Everyone’s ideal life looks different. Everyone’s “American Dream” is unique to them. That’s a good thing! We all want different things out of life, but there are certain questions that must be answered to obtain those things. While everyone’s ideal life looks different, the questions to ask to help you get there are the same. You can afford the life you want, with the right mindset, of course.
It truly doesn’t matter what your situation looks like right now. Sure, if it’s not looking good, it may take longer to get where you want to go, but it is possible. Sacrifice, discipline and consistency are required to afford the life you want.
Combine those three traits with perseverance and a will to win, and you will be one lucky lady living the life of her dreams! I’m sharing 5 important questions to ask yourself to help you determine how to afford the life you want. Be honest with your answers, because the action behind them will show.
#1 What do you want out of life?
Before you can determine how to pay for the life you want, you need to determine what that life actually looks like. This is a very deep question, so no skating the surface level with your answers! Get honest, go deep, and really think through what you want to achieve in your life time.
When you are thinking about the life you want, what does it look like? Do you see yourself traveling often? Do you see yourself having kids and paying for their college education? Do you own one home or three? Will you get married? If so, will you and your partner pay for the wedding out of pocket? Are you a successful business owner or a corporate ladder climber?
Get very specific with the life you want, then write down everything you envision for yourself. I would suggest breaking it down into different timeframes. For example, in the next 5 years you may want to pay for your wedding and start saving for your children’s college fund. However, in the next 10 years, you may want to save $50,000 or start your own business. When you assign timeframes to your life goals, you can move on to the next question.
#2 What will it cost to get what you want?
When you know what you want, and when you want to achieve it, you can associate a cost with it. For example, if your goal is to save $50,000 over the next 10 years, you would need to save $5,000 every year, starting this year.
If your goal is to start your own business in the next 5 years, what will that cost? Do you want to have 3-6 months’ worth of living expenses saved before you start your own business? What will the start-up costs be? Once you have an exact total of what it will cost to start your own business (including your household savings), you can divide that total number by 5. Let’s say you want 3 months’ worth of living expenses, which totals out to $10,000. Then, you determined that you will need an initial investment of $15,000 to get your business going. That means you will need $25,000 in the next 5 years, which would add up to saving $5,000 a year, starting this year.
Understanding the price tag of your life goals will allow you to plan accordingly. It will also give you an idea of what changes must be made for you to get there. Leading us into question number 3.
#3 Can you get there with your current situation?
Most of the time, your current situation can get you to a goal or two, but not every goal. You will likely need to make more money, get rid of debt, or cut back certain expenses before you can set your sights on your life goals. That’s perfectly fine, but you need to understand if your current situation will get you there, or not.
Going back to your goal of saving $50,000 over the next ten years – you would need to save $5,000 a year. If you only make $40,000 a year and your annual expenses add up to $35,000, then you will only have $5,000 to save and enjoy life with. Chances are you will want (or need) to buy something for yourself, which means you won’t be able to save your full $5,000.
Understanding that information will allow you to strive towards earning $45,000 (so an extra $5,000) a year or cut back your annual expenses to $30,000 (also an extra $5,000). Once you know what your current situation allows you to do, you can think through changes to help you reach your goals faster.
#4 What changes do you need to make to get to the life you want?
In all honesty, when it comes down to what changes you need to make to reach your goals, you have two general options: 1) increase your income or 2) decrease your spending. You can do both at the same time, or one or the other.
I would personally recommend increasing your income, and here’s why: you can only cut back your spending and expenses so much before you reach your cap. However, there truly is no cap on the amount of income you can earn. It’s all based on how much work and time you put in. You can get a second job, you can tutor on the side, you can sell your stuff, or you can ask for a raise. You can essentially do anything in your power to bring in more money.
While cutting back your spending and expenses (especially if they are unnecessary) is a good idea, there will come a point where money just has to go out. That’s when bringing more money in can help you reach your goals faster. I challenge you to think about different ways you can earn more money, as well as certain spending areas you can cut back.
#5 How will future changes and decisions effect you getting there?
Life comes at you fast. Things change. Unexpected experiences happen. That’s all a part of this life we live. We can’t control everything – you could lose your job. You may have a child when you weren’t planning on it. Things can happen that throw your life goals for a loop.
When unexpected things do happen, it’s time to re-evaluate your goals and then answer the four questions above. You may want different things 10 years from now, but that doesn’t mean you should start planning and preparing as early as possible.
Related: 10 Steps to Financial Freedom
Believe it or not, you can achieve the life you want – no matter how grand and luxurious it may seem. You just have to be strategic with your mindset and action plan to get there. You need to think ahead and weigh each decision as it pertains to your goals. If something isn’t helping you get to where you want to be, then leave it behind!
Have you thought about the life you want to live? What are some of your biggest life goals? I would LOVE to hear from you, so post a comment below to share or ask questions!
The CGS Team