I realize I need more margin in my life.
I’m constantly trying to cram too many projects and tasks into my day and it’s not sustainable.
And when I think about it the problem is bigger than just how I schedule my days. It also affects my finances.
For example, if I operate with no margin financially then I create unnecessary stress and pressure in my life. If we have a big unexpected expense and we have no emergency fund then there’s suddenly a major problem in our family.
However, if we have a fully-funded emergency fund (which we define as at least 6 months of living expenses) then the “emergency” gets downgraded from a Category 4 to a Category 1 storm.
It’s the difference between experiencing some “strong winds” life blows versus a storm that feels like it could kill you!
So I’m motivated to build our emergency fund to a full 6 months. For us that means getting it to around $33,600.
This idea of “margin” also applied to business finances. I’ve been self-employed for the last 6 years and my income during this time has been up and down. The typical feast or famine syndrome.
We’ve always “made it” (not sure what “not making it” looks like, I think that means you die!) but there’s never been any “margin” there. I basically pay my expenses and whatever is left is what I pay myself.
That all changed in March of 2017 when I made a decision (which was strongly influenced by my wife) to pay myself a consistent salary every month. I now get paid on the 1st and 15th of the month.
This has been good as it’s created consistent cash flow for personal income. But I realize it’s not enough. I also need margin here too. And recently I read about something called a Core Capital Target while reading Simple Numbers, Straight Talk, Big Profits! by Greg Cabtree.
He defines a Core Capital Target as:two months of operating expenses in cash and nothing drawn on a line of credit.
This is another example of a tangible way to create more margin in your life. So I’m going for it!
The formula, at least for me, looks like this:
Emergency Fund + Core Capital Target = Financial Margin
Financial Margin = More Peace.
And peace is a great thing to have.
So do the math for your situation and ask yourself three questions:
1) How much money do I need to fund 6 month’s of living expenses?
2) How much do I need to fund 2 months of business operating expenses?
3) What am I going to do today to take a step toward realizing these goals?
Maybe it’s simply writing this goal down. Maybe it’s reviewing your budget. Maybe it’s scheduling some more prospecting time next week.
Whatever it is, do it! We need more margin in our lives. Because we need more peace and less stress. At least I do!