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Let’s jump right into this article. 

Obviously it will take more than just a few minutes to put this strategy into practice but the idea is to form a habit of doing these different exercises that are both fundamental and even a bit unorthodox so that you can begin to see how the different parts play together when you build financial goals for you, by you.

Start with the basics 

These are the expense categories for “life stuff” that you absolutely need. 

• Food, clean water, clothing, shelter
• Transportation, Fuel, Insurance
• Healthcare
• Utilities
• Liability payments
• Extras (Netflix, Disney? Not likely!)

Many of us barely take the time to get a handle or clarity on this number…. 

and we’re already daydreaming about lifestyle. 

Define your desired lifestyle 

These are the what you want or “envision for your life to be” categories. 

This is your chance to mind dump it. Brainstorm and write it down in a guilt free environment where it’s ok to fail. You are not spending any money doing this exercise and it’s ok to think AS BIG as you want. 

• Everything you could ever dream of having for yourself.
• Tag the items that are: What you REALLY believe will bring you lasting happiness for long term
• Tag the items that are: What is enough for you and your family. Decided by you. Non-negotiable. 
• What will each cost?
• When do you want to acquire it? 30, 60, 90+ days? Years?
• What is realistic based on your knowledge, skills, and current earning power
• What will it cost to maintain any material goods acquired, moving forward?
• Usually a multiple of X in comparison to basic income requirements. 

Even fewer people will actually write down all of their dreams, let alone account for the costs associated with acquiring and maintaining them. By giving ourselves an estimate and prioritizing, we can get the ideas out of our head and in motion, or enable us to allow ourselves the mental space to relax if we realize that some of the ideas may not really be that important after all. 

I’m no different than you and personally I’ve had many things that I’ve wanted to acquire over the years and several things have happened… Sometimes I acquire the item and am satisfied, and the item serves me with a positive experience over time.  

Other times I’ve gone for instant gratification and ended up not really satisfied or feeling like I wasted money or could use the money later. Sometimes I’ve held off on purchases only to find that I get over the desire to acquire it and it wasn’t that important anyway. 

And sometimes I hold off for weeks or months and I still want to “get the thing”. So I put my mind to it and will usually figure out a way to get the thing.

It’s just our human nature, so again no right or wrong, writing these things down and assigning a cost and priority to them just helps organize and see how much money we really need for the stuff that we really believe will add value to our life. 

We can even go as far as creating vision boards with detailed pictures of the items (houses, cars, vacations, etc), or creating projects and folders to organize collections of things (think setting up a dream home-office studio, or ultimate camping truck build). 

The end goal with this step is to have a list, know the costs, and prioritize. It gives you goals to work towards. 

Margin

So you have a number by adding up your basics and desired lifestyle? 

Good. Now, give yourself extra, and then some. It’s always going to cost more than you expect. There are always emergencies. Taxes will take some too. Plan for contingencies. 

Again, for most people this is usually just a “nice thought” that passes through. We’d all like to have a cushion but rarely do we get advice about treating this as a very important and non-negotiable item in addition to our basic expenses and lifestyle goals. 

Taxes

Are you paying more than you need to in full? Or are you using strategies to reduce and limit your liabilities? Unless your tax liability is Zero, I would consider increasing the total income goal by another multiplier of X to account for taxes. 

Future

How much capital at work will you need in the future to produce your desired income?

• Retirement - when? How many years do you have until it happens? For how long?
• Estimated required Capital at work
• Inflation - worth less every day
• Estimated required capital at work adjusted for inflation

Now calculate, based on the number of years until your retirement goal… how much will you need to save, invest, accumulate, grow, each year in addition to your income and lifestyle goals to reach a capital at work goal that will produce enough to continue maintaining your desired lifestyle and growing your capital at work?

Business 

If you’ve decided that you want to freelance, or start a business of any kind, have you determined what the ideal numbers are for running a profitable, successful venture? 

• Product or service, price? 
• margin? 
• number of customers? 
• CAC? 
• EBITDA?
• etc. 

Plan accordingly. 

Likely need to generate 5x, 10x, 20x or more in revenue than what your annual personal income expectations are. This is so that your business will be profitable enough to pay for your income goals. You want enough revenue and profit that enables you to work on the business, not necessarily in the business. This means that you need enough cash flow to hire help and reinvest in your business.

Alignment 

Who are you and what are you willing to do? No one or single right answer. Your choice will differ, income vehicles will vary. Usually boils down to your personal values and priorities. 

Job, Career, Entrepreneurship, Investing? 

Hopefully you choose not to participate in illegal or criminal activities!

Optimize

Based on all of the above, you may need to revisit each area and adjust, fine tune, modify, or pivot based on your individual circumstances and priorities. Being optimized does not mean you are cheap. 

Do you see what we’ve done here? 

Throughout this process we are working forward and defining our own number that makes sense for us. Instead of letting market salaries dictate what we will “have left over” - we are establishing an income target and goal that we can work towards. 

Questioning:

What is marketing, actually?

Could you accept that many of your lifestyle goals are not really your own “dreams” and could simply be sensationalized expectations based on your current world view and influences? 

For example do you watch Shark Tank or believe the only way is through hustle and a mega SAAS exit? 

Luxury and status? 

Celebrities, influencers and commercials? 

Expos and big events? 

Statistics? 

Job postings? 

Social news feeds?

Beware, structures and narratives form identities. 

You should always question everything, whether you agree with it or not.

Thankfully, in the society we live in, the choice is yours to make. Success is not guaranteed, but at the very least with this practice you should be able to identify some bigger financial goals that work for you so that you can stop your life from being run 100% by statistics, job posting salaries, and social norms.

Are you ready to go down the rabbit hole?

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