The Ratio Of Income And Expenses

All about money?!

How much should you save? How much do you want to make? How much should you spend?

Well, it all depends on what you want to “DO” in your life or if you want to “DO” something at all. What would you like to do if you would get your current salary, but would not need to work? What do you think you want to do when you retire? This will determine how much money you need and when you can start doing what you want to.

Your “stop-working/retirement” date is only a function of your average future yearly expenses and how much money you save. If you never need fancy shit that does not really make you happy, you don’t need to make millions to start doing what you want to. Now, only the ratio of income to expenses counts. Nothing else.

The strive for more money than you need is pointless

And this story will speak for itself:

An American investment banker was taking a much-needed vacation in a small coastal Mexican village when a small boat with just one fisherman docked. The boat had several large, fresh fish in it. The investment banker was impressed by the quality of the fish and asked the Mexican how long it took to catch them. The Mexican replied, “Only a little while.” The banker then asked why he didn’t stay out longer and catch more fish? The Mexican fisherman replied he had enough to support his family’s immediate needs. The American then asked, “But what do you do with the rest of your time?” The Mexican fisherman replied, “I sleep late, fish a little, play with my children, take siesta with my wife, stroll into the village each evening where I sip wine and play guitar with my amigos: I have a full and busy life, señor.” The investment banker scoffed, “I am an Ivy League MBA, and I could help you. You could spend more time fishing and with the proceeds buy a bigger boat, and with the proceeds from the bigger boat, you could buy several boats until eventually, you would have a whole fleet of fishing boats. Instead of selling your catch to the middleman, you could sell directly to the processor, eventually opening your own cannery. You could control the product, processing, and distribution.” Then he added, “Of course, you would need to leave this small coastal fishing village and move to Mexico City where you would run your growing enterprise.” The Mexican fisherman asked, “But señor, how long will this all take?” To which the American replied, “15–20 years.” “But what then?” asked the Mexican. The American laughed and said, “That’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich. You could make millions.” “Millions, señor? Then what?” To which the investment banker replied, “Then you would retire. You could move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”

So do you run out of money… or do you run out of time?

If you are investing your money you also need to think of when to withdraw your returns. There will be the point where you have less left on this planet than chances to spend all your money.

What do you really want to do? Live your life or earn more money?

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