The math behind making an extra $100K in 5 years is surprising.
Someone on Reddit recently asked a question about the difference between having plans and goals. I responded, because it was an easy enough question to answer.
My response kind of shocked me, and I’m sharing this post to make sure that my math isn’t way off.
The conversion in question took place in r/GetMotivated. Here’s the original post.
I love this plan, and it reminds me of what James Clear writes about the benefits of incremental improvement over time.
Getting 1% better every day has a powerful compounding effect. It’s less overwhelming to shoot for dramatic improvements every day. That’s how people set themselves up to fail.
This is why creating habits is a fundamental part of success.
One of the comments said that trying to create an infinite progression of getting better was a way to set yourself up for failure. I disagree, but I do believe the second half of the comment is true.
don't set "goals"-- goals are pass/fail. make plans instead, plans can be changed, and you can have as many backup plans as you think you need
That prompted someone to ask the question that I’m about to address. The answer I gave kind of blew my mind, because while I understood the general theory enough to give unsolicited internet advice, I don’t think I fully understood what it means.
Did you know that to make an extra $100K in 5 years, all you have to do is make an extra $6 per day?
No way that adds up. But…it apparently does. I didn’t realize it until I did the math.
Could you elaborate on what you mean when you say make plans instead of goals? As in my goals should be more general?
This question prompted me to respond. I thought I could help a random internet stranger learn something valuable.
I ended up surprising myself.
If your goal is the destination, your plan is the map.
Start with the goal and work backwards.
Once you have a goal, you can figure out what you need to do on a daily, weekly, monthly, and yearly basis.
This allows you to measure progress toward your goals.
Wanting to do something often isn’t enough.
HOW will you do it? And when and where and why?
That’s the plan you need to get to your goal.
Specific, measurable and time-oriented goals (ie you have a target deadline) are best.
Think "I’m going to make an extra $100K in 5 years" vs. "I want to make more money."
How to make an extra $100,000 in 5 years
Let’s do the math.
- $100K in 5 years = $20K/year
- $20K/year = ~$200/month
- $200/month = $6 per day!
Now, you just have to figure out how to make an extra $6 per day. In 5 years you’ll have made an extra $100,000.
At this point, I started to question myself.
I’m kind of amazed by that math. Pretty sure it’s correct but… it totally doesn’t sound accurate.
Making an extra $6 in a day is totally doable. It’s way less intimidating than thinking about making $100K.
But if you focus on getting 1% better every day (or in this case making an extra $25/week), you’ll eventually get to your goal.
Assuming my math is accurate, this is kind of huge.
This is the reason plans are better than goals. You can accomplish a plan.
So making an extra $100K in 5 years is the goal. Now we know what that translated into on a daily/weekly/monthly basis.
Next, you need to figure out how.
Earning $6 a day or $25 per week could be as simple as mowing your elderly neighbor’s lawn.
You now have your how, where and when.
The why could be almost anything, but it’s important to know why you want to make an extra $100K.
Maybe you’re going to buy a house. Or a boat. Maybe you’re going to quit your shitty job and go on an epic f*cking vacation.
Maybe you want to send your kid to, like, one year of some fancy private college.
It doesn’t matter what your why actually is, as long as it’s something you care about.
The why us what keeps you motivated to mow someone else’s lawn every week for 5 years when you kinda don’t feel like doing it.
Maybe I made some error in the calculations, but I’m pretty sure that mowing lawns can be the thing that sends your kids to college.
Begin with the end in mind. Work backward from there. Figure out what it will take to get to your goal, and then give it time.
Keep doing the thing for long enough, you’ll be amazed at how far you can go.