After reading Tim Ferriss’ book, The Four Hour Work Week (4HWW), I have to admit, I was impressed. He really spoke my language and helped me realize one life-changing thing: People don’t want to be millionaires — they want to experience what they believe only millions can buy. – Tim Ferriss
He was so right. I’ve always said money is not important to me, but knew deep down that money was necessary to sustain my ideal lifestyle. After reading the 4HWW, I realized that I might be able to have it all without being a multimillionaire! And so I set out to test out this theory.
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Before calculating the cost of my ideal global lifestyle, I first used Longing to Travel’s SIDE Formula™ to track my current expenses. This gave me an accurate picture of my current financial situation. Then, I did something new (as proposed in the 4HWW): I calculated the cost of my ideal (global) lifestyle by starting with my ‘W’, or wish list items, using Longing to Travel’s WIDE Formula™.
Unlike the SIDE Formula™ , which calculates all your expenses (i.e., debt, retirement, savings, etc.) to determine the money left to spend on your ‘W’, or wish list items (S – I – D – E = W), the WIDE Formula™ (W + I + D + E = MIN) starts with your ‘W’ (wish list) and then takes into account your expenses to determine the minimum monthly dollar amount needed (MIN) in order to live out this ideal global lifestyle.
Get Started Now: Use the guide below and the WIDE Formula™ template to calculate your MIN:
W: Wish List
What is it you dream of doing? Is it living in Croatia for the summer? Island hopping in the Aegean Sea for a week? Driving a BMW convertible year-round? Seeing David Guetta in Ibiza (<–yes, please!)? Whatever you want to do, I suggest you write it down. Think long and hard about what it is you really want, and then find out how much it costs (i.e., insurance, tickets, equipment, etc.).
For example, if you want to stay at Kings Landing (aka, Dubrovnik, Croatia), renting an apartment with a water view will cost you about $1,350/month. So that’s $45 a day. If you eliminated eating out, your morning coffee from Starbucks and a few nights of going to the bars, could you afford a stay at ‘Kings Landing’ for a month? Sure you could! Another way to look at this for those who work commission-based jobs is to think about how many products/services you need to sell to cover the cost of this wish list item.
TIP: Once you’ve identified the total cost of wish list items, determine if it’s a monthly expense (i.e., living on a houseboat) or a one-time expense (i.e., seeing David Guetta in Ibiza). If it’s a one-time expense, use the total amount identified in the The WIDE Formula™ template. If its a recurring expense, divide that total amount by the number of months, to find out the monthly cost of that dream.
I: Invest in Yourself
Invest in yourself…aka, plan for your future. As I’ve said before, it’s never too early to save for retirement or just save for a rainy day. No matter how little, make it a regularly practice to put aside some money for your future. It’s the best use of your money.
TIP: If you’re a US citizen earning income overseas, check with an accountant to determine US retirement contribution laws.
Although you’re traveling/living abroad, you may still have unavoidable responsibilities, like paying off your debt. If you can’t pay off all your debt before moving overseas, make sure you account for making the minimum-required payments each month. This may also be a great time to reevaluate your lifestyle and try to live within your means, so as to not acquire new debt while on the road. This is especially important for those craving a global/mobile life.
Expenses are your monthly bills that must be paid. This can include anything from insurance, utilities, rent (if not part of your wish list items), phone, transportation, food, etc.
TIP: If you’re not great at monthly budgeting, try adding up all your expenses and divide it by 30 to get your daily budget (this is an especially useful strategy for keeping food and entertainment costs on track).
MIN: Monthly Income Needed
When you add up your WIDE values, you will get a number (your MIN) which reflects the monthly cost of living your ideal global lifestyle; a life that is both realistic (i.e., debt and expenses included) but also incorporates your wish list item(s).
After comparing my ‘W’ from the SIDE Formula and my ‘MIN’ from the WIDE formula, I saw that the numbers weren’t so different. *Mind.Blown,Again.* This exercise of comparing the two values helped me realize that the difference between my current life and my dream life is how I think about my cost of living, not the actual cost itself.