The first thing I do each morning (after powering up my computer and pushing the button on my coffee pot) is to read Early To Rise. I can usually find an article in this great e-zine that I can use, either to motivate me, help me better my health or just get those cogs turning in my head about my future. I found this one particularly interesting, as I am in my 50’s and although already technically retired and definitely underfunded.
This article appears courtesy of Early To Rise, an e-zine dedicated to making money, improving your health and quality of life. For a complimentary subscription, visit http://www.earlytorise.com.
Enough Money to Fund Your Dream Lifestyle
by Michael Masterson (09/28/2006)
If you’re like a lot of people, one of your top financial goals is to increase your income to “seven figures”. But “seven figures” can mean wildly different things… and if you have a net worth of $1 million, you’ll be living much differently than you would with a net worth of $9 million.
In his brand-new book, Seven Years to Seven Figures: The Fast-Track Plan to Becoming a Millionaire, Michael Masterson suggests that you ask yourself, “Would a net worth of $1 million be enough?”
Here’s how you can find out.
Start a list of regular monthly expenses: mortgage payments or rent, bills, car payments, grocery bills, etc. (You can estimate these costs as they would apply to your dream house, dream car, etc.)
Add to this an estimated cost of the activities that are important to you each month — tennis lessons, dinner and a movie with your spouse, a weekend trip out of state, etc.
Now add the estimated cost of those things that would make up your dream lifestyle — a new Ferrari, two-week vacations to the Caribbean, scuba diving gear, a sail boat, lunch once a week with your sister, etc.
Add in the cost of anything else we may have forgotten.
Multiply by 12.
Your total represents the cost of living your dream lifestyle for one year.
If your dream lifestyle total is…
… less than $65,000 you should aim for a net worth of $1 million
… between $65,000 and $160,000, you should aim for a net worth of $1.5 million to $2.5 million
… between $160,000 and $358,000, you should aim for a net worth of $3 million to $5.5 million
… between $358,000 and $585,000 you should aim for a net worth of $6 million to $9 million
How much wealth do you need to accumulate to live the lifestyle of your dreams?