A financial target becomes more useful when you know what it is meant to fund.
A big round number sounds like an answer. You can aim at it, measure yourself against it and say it out loud, and all of that makes it feel like a plan.
Reaching a target can settle the question you set yourself without settling the one underneath it. The problem is not the size of the number, but the job it was given. What is missing is a figure for what the life you want costs to run for a year.
Someone who wants to keep working two days a week needs something different from someone who wants to stop entirely. So does someone with a mortgage still running, someone helping family at home or abroad, someone who travels often. A target figure shows none of that.
Start with the life, not the number
It is easy to pick a target because it feels large enough, and then to pick a larger one once you arrive. If the figure has no relationship to the life it is meant to pay for, it can always move again. A little more would feel safer, another year of earning would leave more margin, another investment would make the position stronger. There may be good reasons for all of those. The difficulty is that more has no finishing line.
This is where the question meets Calm Wealth. To judge whether your money is doing its job, you need some idea of the life it is being built around.
So if I asked you to describe the life you want, I wouldn’t want you to start with money. I would want the life first, in ordinary language, without trying to make it fit the finances you have today.
People use the word ‘freedom’ to mean very different things. For one person it means time with children. For another, it means choosing which work to accept, spending a few months of the year somewhere else, or helping an ageing parent without every decision turning into a calculation. Those lives cost different amounts to run, and the word ‘freedom’ hides all of it.
That is how The Enough Number begins. The worksheet keeps money off the page at first, because starting with today’s spending can quietly turn the life you already fund into the life you assume you want.
What you spend now is only one reference point
The money leaving your account in a year is not the same as the cost of the life you are trying to pay for. Some of it goes into savings, a pension, or investments. Some is paying off debt or the mortgage itself. Some are one-offs that will not happen again. Meanwhile, the life you want may include things you barely spend anything on today.
So the comparison worth making is between two figures: the life you are paying for now, and the life you say you want.
The useful work is in finding the distance between those two figures.
Enough is allowed to look like more
There is a tendency to hear the word ‘enough’ and assume it means cutting back. I do not use it that way. The life you want may include a better home, more travel, supporting children or parents, giving generously, or spending on things work has left you no time for.
What enough asks for is not restraint but precision. Vague goals are hard to build towards. A costed life gives you something firmer: an amount for the year, and a shape you can describe, such as working three days a week rather than five. Once you have that, you can ask what already pays for it, what still depends on your salary, and how far apart the two are.
Treat the figure as a current reading
Your answer at 42 may not be your answer at 52, and it does not need to be. Costing the life you want is not an attempt to predict the next thirty years. It gives you a reading of where you stand now, worth taking again after anything significant changes.
It also gives your earnings something to point to, which connects to an earlier article: Your Income Has Grown. Has Your Financial Life Grown With It? Some of your next pay rise might improve life now. Some might reduce what your future life needs from work. You cannot decide that from a salary figure alone.
None of this asks you to know when you will stop working, predict every expense ahead of you, or settle today what the rest of your life looks like. It asks you to describe the life, put a cost beside it, and look at the distance.
You can reach a number. You cannot reach more.
Find your Enough Number
The Enough Number is a free worksheet that helps you describe the life you want, cost it in annual terms and compare it with the life you are funding today.
Grace Ogunjobi, FCCA, is a finance counsellor and author with more than 30 years’ experience in finance.
