We all have an “enough” number. That number defines the total income you need in order to meet your basic needs, reach your goals, and enjoy life. It’s key to define what your “enough” number is, and how that goal aligns with your personal and professional priorities. When you have financial goals that are actually tied into your lifestyle goals, you’ll be able to start working with your “why” in mind.
Too often, people fall into the trap of setting arbitrary salary goals for themselves. While it may sound amazing to have a $100,000 salary or to run a million-dollar business, you have to ask yourself whether those numbers will actually move you toward the life you want to build. Sometimes, the arbitrary financial goals you set for yourself are coming from a place of vanity. For example, a seven-figure business may sound better to you than a business that grosses $300,000-400,000 each year, but do you actually need that much revenue to support yourself and your team?
If you’re a W2 employee, it may feel better to have a $100,000 salary, but will that income be enough to move you toward your goals? You may find your “enough” number is actually more or less depending on your unique vision for your life.
In order to calculate your “enough” number, start by reflecting on your goals and priorities both during this season of life and in your future. Prior to setting these priorities, it can be helpful to do a values check-in. Jot down the 4-6 core values you live your life by. Not sure where to start? Take five minutes to run through a free program like Life Values Inventory to determine what you value most. You can also look at a longer list of values (like this one) and pick the ones that stand out to you.
You may find that you value:
With those values in mind, you can start to clarify your priorities and set clear financial goals that support them. Looking at the values list above, you may find that your priorities are:
- Having a job that allows you to spend more time with your family.
- Having flexibility to travel once a year minimum both now and in the future.
- Earning enough income to successfully send your kids to college debt-free, and to go back to school yourself to earn your Masters.
- Being able to donate to charity, or support family members in need, as part of your annual financial plan.
Once you prioritize your goals, you know what “enough” looks like, and you can work backward to determine your “enough” number.
Determining Your “Enough” Number
Wondering how to create a clear income goal based on your priorities? Start by adding dollar values to the priorities you’ve already set. Carrying on our example, you might say:
- Having the flexibility to travel at least once a year both now and in the future. $6,000/year for a big trip for your whole family now through retirement.
- Being able to donate to charity, or support family members in need, as part of your annual financial plan. $5,000 per year dedicated to charitable donations.
There are, of course, other ways to achieve these financial goals beyond just setting a salary you want to achieve. For example, your employer may be able to cover the cost of your continuing education or offer a charitable matching program that could increase the impact of your giving. Given these possible options, determine how much your goals will truly cost on an annual basis. Then, add those figures to your other financial goals (like retirement savings or debt repayment), and current living expenses.
What If “Enough” Doesn’t Feel Achievable?
Does your “enough” number feel like an unachievable goal? It’s time to assess what roadblocks are holding you back from your dream life. A few questions to ask are:
- Does my current employer offer the necessary opportunities for me to earn my dream salary?
- If you’re an entrepreneur. What would need to change in my business for me to reach those goals?
- Do I need additional education or training to level up in my career?
- Would I be able to bring in more cash flow through passive income, or a side hustle?
You may need to focus on leveling up your own experience or training in order to increase your earning potential or look for a position at another company. Alternatively, if you love your job but won’t be able to make your dream salary there, look at other ways of adding income to your household. A side hustle, or freelance and consulting work, might be a great fit.
Making a Plan
Once you know what your “enough” number is, you’re able to create a plan with confidence for how you can achieve that income.
Article Credit: https://workablewealth.com/2020/02/05/whats-your-enough-number/