Have you “arrived,” financially speaking? What would your life look like if you had? What are the similarities and differences to your current reality?
In his bestselling book The 4-Hour Work Week, Tim Ferriss has his readers go through an exercise he calls “Dreamlining.” The purpose of this dreamline is to think of things you could foresee having, doing, or being, over the next 6 to 12 months that would give you the security of being free to live your life the way you want to live it. I’m a HUGE fan of Ferriss’ work, both in this book and across media outlets, and I appreciate the basic premise of his dreamlining exercise.
Ferriss’ dreamline is an eye-opening experience, the basic point being that you oftentimes don’t really have to be earning much more money than you’re currently making to get the sense of more freedom and higher-quality living. As many 4HWW dreamlines as I have completed for various spans of time, I wanted to take it a step further. I would like to expand on Ferriss’ dreamline for my own purposes, and share with you.
We dream of making $100,000, $500,000, $1,000,000, or more dollars. As children, we all wanted to be bazillionaires, but as adults doing the daily grind of balancing work and family, those numbers have become a little more realistic…but how realistic are they, really? I could say I would like to earn $500,000 a year, but that’s just a pie-in-the-sky number if there’s nothing to back it up. Until you have actually done some of the math, you don’t really know what your truest goal annual income would be. This is where my update on Ferriss’ dreamline comes in.
I’m calling my update the True Earnings Goal Assessment (“TEGA”) and here’s how it works:
HAVING: List three (3) things you would like to have within the next 12 months. Would you like to have a new car? Would you like to have a solid college fund set up for your child(ren)? Would you like to have a facelift? Would you like to have an RV and the freedom and budget to travel? Would you like to have an office space outside of your home so you feel like you can work and focus without interruptions?
Once you have your list of your top three “haves,” put a price tag on them. If you want that new Subaru Outback that’s calling your name from the showroom floor, factor how much your monthly payments will be plus insurance. If you want $12,000 worth of plastic surgery, factor in $1,000 a month for that. If your new office is going to cost you $1,700 a month to rent and operate, factor that in, too. Whatever it is you want to have in the next 12 months, estimate the monthly expense would be, if it’s of top three priority to you then it makes the list!
BEING: Similarly, list three (3) ways you would like to be within the next 12 months. Would you like to be a great pastry chef? Would that entail going to culinary school, and if so, how much would that cost you? Would you like to be a skilled photographer? How much would classes at your area camera shops cost you and add to your dream? Would you like to be a triathlete? Do you already have the gear you would need or would you need to purchase it? Would swim lessons or tri classes help you better prepare for your goal of triathlon success? Now, estimate your monthly expenses for being each of your top three priority items and add those to your list!
DOING: Again, list three (3) things you would like to do within the next 12 months. Why not choose now to begin (doing) an annual family tradition like trips to Disney World or visiting all 50 states? Would you feel so much better to be actively repaying (doing) an old debt that’s been looming for too long? Take this opportunity to make that happen and get that monkey off of your back! How would it sound to even keep it closer to home and plan (doing) a weekend get-away for just you and the love of your life to go off to a cabin in the woods and just enjoy the peace and quiet of some alone time? What would your monthly budget look like to be doing each of your top three priority items in this category?
Now, on to the math (AKA: the fun part).
- Calculate your current monthly living expenses and multiply that amount by 1.3 to allow for a little wiggle room in case of emergencies or whatnot.
- Add up your monthly HAVING dream total.
- Add up your monthly BEING dream total.
- Add up your monthly DOING dream total.
- Calculate the total monthly expenses of these four items (current expenses x 1.3, having, being, and doing).
- Multiply that monthly total by 12 to arrive at your annual earnings goal amount.
THAT, my friends, is your truest earnings goal amount. THAT is the income amount to strive towards, not some random number picked out of thin air. There’s a difference in setting the bar high and setting it too high to realistically reach. Your goals have to be attainable or you’ll quit just shy of success. For example, prior to doing this modified version of Ferriss’ dreamline, my random goal earning amount was $150k. Boy, was I surprised that even with all of the BIG ticket items I put on my TEGA, my true annual goal earning amount was just $82,200. That number is almost half what I previously thought I would have to have to live large and in charge in my own little world! This was a huge relief and pleasant surprise!!!
Depending on your current lifestyle, your numbers are likely significantly different than mine. But, I hope you find–as I did–that having a hard number to put on your dreams as you go through your life and business choices will make your work more productive, your choices more fact-based, and your dreams much more attainable. You don’t have to be a bazillionaire to feel like you have “arrived” at financial freedom. You have a number, it’s just up to you to find that number, then strive for it.
You’ve got this!
Make it a great day,