Peter Moriarty: So if someone's got a business, and let's say,
you know, they're really pulling $100,000 a year right now, how
long would that typically take when you start planning those
things out? Is that like a five years at a 10? year? Or is it a
20? year? I mean, of course, it's, you know, based on
someone's goals, but you know, what's, what's that typical game
plan look like?
Jackson: I'm gonna give you a really simple formula, because
what this comes down to is it really comes down to three
leaders, so that the f3 formula that we use is the annual income
that you need to produce, then divided by five, and times by
100. And that equals the net wealth that you would need in
order to be able to achieve financial freedom. So simple
math would be let's assume you needed $200,000 a year, divide
that by five times that by 100, means that we would need $4
million of net wealth in order to manufacture true financial
freedom. So then they go, Oh, wow, 4 million, that's a big
number. But let's come back to those three leaders. lever
number one is how much can you afford to contribute to building
that portfolio? So after you earn your $100,000 from your
business, and you live your lifestyle? How much is leftover?
And are you contributing that to an investment portfolio? To? How
much risk are you prepared to take like, as you rightly said,
if we've got it sitting in cash, it's making diddly squat. And if
you've got it sitting in the share market, you're probably
making about 8% and property about the site. And then
thirdly, how long are you prepared to wait. And if you
want financial freedom in 10 years,
Peter Moriarty: you're gonna have to pull those other two
levers a whole lot harder, right. But if you've prepared to
wait 30 years, then you might not have to pull them as hard.
So this is about us working out those numbers, and then having a
really clear plan that connects your activity and your actions
to the outcomes that you want, both personally and in your
business. Beautiful. I like that. And I think for for many
business owners, they may think strategically about their
business for the next couple of years, but not strategically
about the wealth plan for the next couple of years. And so
it's something that I only did very recently, because I you
know, calculated what my number was, and was like, Okay, well,
we'll take x many years to do this. And then I kind of started
looking at, okay, well, what are the milestones? And what are the
steps along the way, for me, as a pretty creative entrepreneur,
I can get bored when I think of something that's going to take
10 years to do. Like, I've got an idea of the vision, I know,
I'm going to get there. But I'm like, Oh, my God, that's so
long. And so for me, like, you know, property is even a little
bit boring, because it takes time to do things. But then when
I started to map things out, I was like, Okay, cool. That gives
me the confidence to keep my savings ratio in place based on
the amount that I'm earning an income from the business that
inspires me to actually stay diligent with that savings
ratio, because I know that bit by bit each year, getting me
towards that, like, you know, financially free forever, don't
need business income anymore number.
Jackson: Yeah. And we've got I'm very similar Pete, because I'm,
I've got a short attention span. I like everything yesterday. And
I did a study on this when I was writing my last book, where
there was a study that was done on individuals to work out how
connected their current self was to their future self. And they
illustrated this by two overlapping circles. And they
surveyed 1000s of people and I asked them, how connected are
you to the future version of yourself in 10 years time. So if
you're not very connected, it's going to be very, only a little
bit on the left, or if you real deeply connected, it's going to
be very closely overlaps. And they worked out the individuals
who were more deeply connected to their future selves, worked
out it much easier for them to defer gratification, because
they can almost feel the benefits associated with putting
that money away and making those decisions for their future
selves. And they could feel the pain associated with inaction.
Whereas people like us speak like our stuff. And I'll just
earn myself out of that situation in 10 years time,
right. So yeah, what I tried to do is redefine a financial
operating system where taking action was the default action.
And this came down to a principle I refer to as living
for today and planning for tomorrow. So what I work out is
my dangle of the kind of the carrot is that I need to earn
enough income to allow me to live in abundance, my story in
which to be fair, my lifestyle doesn't cost a lot of money, I
actually do a YouTube video talking about how much my life
cost and how much I spent. So I want to do all of these nice
things and travel around Australia and live this amazing
lifestyle. But I also want to make sure that I have the
freedom and flexibility to do the things I want in the future
without compromising my goals today. So I just worked out what
is my income target that I need to achieve every single year
that allows me to have my cake and eat it too. And as long as I
hit that, then everything happens and there's no
sacrifice. Because I think the big problem here is beat our
parents taught us that in order to live an amazing lifestyle in
the future we need to sacrifice today. I've never been motivated
by that. That sounds horrible. So
Peter Moriarty: keep working and keep working.
Jackson: Exactly. That's a terrible idea. In this day and
age, we can have our cake and eat it too. And I think we're
both living proof of this right? That we've been able to live in
amazing lifestyles and do things that our parents don't do until
they retire and we're doing that in our 30s but we're also
setting ourselves up financially for to achieve financial
abundance will before our parents and it just goes to show
that the being written as we speak.
