WEEK FOUR ACTIVITY 1: CREATE YOUR MONEY CASCADE

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The Conscious Lifestyle Inflation Plan may work for you if you having been saving and investing for several years (even if only in your employer 401K or 403B).

First a thought experiment: If you suddenly inherited money from a long lost relative so you could live your current lifestyle forever without working, what would you do?

• Would you quit your job?
• Would you start a passion project or business?
• Would you ski or surf five days a week?
• Would you coach kids basketball at your local community center?
• Would you write a novel?
• Would you volunteer at a particular charity?
• Would you travel?
• Would you simplify, do daily yoga, and pick up your kids after school every day?
• What would you do if you could do anything?

At it’s core, the Conscious Lifestyle Inflation plan is designed to help you incorporate the activities you outlined above into your life as soon as possible while meeting your financial responsibilities.

It’s time to get a pencil, a good eraser, this week’s printable, and a cozy blanket. You are going to figure out how to use money to make far-future you, 5-years-from-now you, AND current you have the most fulfilling life possible.

A financial plan can be used three ways:

• Some of us need a financial plan to spend less money on things we do not value.
• Others of us need a financial plan to give us permission to spend more money on the things that are important to us.
• All of us need a financial plan to spend less money on things we don’t value and more money on the things that are important to us.

Stay calm, naturally frugal friends. The thing you spend more money on could be a comfortable retirement, or enough investments to never be a financial burden on your loved ones. Or you could choose to get monthly massages…. Or both!

The Conscious Lifestyle Inflation Plan is designed to do several things:

• Use rewards to make focusing on your long term goals easier. The Pew Research Center reports that gamification can improve learning, participation, and motivation. You will use prizes and rewards to maintain your motivation toward your financial goals over the long-term. You determine the rewards based on what you value. As you reach a “new bucket” you can add a small “reward bucket, such as new winter boots or hiring a house cleaner.
• Save you from over-spending in high-impact areas (housing, transportation, food) making progress toward your goals impossible. Bankrate.com reports that average households spend over 50% of their budget on these three categories. Paying high rent or a large monthly car payment may consume all your discretionary income, leaving you to scrimp on everything else in your life or start accruing credit card debt. Paula Pant famously says, “You can afford anything, but not everything”. At this point in your life, you may have to choose participating in your employer 401K plan over your dream car, so someday in the future you can have financial security and your dream car.
• Remind you that money is just a tool to make your life fulfilling. Free your mind and think about what your ideal life would include and determine if you can use your money to make that happen, while still meeting your current and future financial responsibilities.

Conscious Lifestyle Inflation Plan Directions:

Fill out the Conscious Lifestyle Inflation printable based on your goals and the things that will add value to your life.

Step 1: Create the first section based on your current net-worth

To determine your current net worth you may choose to use an online net worth tracking tool such as Mint by Intuit or Personal Capital. You would link your current accounts to your profile, then the tool would provide an updated net worth totals every time you log in.

Or you can use a one-time net worth calculator like this one from Forbes.

Set limits to your high-impact expenses such as housing, transportation, and food.

Allocate money toward your

Step 2: Put your second highest priority financial responsibility in your second bucket. And repeat for third, fourth, fifth…. buckets.

Step 3: Add rewards into “side buckets” for each level.

As you are able to meet more of your financial goals, you can also use more of your money for the things that add value to your life, such as vacations, charitable giving, and more free time through a house cleaner or lawn service.

Step 4: Try to get to the next bucket faster by:

• Ask for a raise by following Ramit Sethi’s system.
• Reduce spending on high-impact areas, such as housing, transportation, and food.
• Find ways to earn money by using your current resources. Have a spare room? Rent it to a traveling nurse for 3 months using this service. Do you live in a cool area and have friends you can stay with periodically? AirBNB your apartment around holidays or whenever you are traveling. Do you walk to work? Rent out your car on Turo.com (includes special insurance coverage).
• Start a side-hustle. These can take months to build up to real income but check out this podcast channel, “The Side Hustle Show”, for an endless supply of great ideas.

Things to keep in mind:

Research shows the money spent on physical things (cars, clothes, etc) tends to have less impact on our long-term happiness. However money spent on freeing up time, on experiences, and on others has greater impact on our long-term happiness.

Research also shows that you are more successful at reaching your goals when they are SMART (Specific, Measurable, Achievable, Relevant, and Time-bound). This suggests that you will have more success saving for “a three week trip to India with my best friend next July” rather than “future travel”.