By Allison Tait, ninemsn Finance
How many times do you imagine yourself living a different life? Perhaps you're an artist? Or living by the sea? Maybe you're a stay-at-home mum? Or an early retiree?
No matter what your dream, chances are that you can convince yourself it's unattainable. Reality, after all, is a place of mortgages and regular bills. A place where the cost of living is high and the amount of money you'd need to live the life of your dreams is out of reach.
Or is it?
"People always believe that they'll need more money than they actually do to live the life they want," says Sarah Rodgers of Sarah Rodgers Coaching. "The trouble is that they start at the wrong point. When you earn $200,000, you think you need that and more to live the life you want. I say forget about what you earn look at what you spend."
Rodgers believes that if we look at what we really need to live our dream lives, we might be surprised. "I think what happens is that people are too afraid to examine what they really need," she says. "Don't start with a figure. Instead, look at your essential expenses: How much is the mortgage each month? What about the bills? Can you stretch your dollars further?"
She believes that if we cut the fat from our budgets, the surplus may provide everything we need. "You may not live a lavish lifestyle, but it's need versus want," she says.
Susan Jackson, founder and executive director of the Women's Financial Network, agrees. "I think that people believe there's an elusive figure that will free them up to do what they want," she says. "There's no such thing. How much you need is directly related to your current standard of living and what your desired standard of living is."
The trouble is, she says, that nobody stops to simply cost it out. "If you cost it out," Jackson says, "you can see that it's possible you can also see what you might need to change to create the world you want."
The trouble is that we tend to spend what we earn. Our first pay packet seems huge, but by the third we're already spending every cent. As our pay increases, our spending increases to match. Downsizing a car, or a home, or removing some compensatory spending from our lives the dog walker, the cleaner, the retail therapy can free up the case we need to change our lives.
"You may need to make some changes to get what you want, but when you're happy doing what you do, then your desire to spend money drops anyway," Rodgers says.
It's all in the planning
Part of the problem is in the planning. We say "Gosh, I'd love to move to Byron Bay/dump my job and be a writer/start my own business", but we never break that dream down into manageable goals. And sorting out the finances is a great first step.
"We'll often use finances as an excuse," Rodgers says. "Sit down with a financial planner and work out how it can be done. If you eliminate the pressure in that area, you eliminate so much of the stress of setting up a business or following your passion."
Jacksons says it's important to consider what you need to do to "make it happen". "Rather than thinking, 'How do I get a million dollars together?', chunk it down into something that's practical."
If you're wanting to buy your own home, for instance, and can't see how it's possible, she suggests getting a floor plan of the house of your dreams. "Break your deposit down into rooms," she says. "How much do you need for that bathroom? Colour in that room when you've saved that money. You can see it growing. Trying to save $20,000 is too hard. Save for the smaller rooms first and watch your progress." (For more visualisation tips, see www.msmoney.com.au.)
Visualisation also starts with yourself, Rodgers says. "Giving up a corporate life or career to follow a different path is not just a one-dimensional decision," she says.
"Many people define themselves by what they do, by what they earn. Making changes in that area requires re-examination of who you are, as well as the money side of it."