Keep it healthy: setting revenue goals based on how much money you need…
Might as well make your goals good. If you were to define how much money you needed, what would that number include?
A couple notes before we begin:
- This is the reminder I give myself when I find myself slipping into setting financial goals that just cover my bills and nothing more, wondering how I can need less. If you find yourself slipping into that state sometimes too, I hope this might help.
- I am not a financial advisor, and this is not financial advice. And, I have spent over 10 years working with and around freelancers, entrepreneurs, and small businesses – this concept comes from that experience.
When you work in a creative or freelance field, money tends to be a tricky topic – can you make enough?
When you work in entrepreneur and founder circles, money tends to be a tricky topic in a different way – how can you keep as much money in the business as possible?
When you work in small businesses, money tends to be a tricky topic in a third way – how was this month?
But regardless of the field, you do need to set revenue goals / forecasts / plans / expectations. Figuring out your numbers always seems to start with the same question: how much do you need?
How much money do you need?
On the surface it’s a straightforward question. Add up your expenses and there you go, that’s what you need.
But does that number include your future? And does it include your joy?
I have come to learn that not everyone agrees on what needs are.
Covering or not covering your expenses at any frozen moment in time is fairly binary and most of us know which side of the line we’re on at any given point.
But when you are able to cover your basic day-to-day needs, I’ve noticed a tendency to stop and say this is enough. Even if it’s *just* enough, when you squint and hold your breath, and time everything right.
Especially if you come from, or are around, any sort of scarcity.
So I’ve started thinking about revenue goals in terms of two different numbers. A healthy needs number and an unhealthy needs number.
Unhealthy needs number
An unhealthy needs number covers your expenses for today, maybe tomorrow, and maybe a small amount of joy. But does not include longer term savings or future retirement investing.
This is somewhere between very bare bones expenses and the healthy needs number.
You can go a long time making and living off your unhealthy needs revenue number.
When you’re ramping up, it’s a victory worthy of a parade. If you’re handling other caretaking responsibilities, it might be for a season. If your business or creative endeavor is a second act bridging you until retirement, or is your retirement project supplementing other retirement income, you can continue here forever.
But if this is your primary earning career in your primary earning years. Don’t aim to stay here forever.
There isn’t enough financial slack in the system. (And if we’re setting financial goals, might as well make them good.)
Which is where the healthy needs number comes in.
Healthy needs number
Your healthy needs revenue number includes: your present moment, your short term, your long term (like retirement!), and your joy and delight.
It may take a lot of work and time and some luck to get here. You may hit your health needs number some months, and your unhealthy needs number other months. You may spend years hitting one or the other. Knowing both, gives you a sense of where you are, and where you might want to look towards.
I generally figure your healthy needs number is about double your bare necessity needs number. Enough to cover your needs, no questions asked. Plus savings. Plus debt pay off if needed. Plus investments. Plus fun and delight and joy. In different percentages, but they are all there.
The primary distinction is this: your unhealthy needs number enables you to survive. While your healthy needs number enables you to thrive.
This isn’t a level of greed or extraction. It’s the revenue to support a healthy and thriving life, and that’s always a goal worth reaching for.
Photo by micheile henderson on Unsplash
