Do You Really Know Your Number
Brian Williams
Retired from Financial Services and now FEMA Individual Assistance Cadre Reservist | Habitat for Humanity Board of Directors and Volunteer Homebuilder
Welcome back to the True Measure of Wealth!
Since our last edition, Do You Really Know Where You Are?bit.ly/3KVIQQ5, I truly hope you spent some time taking stock of where you stand and where you're headed toward controlling more of your time. Whether you're a few years away or just starting your career, here are two simple steps to get you started:
Step 1: Where You Stand - gather current balances for:
Step 2: Where You're Headed - for each account / asset, project how it will grow each year until whatever year and age you plan to wake up every morning and say "I can do whatever I want today":
While there are many online tools that can help, this is a simple example of the actual spreadsheet that I started (and named "Mountain Bound" so every time I opened it I thought about why I was doing it) just after the 2008-2009 Great Recession to get started down the road of knowing where we stood and where we where headed:
As a student and geek of investing (CNBC very high on my list of most watched channels) I'm a big believer in Edward Deming's "inspect what you expect" management adage. Almost every time I opened Mountain Bound, my eye was drawn to the Row with year 2021 and age 55. Not sure exactly why 55, but it seemed like a good age to do something else than the bump and grind of whatever corporate America was throwing my way. Whatever year and age you personally dream of controlling more of your time, periodically and purposefully updating your balances, following and knowing your returns, and watching your nest egg grow will vastly improve your chances of getting there!
As we dive into question 3 of The True Measure of Wealth do you really know your number, here are two stories you might relate to whether you're 6 months from retiring or just starting out in your career.
When my wife Wendy and I where fresh out of college in 1988, we balanced our checkbook to the penny every single month. Maybe it was my small town community banker dad's advice to always know where your finances stood, or for those that know me well and my approach to solving most issues and opportunities with a good ole fashioned project plan, we took the time to balance our account every month without fail. As our careers progressed and a few annual raises grew our paychecks, we were blessed with more than enough disposable income so time spent on this tedious task was better spent elsewhere. We weren't balancing our checkbook, categorizing our spending or working from any semblance of a monthly budget. Sound familiar? We were flying blind looking back at it now with all honesty. If you've done the work to know exactly where and how your money is being spent every month, good on you! If you haven't, keep reading.
领英推荐
It's funny sometimes how we make life's simplest decisions so hard. If you're getting closer to the year and day you'll control more of your time, I bet you've asked yourself, "how do I know I have enough to enjoy the lifestyle I want for as long as I want"? Regardless of how much time you've pondered this simple question, your answer (whether you realize it or not) is based on another very simple question, "do you really know your number"?
Fast forward the story thirty years to 2018. While I'd heard the age old adage "if you want to retire comfortably build enough wealth to live on eighty percent of your final annual salary" so many times, Wendy and I had no idea whether that was right for us or not. While eighty percent may be right for some, your vision of how you would control your time everyday may require far less to be happy.??Up to that point, we were blessed enough to not think how much and where we spent money each month. Whether you want to believe it or not, doing the work to know your number is a non negotiable input to the True Measure of Wealth. Beginning with the end in mind, we built a simple spreadsheet with ~30 categories of expenses and tracked every single penny we spent in those categories for 24 months to gain real world insight on what and how much we needed each month for as long as we wanted.
Whether true happiness in your life means trading your current nine to five grind for something far less stressful, pursuing opportunities in other industries you never imagined or like me, giving back daily to the causes the world that most move your soul you'll never know what's possible until you figure out your number. Would you make that lifestyle trade by spending 10%, 20% or even less every month or does your dream of controlling more of your time have you firmly planted in the "80% (or more) of your final salary club". Regardless, getting to your number is the real answer to question 3, and doing the proper work is your next step in The True Measure of Wealth!
As shared in our last edition Do You Really Know Where You Are?bit.ly/3KVIQQ5, if you've picked up or downloaded a copy of Morgan Housel's The Psychology of Money (2020) and made it to chapter 7 Freedom, I'm confident you've thought about how the following sage words from that chapter move you:
"More than your salary. More than the size of your house. More than the prestige of your job. Control over doing what you want, when you want to, with the people you want to, is the broadest lifestyle variable that makes people happy" (1)
For what it's worth, and now sixteen months into my decision to control more of what I do everyday, I can confirm Housel's simple happiness lifestyle variable has unequivocally provided me the opportunity I'd always imagined...giving back to those in my community and our world most in need. Take a moment and ponder what you would be doing right now if you controlled more of your time? Knowing your number is a set of footprints you have to walk, so the quicker you get started, the sooner you'll know how close you just might be!
If you've like to chat more about how I answered question 3 of the True Measure of Wealth, or for input on your thoughts, questions or the work you're doing on your personal journey to control more of your time, please direct message me and we can set a meet up.
In the next edition of the True Measure of Wealth, we'll explore thoughts and share a few stories for question 4 - Can you really see your transition and financial future? If you are newly subscribed or missed any previous editions, you can catch up at the links below. As always, I truly hope you will find a way to?#helpsomeone?this coming week in your world because that is what we are all called to do.
Until our next set of footprints are made...keep working on really knowing your number!
Brian
(1) Morgan Housel,?The Psychology of Money?(April 8, 2020)