Dream state

Scenario

At the beginning of every month, I check our income bank account to see how much we've gathered over this past month.

I then look at how much we need and want for spending for this next month, and distribute those dollars to my essentials (needs) and lifestyle (wants) bank accounts.

But before we commit that money to spending, we first contemplate what we'll then have for saving.

We want to make sure that we balance our income distribution between spending now and saving for the future.

We ask ourselves, with the goals we have, and remaining funds available to distribute, can I make big enough contributions to stay on track to achieve them when we are wanting to?

If we'd like to go faster toward those goals, we reduce our spenidng allocation. And vice versa.

We continue this until we find a happy balance between paying bills, enjoying our money and making meaningful progress towards our goals.

Then, we empty our income pool by transfering those amounts into each of the spending, saving or investing accounts.

Now we have full spending accounts for the month ahead which will begin burning down over as we spend.

At the same, the income pool (at the top) refills ready to be allocated on the first day of the next month.

Rinse and repeat.

Balance Now & Future

While the concept is simple, the layers are profound.

As maslows heirarchy suggests, we humans prioritize survival above all else.

Now

Our physiological and safety needs must be met first. Think water, food, shelter, sleep.

In the modern world, that looks like buying:

🛒 Groceries

🏠 Renting or paying a mortgage

💡Creating a safe and comfortable home

🩺 Taking care of our health.

Once those needs are satisfied, we attend to our wants.

This is the social and self-care factors, like being with friends, buying nice clothes, pampering yourself and experiencing adventure.

Again, in the modern world, this can look like spending on:

🍝 Going to bars or dining

👖 Buying clothes and shoes

🏕️ Booking a camping trip

☕ Meeting friends for a coffee

Some of those wants and needs exist in the present. They require constant funding to satisfy, but their are others that exist in the future.

Future

We must also create psychology safety by knowing that we will be okay in the future.

If spend everything we earn, that's tough to do.

Instead we need to set aside money for the (somewhat likely) chance you need more at a time in the future. Things happen, things like:

🚗 Car broke down

🦵 Broke a leg skiiing

🙅 Employer goes under

🦷 Need a root canal

For that reason, we suggest having a cash cushion.

It's a bank account that is their to give you comfort that if and when something happens in the future and you need more than what you're last months pay, you'll be okay.

Beyond that, we must have a vision for ourselves in the future that compels us (toward self-actualization) and maintain a sense of purpose.

This could be anything, it just needs to mean enough to you that you're willing to not spend all your money now and put some aside for something bigger or better later.

Generally this means getting more of what you want or living with less obligations.

Getting more of what you value tends to look like saving toward specific goals where you'll need make a bigger spend later. Here's some examples:

🌍Travel the world

🏡 Buy a home

🧑‍💻Start a business

👰Get married

Living with less obligations is being able to pay others or say no to the responsibiltiies that weigh you down, here's some examples:

🧹Cleaning the house

🚌 Ride the bus

💻 Work on weekends

👷‍♀️Go to work at all (instead retire)

Living our best life is a combination of cutting down on obligations that weigh us down, and getting more of what we want in order to satisfy and fulfil us.

The skill of determining what you want more or less of is called 'future authoring'. It's stepping into the future and designing a life that will satisfy and fulfil you, and then extracting specific goals to save towards and identifiying obligations for removal. You can learn more on this here.

Usually (not always), the easiest way to achieve this is with having more money.

Most often, getting more of what you want means setting some of what you earn aside each month for a goal until you have enough to then purchase it.

For removal of obligations, this usually means paying someone else to do it (increasing spending) or not going to work (reducing income). Both of which mean you need more income and purchasing power from elsewhere.

To achieve this, I must invest intelligently.

I need to also set aside money each month to buy assets that'll earn income (to cover my spending) and grow (more purchasing power in the future).

So on this future side you can see we now have a few specific jobs:

💰 Cash cushion in case we need a fail safe in the future.

🪙 Investments to reduce obligations with working harder.

💵 Specific goals to get more of what we value (bigger ticket items)

As you can see in the scenario shared above, there is a cash cushion, investments, and 2 specific goals. This a great baseline, but you may have more specific goals and be splitting money that can be saved into smaller contributions toward more goals.

A recommendation on goals is keeping it under 4 total unfunded goals. IF you're cash cushion is full, then you might have 1 investment and 3 specific goals for example.

As you can now see, finding a happy balance between now and future is a continuous to-and-fro, tilting in and out of a balanced state.

It is my duty to continue to seek it however if I truly want to pay the bills, get more of what I want and remove obligatons on the path to living a full and satisfied life.