Last week, I was gifted a book to read by a friend in Wealth Management, called ENOUGH: What’s YOUR number?
It shares many examples as to how so many people are working hard, putting money away for when they retire, with little to no idea as to how much they actually need TO retire!

The idea was that everyone has a “number” that defines how much they need to retire. While it’s absolutely true that you need to set clear retirement savings goals for yourself, it’s also true that you have a “number” right now that perhaps you don’t even know?

That’s right, in this stage of your life, you have an “enough” number. That number defines the total income you need in order to meet your needs, reach your goals, and enjoy life.

It’s key to define what your “enough” number is, as quickly as possible and how that goal aligns with your personal and professional priorities. When you have financial goals that are actually tied to your lifestyle goals, you’ll be able to start working with your “why” in mind.

Defining “Enough

Too often, people fall into the trap of setting arbitrary income goals for themselves. While it may sound amazing to have a six-figure salary or to run a multi-million-pound 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? It’s only when you have absolute clarity on both your and the business goals, that you can ensure they are aligned and are working effectively to achieve them. And not at risk of achieving one, at the detriment of the other!

It may feel good once you are able to generate a 6 figure 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 the Life Values Inventory to determine what you and your business value most.

You might also wish to read: Why Values are key to success and Our Values

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 the flexibility to travel 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.
  • Being able to donate to charity, or support family members in need, as part of your annual financial plan.

Once you prioritise your goals, you know what “enough” looks like, and you can work backwards to determine your “enough” number.

Determining Your “Enough” Number

Wondering how to create a clear income goal based on your priorities? Start by adding monetary values to the priorities you’ve already set. Carrying on our example, you might say:

  • Having the flexibility to travel both now and in the future. £16,000/year for your whole family now through retirement.
  • Earning enough income to successfully send your kids to university debt-free. Circa £70,190 for each of your kids in the next 5-15 years (depending on when they graduate)
  • Being able to donate to charity, or support family members in need, as part of your annual financial plan. £6,000 per year dedicated to charitable donations. 

Then, add those figures to your other financial goals (like retirement savings or debt repayment), and current living expenses. Your equation should look like this:

(Annual Priorities Costs) + (Annual Living Expenses) + (Annual Emergency/Retirement Savings + Debt Obligations) = Your “Enough” Number

How Does Your “Enough” Impact Retirement Savings?

Are some of your priorities going to impact the amount you spend in retirement? If you want to travel the world during retirement or continue to donate to charity as a retiree, you may need to add these expenses to your savings goals. Remember to add them to your total retirement cash flow needs, and plan accordingly. You may find that you need to save an extra amount each month or set a lump-sum of money aside to achieve your goals as a retiree.

Having trouble figuring out what your ideal retirement savings are? A good rule of thumb is to estimate that you’ll spend 80% of your current income during retirement. Ideally, you’ll have paid off your mortgage and other debt to free up additional cash flow.

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:

  • What would my business need to look like, do, generate, for me to receive the income I deserve?
  • What do I need to change in my business for me to reach those goals?
  • Do I need additional education or training?

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. If you’re uncertain about how to reach that goal, reach out to a financial planner. Together with your advisor, you’ll be able to discuss your current priorities, how they translate into financial goals, and what you need to do financially to move the needle.

And whilst they are working on your “enough” number, we can get to work reviewing and revising your business plan to SMASH IT!


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