… and that’s what makes it all worthwhile!
… for me, these two concepts made all the difference!
I just came across this blog post which seems to summarize it nicely …
In it Ian Ybarra says:
I’ve noticed that the more specific goals I have, the wilder the dreams I come up with, the more conscious I am of what I spend my money on. Because committing to doing what I love gives me reason for my money. Every time I’m about to waste money, I can’t help but think “I shouldn’t do this. I could use this money for something I want more.”
I agree with Ian. But, when we talk about Personal Finance, I’ve also noticed that we tend to just talk about money-related goals.
I have a different view – and it’s a view that ultimately made me rich – that money is to support your life, not the other way around!
Buckminster Fuller is generally regarded as one of the twentieth century’s greatest inventors, architects, poets, and visionaries. His theory was that your job/purpose was not to make money. It was to fulfil your life’s purpose … and the money will come (if it’s truly required)!
I guess, what BF was saying is that our life’s purpose is not necessarily the same as chasing the goal (e.g. to get a promotion or a pay-rise; or to have a $1,000,000 nest egg by age 45; or whatever).
But, the way I look at it is just the opposite …. concentrate all of your efforts on finding then chasing your Life’s True Purpose, and your financial goal – if it is directly related to your life’s purpose – will come!
So, here is my simple three-step plan for totally turning the traditional way of looking at Personal Finance on it’s head:
1. Find your Life’s Purpose – or at least find what the destination is that you are aiming at and by when (retiring on a beach by 55; quitting the rat race to help the poor in Africa; reading every book in the library; whatever turns you ON).
2. Work out how much Passive Income you think that you will need to support that lifestyle in today’s dollars … then double that amount for every 25 years (prorate for shorter periods) until the date that you really have planned. If you intend to keep working, just subtract the income that you expect to be able to earn.
3. Multiply by 20: that is the amount that you will need to have in passive income-producing investments to support your’ Life’s True Purpose Lifestyle by the date that you expect. This becomes your Magic Number.
4. Where will that money come from? it’s probably a larger number (maybe, much larger) than you expected. Right? If so, it will need to come from Making Money 201 strategies … if not, Making Money 101 strategies on their own should achieve your goals.
Please let me know what you think your Magic Number is (and why you need that much/little) …