How Much Money Do You Really Need?

I love working with other entrepreneurs – in fact, I spend a good deal of my time coaching new entrepreneurs that have discovered their itch and helping them move a lot faster toward their goals and dreams.

At some point we talk about money and how much it’s going to take to fund that new dream and venture – this is one of the easiest and quickest ways to determine if you’re going to be able to make it and if you’ve got what it takes to become a bootstrapped professional blogger or small business owner.

Time to look in the mirror…

Sure, I’ve already talked about how to calculate your yearly salary but sometimes you have to approach it from the other angle as well and ask yourself what your current expenses are and if they can be reduced or if you can change your lifestyle a bit to make it all work.

I’ve shared what I’ve made historically per year as a professional blogger alone (around $44k) but honestly that’s still not enough to cover my family’s total expenses – thank God I’m able to do other work that helps put the food on the table and keep the roof over my head!

Here’s the thing: Many people want to do their own thing because they feel like they’ll make more money that way. Let’s be honest: This is what they are really thinking but it’s typically expressed these publicly in these ways:

  • “I want more freedom and flexibility in my life.”
  • “I want more time to spend with my family.”
  • “I want to travel more and see the world.”
  • “I want to spend more time on my hobbies and the things that I love.”
  • “I want to be able to give more of my time and resources away to those in need.”

Although these are all great motivations I believe that most people fool themselves in believing and expressing those things in a way that puts money in the back corner when in reality money is the chief motivator. I think coming to terms with oneself and being honest is the first step to getting on the right path, by the way. Heck, you may eventually come back to these conclusions but after you have a serious self-review.

What I’ve discovered is that most people are terrible at managing their finances and that they could have many of these things already in their life if they simply started managing money better! Although I won’t tell you what I make in total I’ll share with you what my family’s monthly expenses look like:

  • Mortgage – $1980
  • Utility Bills – $320
  • Insurance – $1000
  • Food – $1000
  • Phone – $220
  • Misc – $400
  • Total: $4920

These are the larger main categories and I have rounded the figures a bit to make the calculation easier on the eyes – I obviously go more in depth with my family’s budget but it’s mostly there! I have a wife and two beautiful daughters for more context (just in case you’re a new reader, you’ve probably seen my family multiple times!).

Easter 2012

I’m self-employed so my insurance (health, cars, and life insurance) are a bit higher than most people and my wife and I like to take each other out on dates so our food bill can be high at times. We don’t live the lavish lifestyle of those so-called entrepreneurs and I drive a beat-up 2007 Honda Civic and my wife has a 2006 Toyota. If you walked our house you’d find very little to suggest material wealth (outside a few Apple products sitting around the house).

Even as I look at these large groupings and the cost I reflect and know that even we can tighten things up even more – we’re extremely grateful that we have never been in want and that God’s taken really good care of us, more than we deserve! This is the cost (literally) of being an entrepreneur and there are times where it’s seriously “feast or famine” – months without getting a paycheck and then a few months that offset the ones with nothing!

But the most important thing is that I’m able to say, with confidence, that I have everything that I need and that I do have the things in the list above, like freedom, flexibility, the opportunity to travel (don’t do it as much as I’d like but this coming year it’s on like Donkey Kong!), and even to give away my time and resources to other people and organizations.

The point is that you and I don’t need as much as we think we do and to get out of the 9-to-5 swing of things we all need to count the cost of making the jump. It’s not as much as you think and if you’re family budget is way more than this then it’s going to be ever harder for you – not impossible, mind you, but being an entrepreneur is more than just what you do, it’s how you live and the way you conduct your life, all of it including finances.

If you want to become a Problogger or anything like that then you have to start with the things that you can literally count and you have to ask yourself the hard questions about your finances and what you’re willing to give up to make that dream happen.

[This is part of the Escaping the 9-5: My Road to ProBlogging series.]