The Road to $1.6 Million
When I first joined Wealthy Affiliate and was asking to set a goal I will be the first to admit that I pulled a number out of thin air and honestly cannot even remember what I wrote down. I am sure that I am not the only one and the reason we forget these things is that if the number you write down has no meaning to you, which mine clearly didn't, then it is difficult to remember- it's more or less pointless.
Since that time I have re-evaluated things and have arrived at a very crystal clear number- $1,600,000.00.
This number has huge meaning to me therefore I will never forget it. It also serves are a reminder and motivator to constantly take action. Keep reading and I'll explain why.
Picking a Number with Meaning
I arrived at "my number" by taking the time to review and tally up my annual household bills. This totaled $44,720.
The next step was to tally up my lifestyle expenses. This includes things like vacations, fun activities for my wife and myself, and activities with the kids. I also included a monthly budget for so called "mad money". This totaled up to $23,600.00.
These two numbers combined came out to $56,720.00. The next step was to include a portion for the government- as you know they always their cut. For this I rounded my number up to an even $80.000.
This $80,000 figure is the number that I need to make on an annual basis to cover all the costs associated with my current lifestyle.
How do you get from $80,000 to $1.6 Million?
I'm glad you asked! To arrive at my final number and goal of $1,600,000 I took my annual cost of living and figured out how much money I would need to have in the bank in order to reliably earn $80,000/year on a super low risk investment with an expected return of 5%/year.
To figure this out you simply take 100 and divide it by your targeted annual return %, in my case this is 5%.
100/5=20
The next step is to take your annual cost of living and multiply it by this number. In my case, my annual cost of living requires me to earn $80,000/year.
$80,000 x 20 = $1,600,000.00
Therefore, once I reach my goal of having $1,600,000 that I can invest in super low risk investments that will generate a measly 5%/year I will reliably and consistently generate an annual income of $80,000.
Doing so will allow me to continue my current lifestyle but with the added benefit of having the option to work for additional money, or not work. I will know my expenses are covered either way.
What's Your Number?
I would love to hear your thoughts on this strategy in the comments below, and if you're up for it I would also absolutely love it if you would share your number with us!
Recent Comments
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I don't know that my number is all I know I want to live a comfortable lifestyle with no worries whatsoever. I know that I can do this with WA.
I would highly recommend taking the time to figure your number out. If you don’t you risk the chance of your lifestyle constantly keeping pace with your income and never being able to escape the so called rat race. If you figure your number out and set it as a goal it help to keep you grounded, focused and motivated knowing that there is an end game. Best of luck in your ventures!
Thank you I will try to do that but if I could make an extra $5,000 a month that would be great. But I do see what you are saying though. Thank you for the information.
My pleasure