled in to watch Disney's animated comedy Up. As I munched on some popcorn, I realized I don't want to end up like the main character, facing unfulfilled dreams at the age of 78.
The story is about two kids, Carl and Ellie, who become fast friends over a shared love of exploring and a desire to travel to the lost land of Paradise. But their childhood dream takes a backseat to life as marriage, work, buying a home, and mini emergencies ranging from leaky roofs to flat tires get in the way. Ellie dies before she realizes her dream of reaching the lost land with Carl.
During tough economic times, the notion of keeping a dream fund has likewise grown obsolete. Now I am an advocate for smart spending and investing: build your emergency fund, pay down your mortgage, live debt-free, save for retirement. But I also think finding a way to fund your fantasies is a must.
How many times have you started a sentence with "One day..." One day I'll visit Paris, have the funds to do yoga regularly, own a lakefront cottage with my family. Whatever the dream, you should work toward realizing it. We all need to cut out the one day and get busy making plans - otherwise one day will never come.
The first step is to decide what you want. To help you get started I recommend an exercise called "The Perfect Day," which you can find in full on . The exercise asks you to take a moment to imagine your perfect day, two years or so in the future. What three activities would truly make it your perfect day? Would you do work you love, meditate in the morning, share dinner with family and friends?
Next, think of three things in your perfect day that you don't have now, like a spacious new apartment, a set of golf clubs or a convertible. These are the things you should work toward realizing. Don't worry if what you want seems a little unrealistic right now - the point is you've declared it, you deserve it and you'll have it if you make and stick to a plan.
Now write down each thing you'd like to have or do in the near future. Next to each item note how much money you'd need to have it (this may require a little research).
On my dream list is a vacation to the Miraval Health Spa in Tucson, Arizona. Its hefty price tag makes it a long-term goal but for a spa-lover like me it would be a once-in-a-lifetime indulgence. I came up with my plan by scoping the spa's price list online, speaking to a rep by phone, looking up airfare and even sending away for a brochure to hang in my office. Now I'm saving for this goal - not a lot but it's something and I feel good about it. I'm in the habit of making the dream fund a priority.
Once you're clear on what you want, you need a plan to fund your dream. Here's where reality meets the dreaming process. You can get a little help at , an online tool from ING that lets you hatch a plan by dollar amount or date. The latter option helps you figure out how much you need to save at regular intervals in order to reach your target.
The best-laid plans come armed with a little motivation. My friend and her partner, whose dream is to vacation in Hawaii, downloaded images of the island state and put them on a digital rotating photo frame on their mantle. It keeps them excited and focused on their goal. If your dream comes with a spoiler and sound system, you may want to take it out for a test drive - even if you're not ready to buy.
Once you fully commit yourself to setting money aside for the long-term goals that really matter, short-term spending becomes less appealing. You start looking at how you spend in a whole new way, asking yourself if each purchase is truly worth your hard-earned money and is bringing you one step closer to reaching your goals.
Angela Self writes for Globeinvestor.com weekly. She is one of the founders of the Smart Cookies, a group of five women who specialize in personal finance. They are hosts of a self-titled show on the W Network and the authors of The Smart Cookies' Guide to Making More Dough. Find out more about them at