Issue #016: Enough is Enough

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👋 Hey Money Peeps,

I got asked a question this week that really stopped me in my tracks. As a self professed ‘Money Person’, I really should have had an answer ready on the spot for this kind of question so I panicked and threw out the first thing that came into my head.

“£10,000”

Oh sh*t, I forgot to tell you the question, here it is:

“How much money do you want to be making ideally per month?”

Whether than answer has any truth to it, I still don’t really know. The reason I’m sharing this with you is because we SHOULD all really have a number to answer this question, so that we know when to STOP. Without it, we will just continue to strive for more and more without ever really knowing why.

Now I’m not saying that this number has to stay fixed, of course it’s gonna be higher when you have a family and kids compared to when you’re living alone as a student. Additionally, I’m also not telling you that you have to STOP when you get your your number, you might absolutely love what you do.

What I am saying is that by having a number, you give yourself the ability to get of the hamster wheel of always chasing more and more. Simply put, you know when:

ENOUGH IS ENOUGH

And here is how we’re gonna do it…

📈1% Better Every Day

Finding your version of ‘ENOUGH’

The method I’m going to run you through today is called the

4% Rule

Here’s how it works:

Common practise suggests that in order to retire, you will need to have 25x the amount you will need to spend each year.

Take for example someone who spend £40,000 per year.

25 x £40,000 = £1 million to retire

or done in reverse.

£1 million x 4% = £40,000

Why 4%:

Well some fancy guy who knows economics studied the stock market and calculated that even in the most turbulent of times, a 60/40 portfolio would be able to return at least 4% over a period of 30 years. Feel free to read more about how he calculated that here.

I’m not saying that I believe in this rule wholeheartedly, but with finance, there is never an exact science, and this is a bloody good place to start!

🥊 ACTION

Calculate your rough expenses. Or work out how much you earn each year and how much you are able to save and remove one from the other. Then times that number by 25 to give you your MAGIC number.

❓QUESTION

What number did you calculate as your own personal version of enough?

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Till next time!

DISCLAIMER: None of the above is financial advice. This newsletter is strictly education and should not be taken as investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and always do your own research.