• Morag McIntosh

What's your money number?


Canadian Money

Your money number is a number that is different for everyone. It depends where you are in your life and where you are in your money journey. My money number is the amount of money we need in the bank in order to let my DH retire. It’s the number that I keep my eye on at least once a week.


For some of you who are starting out it might be how much you need to pay off debt, or how much you need to for a new car, or how much you need for a down-payment on a house. For women that are farther along in their journey it might be what is needed to pay off the house or what is needed in the retirement accounts. For entrepreneurs it might be a sales target that you need to make to break even, or even start making viable money.


Your money number is the number that you have on your mind the most.


So why am I writing a blog post on money numbers? Simply because I find when I ask my clients what their money numbers are, it’s pretty rare that they can come up with a solid figure. I usually hear something along the lines of “I think I need $X.” or “I owe roughly $X.”


Here are the issues with that…


You can’t hit a target that you can’t clearly see.

If you don’t know exactly what the dollar value of your money number is, then how will you know when you hit it? How will you know when you can stand back, ease up on the pressure and pat yourself on the back? How will you know what it will take to meet your number in terms of creativity, resourcefulness and time? Knowing your exact number is a great way to help you visualize the path to your goal.


Target

Knowing your number is a great way to evaluate your goals.

Say your goal is to own the car of your dreams: a Mercedes-Benz and you’ve decided you want to do that by 30. Understanding the cost of the specific model you want - in terms of purchase price, insurance and gas - is a great sniff test for your goal.

If you are in your mid-twenties, earning great money and living below your means it might be easy to hit your goal. If you are in your late twenties, working in a minimum wage job and in debt you may need more creativity and resourcefulness to achieve your goal.

The same goes for the bigger life goals. If you want to want to retire early you need to know exactly how much money that will take. If you want to buy a large house in a nice neighbourhood but you don’t have the means to do so, then maybe the goal changes to starting with a more modest house in a different neighbourhood. Knowing the money number behind the goal will help you refine your goals.


Home ownership

We tend to fear what we don’t understand.

Have you ever felt like your goal was so large and so complex that you could never hit it? I used to feel this way about retirement savings. I spent my twenties spending money I didn’t have, my thirties paying back my debts and worrying about retiring and my forties saving for them. But I didn’t have a concrete number in mind. I just knew that you had to save a TON of money if you wanted to be able to retire without eating cat food. Seriously, that was a legitimate concern in my life for most of my late thirties!


I kept read articles that said stuff like “If you don’t have AT LEAST 2 million set aside for retirement you’ll die penniless under an overpass!!!!” and I thought to myself, ‘how am I ever going to hit such a large number?’ I can’t save 2 million dollars! That’s impossible. So I became more and more convinced I’d never be able to retire.


I had no idea what my money number was. I had no idea why you needed 2 million dollars. I had no idea what 2 million dollars meant in terms of a sustainable monthly income. I had no idea what sort of retirement 2 million could buy and if I’d even want that retirement…


It wasn’t until I got serious about what I would need to fund my retirement that I began to feel like retirement was a possibility. I read different points of view on what retirement could look like, and compared them to what I wanted. I realized I didn’t need 2 million dollars to retire. I needed way less to actually achieve my goal. And as I clarified my money number I was able to stop fearing a cat food and overpass retirement.




Do the math!

There are calculators all over the internet that help you figure out money numbers. They range from great to ‘not-so-hidden-agenda’ bad. If you want to pay back debt, save for a major purchase, plan a wedding, retire or go live the van life you can usually find a calculator to help you figure out the costs.


Know what your resources are. Before you commit to saving or paying a specific amount make sure you have it and will continue to easily have it. Know where your starting position is so that you can take those first steps confidently!


Start with some soul searching!

Really get clear on what your goal is and is not. Know in as much detail as possible what you want before you begin to calculate your money number. Remember that creativity and resourcefulness can help you reach even the loftiest of goals. If your goal seems too big to achieve are there smaller goals that could help you on your way?

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