Peter Moriarty: I'd also suggest that you know, our generation of
business owners and by that I mean millennials and Gen X as
well have read the four hour workweek by Tim Ferriss and
realize that, hey, I don't have to, you know, slave away, and
then like, enjoying my life later, I can start having
flexibility in my life now. And I think the big kind of
entrepreneur movement of the last five or 10 years and you
know, we've been around the block a little bit longer, I
wish you'd been in business. 15 years, I've been in business 15
years. So we kind of like I think started a little bit
before that way. But now it's like, cool to be an
entrepreneur. And a lot of that is driven by like, Okay, well,
you know, you can grab us to be able to grab a backpack, jump on
a plane and go and live in Thailand. And as long as you've
got a dropship business making you $1,000 a month, then you're
good. And, you know, I'm hashtag, I'm retired. And I
think, you know, while that's not a real business, because
it's probably not sustainable. But what we do have is business
owners who are interested in the flexibility, you know, they're
interested in working flexibly, which we do a lot of work with,
but they're also interested in, okay, how can I create a life
that really works for me and do the work that I love, like, no
one wants to go and play golf five days a week, if you're our
age is probably not that appealing. But how can I do
meaningful work, that I love with people that I enjoy doing
it with and make good, you know, good enough money that I'm able
to, you know, support, be with family, you know, be with
friends and, and have all that kind of tied together nicely.
And to me, that's, that's the essence of lifestyle design.
That's the essence of what Tim Ferriss was talking about in
that book is about, you know, designing and choosing the life
that you want, and then making movements to actually build
that.
Jackson: Yeah. And and I remember I was actually flying
to Brazil, and I read, I actually listen to an audio book
of the four hour workweek. And it was this epiphany moment I
go, where can I actually do this, and I remember becoming
very disheartened, where my measure of success was a four
hour workweek, right? And I'm like, I can't just I can't seem
to systemize myself out of my business, enough variety for me
to ever make that possible. So I can maybe I'm setting an unfair
and unrealistic expectation of myself because of this book that
I've read. So what I did is I designed another framework
called the lifestyle business plan. So we're spoken on a
couple of these subjects, but I created really four measures of
success. The first one is that I want to have a business that
allows me to have $400,000 a year in profit or more. Because
I know that if I can produce $400,000 a year in profit from
my business, I can not only have an amazing lifestyle, and pretty
much do anything that I'd ever want to do. But I can have an
amazing amount of surplus that I can put away to plan for the
future. Second thing is I want to work four days a week,
because if I was working any less than than four days a week,
I've got mental, I enjoy what I do, I'm passionate about it. But
having that freedom and flexibility to work, work for
days and have three days to do the things that I enjoy, like
for wheeling, or going off grid or doing jujitsu, even though
every time I train, I get injured. But it's having that
flexibility because it recharges my batteries, and it actually
gives me more ideas. Then the third one is working 44 weeks a
year, because if I can have two weeks off, completely switched
off for my business every quarter, I'm going to make that
business 100 times better when I come back. And then
Peter Moriarty: when I disappear, because when I go, I
get all these ideas, and then I come back and I'm like, I want
to do all these
Jackson: things.
Peter Moriarty: I think they like it when I started the
business.
Jackson: I can keep an eye on I love that time. And exactly, and
I'm exactly the same. And the last one is that $4 million in
net wealth, because if I can achieve $4 million in net wealth
outside of my home and outside of my business, I have complete
freedom of opportunity, and my wealth will last in perpetuity
more than I could ever spend. So why do you take you four days a
week, 44 weeks a year formula of net wealth, there's four fours
that are needed here. And if I hit those, the world is my
oyster. And how I measure my success. Those are the outcomes.
We can't measure those because those are lag indicators. I
asked myself three questions. If I do anything in my life on my
business one is it making me more profit? Two, is it helping
me win back my time? Or three? is it helping me build more
personal wealth? And when I started asking myself these
questions when I did everything, whether it be personally or in
my business, it changed the way that I approached how I spent my
time because I was spending my time I wasn't investing it and
that was a game changer for me.
Peter Moriarty: Yeah, one of my mentors James Schramko has this
beautiful calculation of number of hours invested in a business
and net profit returned and so it's like profit per hour
invested which I really love and need I've got another
calculation on my channel about you know how to work out your
hourly rate and you know, like okay for every hour that you
bring into the business, you know what what needs to come
back and I love I love optimizing time because once
you've kind of like optimize the business as much as possible,
optimizing for time is the next step is there is like it's it's
the other resource to also to also balance out as well.