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Usually earning enough money to live the life of luxury is the sign of success and wealth. The key to wealth is knowing what to value. Most people value the accumulation of material things over everything else. Human life, the quality of said life and human experiences are far more valuable to me than material things. Family, friends and joyous encounters with strangers mean more to me than having a beautiful pair of [insert brand name]. Once you prioritize what’s really important in life, wealth has a whole new meaning. That being said, I firmly believe that positively contributing to society in the special way that only you can will always lead to income, wealth and prosperity, but the joy should be in doing what you love to help yourself and others. This doesn’t mean there won’t be blood, sweat and tears involved. It just means you pay the price joyfully, because you’re doing what you love. My second indication of success is LOVING WHAT YOU DO.

Now that we’ve briefly touched upon earning, let’s talk about spending. I know I’ve been guilty of buying things in order to give me status, because I didn’t understand yet that those things do not give me worth. Choosing to spend your hard earned money on expanding your perspective of life, let’s say through travel, improves your wealth three times over. 1. You’re seeing a new part of the world’s landscape, people and culture. 2. You’re learning information about a foreign way of life through experience. 3. You have the opportunity to meet and engage people who live thousands of miles away from you and have an impactful conversation and/or experience that will forever touch and/or change lives. Try to spend your money on things that will appreciate with time. When thinking about wealth we must always consider that financial wealth must include your earnings as well as your spending.

This page is dedicated to improving our relationship to wealth and money while we’re on this path to living the life of our dreams.

Deciding to sustain your life by way of your passion doesn’t mean neglecting practicality: Bills have to be paid, you need a roof over your head, and we all get hungry. Your first step is to assess your current financial health. When starting entrepreneurial- behavior, thinking like a business person is paramount. Your skill, talent, or passion will become your business, and it will take an initial investment to start (even if the investment is time) as well as money to float the idea (startup costs) until you begin to make a profit. Before you think you can’t afford to start a business, let’s consider the possibility of downsizing your current lifestyle to make room for your dreams. Your goal is to find ways to live below your means in order to form a sizable cushion so that you can sustain yourself until the money comes pouring. Think of it this way. You’re taking money you normally flush down the toilet on unnecessary things and investing it into your dream career, your dream life in fact.

Creating a budget

The most common recommended budget percentages is the 50/20/30 budget. Use your 2018 income tax return to determine your annual net income (income after taxes and other deductions). Divide your net annual income by 12 to establish your average net monthly income, understanding some months may be more or less. Once you have your net annual and monthly income, multiply both numbers by .5, .2, and .3 to determine 50, 20, and 30% of your annual and monthly income.

50/20/30 Budget: 50% of your net income is for needs (housing costs, groceries, utilities, healthcare and transporation). 20% of your net income is for savings and debts (student loan/credit card payments and retirement savings/ emergency fund). 30% of your net income is for wants (restaurants, gadgets, vacation and shopping). Now that you’ve established how to divide your income, let’s look at your expenses. Make a list of annual expenses, like car registration, that’s only paid once a year and also monthly expenses. Organize your expenses into categories such as Housing, Healthcare, Food, Insurance, Transportation, Savings, Debt, Clothing, Entertainment, Miscellaneous, etc.

20%: Do you have a 3 month emergency fund? Have you started a retirement fund? If yes, you’re off to a great start. If no, it’s time to start building one.

30%: This is where you want to create as much magic as possible! Do you need Starbucks everyday, manicures and pedicures, eating from restaurants 3-5 times a week, etc.? Spend a week journaling how you spend money daily. Then do the same for weekly and monthly spending. Look for places where you can cut costs. Could it be cheaper to make coffee at home, maintain your own nails and cook your meals?

50%: Remember this section is for NEEDS. How many GB of data do you have on your cell phone plan? Is cable a necessity or could you try a streaming service? Do you need a luxury car, big house, lawn and/or pool service? Consider all of the options: do you need a 3 bedroom or does a 1 bedroom suffice, should you find a roommate, could public transportation save you money and be efficient?

Oh, did I forget to mention that this is hard work?! You’re being forced to honestly tell yourself what you need vs. want to survive. We’ve convinced ourselves that we need for more than we actually do. Your willingness to be temporarily uncomfortable is important to your success. You can determine how much you need to cut back based on your budget percentages. [note: if you spend less in the wants and needs categories, you’ll have more for personal savings and business investments.] The year before I purchased my home I streamlined my expenses by no longer eating in restaurants and going out for drinks, eliminating my car note, finding a cheaper cell phone plan, contacting my car insurance company and inquiring about more discounts, and contacting my internet service provider about loyalty discounts. You won’t believe how much money I saved by not having a car payment and cooking more alone. After purchasing my home I had two major surgeries that prevented me from working for 8 months, so I streamlined again cutting cable; streaming is cheaper and I don’t feel like I’m missing anything. Besides you’ll become so enthralled in your new business venture that you won’t have much time to watch tv.

Creating a budget helps to clarify your spending habits. Refining your spending to basic needs helps to create a substantial savings. Both of these tools help to ease some of the stress and pressure associated with starting a business.

Photo by Eric Muhr for Unsplash