If you already know your Life's Purpose, this exercise will be a snap ... if not, you'll either have to go back and find Your Life's Purpose (just click on the tab to the left, and in 20 minutes you should have a pretty good idea) or you'll just have to do some guessing.
Use this table to pick the minimum level that you feel that you NEED:
for future expenses, imagine IF you lived that lifestyle
today, how much would it cost today? For example, if you are trying to decide how much the 'house of your dreams' will cost, you should be able to use online resources such as Zillow.com to see how much the types of houses in the types of
neighborhoods that you want to live in will cost TODAY?
But, we're not quite done yet ...
... you still need to decide your Date: when do you want to reach Your Number? It makes all the difference.
Choose a Date that you want to begin Life After Work - the time when you have the financial freedom to truly begin to live your Life's Purpose. Be aggressive, but be realistic ...
Is it 1 year? Or, can you wait 5 years? 10 years? Longer?
Obviously, the longer you are willing to wait, the easier and more likely it is that you will get there!
A note about inflation:
The later your Date, the less likely it is that the Number that you choose today
will be enough, simply because inflation erodes your future spending power: so we need to adjust our Number for Inflation.
It's easy, just use this table to adjust your Number according to how may years from now your chosen Date is:
5 years out, simply add 25% to Your Number.
10 years out, simply add 50% to Your Number.
20 years out, you will need to double Your Number.
This approximates (very roughly) 4% inflation. That's it ... you're done!
The above Table was excerpted from 'The Number' by Lee Eisenberg, Free press, 2006.