WHAT IS YOUR NUMBER?
I like the idea of having a number that you identify as a goal and drive toward. This is not a financial amount where you quit your career and don’t do anything else.
Instead, it’s a number where you will feel as if you have enough. It doesn’t mean that you won’t continue to earn money, but it may open you up to something different once attained. There is no right or wrong amount; it’s entirely based on the future you see for your family and yourself.
You can establish your number through a variety of different ways. It could be an income stream, or it could be a net-worth amount. Either way, setting a number allows you to focus on the task at hand.
When you eventually attain that number, you have the freedom to decide if you need to rethink your initial goal or start something new. The idea of identifying a number is not to lock you in or trap you. Instead, it’s going against the tide of the world and acknowledging that there may be a point when you will have enough. Once you determine your number and begin shaping your plan, it’s crucial to revisit it regularly—every 2-5 years. During these reviews, assess where you stand financially, emotionally, and in your focus.
It is also useful to periodically ask yourself, “How have I changed?” As time goes on, your experiences will deepen your thinking and shift your perspective, so be willing to revisit your initial goal regularly.
As you’re deciding all these goals, it’s important to identify an age where you hope to achieve the number and start transitioning to the next season of life. For many, this shift happens around 65-70, when transitioning to something new might feel more challenging. That’s why I suggest starting to dream now about what you’ll do when you reach that point. Identify activities or causes that align with your values and test them out earlier than you might think.
When you reach that age, you can evaluate whether to continue on this path you’re on or opt for a different direction. From my observation, those around me who have chosen to do something that involved serving others in some way seem to be in a better place than those who continued to grow and build their businesses. Personally, when I owned Bankers Mutual, I spent my last six years volunteering one day a week. This helped me transition seamlessly into full-time serving and volunteering, knowing it would bring me joy.
To help determine how you would best spend your time, consider answering the following questions: “If money wasn’t an issue, is there something I would rather be doing? What would I do differently? Would I rather continue with what I am doing? When I get to the point of ‘enough,’ what would that mean for me? Would I move out of the business world? Would I spend more time with family or do more philanthropic work?”
A helpful place to start is your personal budget. Most people find a budget confining, but I think it’s freeing because it provides clarity. If you have a budget and you work within it, it can be a very rewarding experience. It can allow you to know when you are in a good place and open yourself up to more opportunities. Kathy and I have a budget for every single line item in our lives. As you work with your budget each year, take the time to ask questions and challenge yourself with the direction you are taking and what needs to change for the future.
WHAT IS YOUR FINANCIAL PHILOSOPHY?
Let me explain this concept by asking a question: “As you continue to accumulate assets for personal use, how do you determine appropriate caps?”
For the majority of people, as they make more money, they spend more money. That’s why I think it’s beneficial to develop this philosophy early on. That way, you can get ahead of that natural tendency and instead maintain your lifestyle at a reasonable level.
The next step is to determine the right amount to spend on personal use. To answer this question, I developed a formula that allowed us to spend a percentage of what we earned, which kept us living well within our means and much less than we made.
With this model, the more you earn, the higher the percentage of charitable dollars should be. I prefer the idea of setting figures/goals beforehand so that when you achieve them, you are more likely to follow through with your donation amounts. When developing your own financial philosophy, these are great questions to consider: Do you consider yourself a more conservative spender, or are you overextended? Do you set caps on your assets? I have included a handout titled What is Your Financial Philosophy You will find key questions such as these to help distill your thoughts further. Take time to go through each question and wrestle with it until you have a clear position of your own financial philosophy.
ACTION STEP
Defining what ‘enough’ looks like for you and your family is not always straightforward. Consider starting with these steps:
- Pause and take some time to dream about the life you desire for you and your family. Factor in your lifestyle, children and other large elements. There’s no right or wrong answer – the figure you land on could be a financial goal or a steady stream of income. Once you decide – write it down.
- Personal budget – get clear on your figures and list every line item within your lives. Look for areas within your budget that offer opportunities for you to do more or areas you can improve on.
- Begin to think about where you currently are in relation to achieving your goal. Map out steps and key changes you need to make to help achieve it. Remember to come back and review this information until you are fully satisfied.
When your numbers are clear, you can focus your energy towards building the life you desire.
I hope you have found this blog useful, please share your thoughts in the comments section below.
