I am turning 29 in a 3 months I want to take the time to reflect on money psychology. My husband and I recently hit a big milestone in our finances recently on a random regular Tuesday.
When I had hit my first 100k I had been checking my bank account every single day. It felt momentous as if a huge weight came off my shoulders but this was different. It was quiet.
In fact as I started to think of how much our investments would compound after 30 some odd years, (quick plug in for our online compound interest calculator) I felt sick.
I came to the horrifying realization that if we stopped investing a single penny now we would have more than we ever needed in retirement.
Now I am not complaining and I don’t expect pity, I’m mentioning this because I thought when I hit such a big milestone I’d be shouting from the roof tops maybe quit my job and become a librarian. But I am sitting here writing this still working my 9-5 job.
Why? Because money is more than just numbers. It’s deeply rooted in our feelings. I can stare at our calculator until my face turns blue but what do I do with these numbers? What do I do when I start hitting my financial goals I set for myself?
All my life I was always focused on getting good grades so that I can get into college so that I could get a good job. And I never thought to dream past that.
So here I am trying to figure out what I actually want to do with my life, pass the ‘get a good job’ phase. And boy, it is not easy, so if you’re feeling lost as well, you’re in good company.
While I can’t tell you how to spend the rest of your life I can tell you that the good thing about money is it gives you the opportunity to try things out.
Money is not just boring ole numbers on a spreadsheet but they can be numbers that when added up can make up your dream life.
It’s important to remember that numbers are just that, numbers, but you can tell the numbers what life you want.
Here’s my favorite exercise you can try:
1.If I had the perfect day what would that look like?
For me that would mean a slow morning with my husband on the porch every morning. Maybe a Pilates class right after. Followed by a day to read and maybe visit family or friends for a dinner.
What this would tell me is that in my financial number that I need to plan for would need to account for buying a home that would have a porch, likely something about $3k per month. A Pilates membership and a budget for hosting dinners and books roughly $400 a month. Which albeit is not a very costly everyday. So I likely do not need as much saved in my bank accounts for a day like this.
2. What would the best year look like for me?
For me that would mean maybe I would still work on my own business that I enjoy, like Money by the Numbers. Where I get to write and possible become an author. I get to travel four to six times a year as I love to see new places. But I do not want to travel to Lake Como I’d really enjoy trips to Patagonia or the national parks. And our family got to spend the most coziest holidays together maybe a private chef for the occasion. My husband and I could trade off on our goal races, triathlons and marathons.
This tells me financially that I likely will would need even WAY less in retirement since I still plan to work which likely means an income coming in. It also tells me that the trips I want would cost me roughly $10k a year ($800/month). With lets say about another $5k for a private chef ($400/month).
This exercise helps you think past the numbers. The point is to ground your dreams in reality. And the reality is this would roughly calculate to about $55k a year, which including some extra numbers from our fixed cost (download your spreadsheet so you can calculate yours) that puts us at roughly $80k a year.
I won’t go into the whole 4% rule and how much you would actually need in retirement with these numbers because the point is not about the numbers per say. The point is that you need to ground yourself in what the numbers can do for you.
These numbers here tell me I do not need to work the job I currently have unless I want to. It also tells me I can take a risk on my own dreams, such as writing. The numbers tell me, I enjoy simple vacations that connect me with nature, and will not be spending my time traveling my plane a lot. It also tells me my family and friends are a big priority to me.
This life may not be for you but I implore you to find the life you want. So if you have been feeling unsure about what’s next, try the exercise I mention and let me know in the comments what your numbers can do for you.
