Discover Your Magic Number

Bye-Bye, Financial Freakouts! (Part 1 of 3)

Author

William Thompson
August 03, 2024

Empowering You 4 Innovative Cash Flow Ideas!

Financial stability isn't just about making money; it's also about being prepared for the unexpected.  In order to determine what you need for your emergency fund, you need to know what your financial number is!

What’s a Financial Number?

Think of your financial number as the magic number you need every month to live comfortably. It’s basically all the money you need to cover your debts, living expenses, and the fun stuff in life. Here’s how to figure it out:

  • Debts: This includes anything you owe money on, like credit card balances or loans.

  • Living Expenses: These are your regular monthly bills, like rent, utilities, groceries, and Internet.

  • Life: This is the fun stuff that makes life enjoyable, such as dining out, hobbies, and entertainment.

Finding Your FinancialNumber

It might take a bit of time to get it right, and you might forget some things at first. Keeping a diary of your spending for a month can help you remember everything. Make sure to include every little thing, and if you have a spouse or a financial buddy, work with them to cover all bases.

What Not to Include?

Nothing! Put everything in there so you don’t miss a thing.

Don’t Fit Your Number to Your Income

It will frustrate you!

Don’t try to squeeze your expenses to fit what you make. It might look good on paper, but it’ll just stress you out. Instead, be honest about what you spend.

Here’s an example breakdown:

Debts:

  • Mortgage

  • Credit card payments

  • Loan repayments

Living Expenses:

  • Utilities (gas, electric, water)

  • Internet

  • Groceries

Life:

  • Eating out

  • Movies

  • Hobbies

Click on the link below to download a FREE Determining Your Financial Number Chart.  Hopefully, this will help to jumpstart you on your way!

Determining Your Financial Number Chart.pdf372.00 KB • PDF File

Recap

Knowing your financial number gives you a clear goal to work towards. It helps you figure out how much you need for an emergency fund, plan for unexpected costs, and work towards financial independence and retirement. Plus, it gives you peace of mind knowing exactly what you need to live comfortably.