The following post is contributed by Martin of Studenomics, where he tries to make personal finance fun since you have enough to stress about. You can click here to check out the wide range of content on everything from student loans to getting paid to drink coffee.
“You're living the dream.” — friends who don't realize how long I've been saving money for.
It's amusing when someone says that you're lucky when in reality you worked towards a goal for over a decade.
We all know what a struggle it can be to save some money. I also understand the frustrations of not being able to get ahead financially. This is why I wanted to help you get your money right to create your dream lifestyle.
How do you set up your finances to live your dream lifestyle?
Coming from an immigrant family, I knew that I wanted to live a different life when I was older. I wanted to have more options and to be able to do whatever I wanted to. I wanted to take advantage of the opportunities that my parents created for me by giving up everything to move to Canada from Poland.
So I started reading everything that I could find on making money and getting rich. I ended up reading many books that were filled with fluff. I also got distracted with the occasional get-rich-quick-scheme (another story for another day). I eventually sort-of found a rough idea of how to set up my finances. This is what I want to help you with today.
How do you organize your finances to create your dream lifestyle?
It's easy to be jealous of someone when you think that they have it made or that they didn't work hard for it. You simply can't ignore all of the work that they put in when you don't know the full picture.
Here are the simple yet difficult steps involved in trying to create your dream lifestyle:
Step 1: You have to know what you want.
We all have different goals and expectations. We all want something eslse. We all have different starting points and levels of determination.
This leads to an important question…
What exactly do you want your dream lifestyle to be?
I'll spare you the awkward verbiage about manifesting from the universe or finding your why. I'll just state that if you don't know what you want, you'll never get it. There's no way around this.
Figure out what you want, how much money you need to get there, and how long it's going to take you to get there.
These are just a few ideas that I got from readers over the last few months. I'm not here to tell you what to want out of life. I just want to help make it a possibility for you.
Here are some examples of what you could want as a dream lifestyle:
- A lifestyle filled with travel and adventure.
- The ability to have your partner stay at home.
- A home in the suburbs with 3 kids who are enrolled in sports.
- Working for yourself so that you don't have to work a traditional 9-5.
- The opportunity to move to the big city to look for a dream job.
This leads us to the next point…
Step 2: Make your financial goals a priority.
You need to set goals and make them an absolute priority. You can't let anything get in your way. Unfortunately, this is where most people will totally fail and give up.
Why do people give up at this point?
- There are so many distractions.
- Saving money gets boring.
- You switch plans frequently.
- You lose track of why you're doing this.
- You get into instant gratification and you binge-watch a new series instead of working on that side hustle (it happens).
- Spending money is fun.
How do you ensure that you don't give up?
- Have visual reminders of your goals.
- Automate the process so that you don't have to rely on being disciplined.
- Set deadlines.
Seth Godin nails it in his book, “The Dip” with this line:
“Extraordinary benefits accrue to the tiny minority of people who are able to push just a tiny bit longer than most.”
What this means is that you have to push through the boring phases and try to fight off distractions as you work toward that dream lifestyle.
Step 3: Work towards making the dream lifestyle happen.
I often find myself referring to this quote from “The One Thing” book:
“It is not that we have too little time to do all the things we need to do, it is that we feel the need to do too many things in the time we have.” — Gary Keller
There are no shortcuts here. I worked multiple jobs and took on many freelance gigs so that I could save up money.
How do you work towards making your dream life happen?
Run the numbers and work backwards.
How much money do you need? How much are you making? How long would it take you to get there?
Get a napkin, use a fancy app, open up Excel or do whatever you can to work out the numbers.
Step 4: Be ruthless about cutting expenses and increasing your income.
This is where things get annoying for a bit. You have to cut your expenses, try to make more money, and save up.
How do you cut your expenses?
- Look at your monthly spending with your debit or credit card. See where you're problem areas are. Work on these.
- Eliminate a fixed cost that you don't absolutely need. Cut one or two things out of your monthly spending.
- Negotiate a better deal on your rent or cell phone bill.
Please remember that cutting expenses can be temporary until you reach your goals. You're not saying no to these expenses forever.
How do you make more money?
- Look into side hustles.
- Sell your crap.
- Get a part-time job.
- Upgrade your skills.
Do you have to do both?
A mix of making more money and cutting expenses down will help you reach your goals quicker.
How do you bring in more money to fund your dream lifestyle?
I wish I could tell you that I have some passive income secret to share. Working multiple jobs and growing a side hustle helped me save money until I could invest in real estate/dividend-paying stocks.
What are the best ways to fund a dream lifestyle?
Create a digital income.
I'm not here to tell you that making money online will make you rich or that you can earn passive income while on the beach. I just want you to know that a digital income will give you freedom. This means that you can decide where you live and how you live.
How can you create a digital income?
- Start freelancing (Miranda has an entire course about this).
- Start your own blog.
- Sell stuff on Etsy.
- Grow a social media page.
- Start an Airbnb Experience.
There are many great resources on every topic on this list. You can easily find tutorials on every platform to help you get started. I just wanted to get you thinking about the possibilities.
Find a job that you don't hate.
I'm not one of those people who thinks that you have to follow your passions and do a job that you absolutely love. I do believe that at the very least, you should try to get a job that you don't hate.
How do you make this possible?
- Always remember that you're not stuck.
- Don't settle.
- Upgrade your skills.
- Keep on looking for work that matches your skills.
Find investments that pay you when you sleep.
You have to find a way to get paid in your sleep if you want to get ahead financially. While there's not enough space in this article to dive deeper, I want to give you some ideas of what to look into.
What are investments that pay you when you sleep?
- Dividend-paying stocks.
- Rental properties.
- Digital products.
I'm absolutely not saying that any of these income sources are easy or free money. You have to build yourseup and these systems can take years to put into place.
I personally used real estate as my investment tool. I was lucky enough to buy property at the right time in my city.
What else do you need to know about your dream lifestyle?
You likely still have a few questions. I'll do my best to go over these. Feel free to leave a question in the comments.
How long does it take?
This depends on your goals and what you want. It could take 6 months or it could take 6 years. This is why it's important that you enjoy the ride.
How much money do you need?
This all depends on your situation and your expenses. There are many FIRE blogs out there that take the all-or-nothing approach. I don't think that personal finance has to be that extreme. I'm not rich but I'm also not tied to a job or a location. That's my dream lifestyle. Your dream lifestyle will be what you want it to be.
What about the behind-the-scenes stuff?
It's important to protect the money that you have while you work towards making more money. Take care of your life insurance, get your property insurance in order, file your taxes with a credible accountantant, and protect what you currently have while you strive for more. Find a savings account that you trust and ensure that your money's safe.
Is it too late to start?
It's never too late to start. It doesn't matter what your age is right now. All that matters is that you start. It's better to accomplish your goals later as opposed to never.
Good luck and let me know if you have any questions about setting up your dream lifestyle. I always find myself referring to this Seth Godin quote when I'm stuck:
Instead of wondering when your next vacation is, maybe you should set up a life you don't need to escape from.