12. Finding Your Financial Freedom Number: A Guide to Clarity

🎙️ Know Your Number: How Much Do You Really Need for Financial Freedom? 💰

Ever wonder how much money you actually need to cover your lifestyle and build wealth? In this episode, Tiffany breaks down how to calculate your Financial Freedom Number so you can create a business that works for you—not the other way around.

💡 What You'll Learn in This Episode:
✅ How to calculate your "rice & beans," "ground beef," and "steak" budgets 🍽️
✅ Why knowing your monthly number is crucial for business & life planning
✅ How to reverse-engineer your revenue goals into clear action steps
✅ The difference between lead and lag measures in financial planning
✅ How small adjustments in spending can create big shifts in wealth
✅ The #1 mistake people make when trying to scale their business income

Whether you’re an entrepreneur, a side hustler, or looking to leave your 9-5, this episode will help you get crystal clear on your financial goals—and the exact steps to reach them.

✨ Listen now and start building a business that supports your dream life!

📌 Resources Mentioned:
🔹 Rocket Money – Track Your Expenses & Get Clear on Your Numbers
🔹 Side Hustle Nation – Find Additional Income Streams
🔹 The Einstein Matrix – Prioritize Tasks for Maximum Impact

🎧 Next time you're on the go, just ask Siri to play the Energetic CFO Podcast!

💬 Love this episode? Tell Siri to leave a review on Apple Podcasts! ⭐⭐⭐⭐⭐

Transcript

0:02

Welcome to the Energetic CFO Podcast, where we empower you to take control of your financial future. I'm your host, Tiffany, an advocate for financial literacy and business success. In this podcast, we'll explore a wide range of financial topics from money mindset and budgeting to building wealth and achieving financial freedom. We'll break down complex financial concepts into simple, actionable steps so you can apply them in your own life. Whether you're a new entrepreneur or a seasoned business owner, this podcast is for you. Join me as we dive into the world of finance and discover the tools and strategies to help you achieve your financial goals. Let's get started. Welcome back to the Energetic CFO Podcast. I'm your host, Tiffany Vogel, and I can't wait to dig into our topic today. I am coming to you from California. I came out here for a week to meet with my coach. We did a VIP day. That was fantastic. It also included lunch at Disney. So, you know, can't complain too much about that. And then we had a great day of brainstorming and have a new business idea in the works. So just excited to see what's next for the Vogel family. Today I'm going to spend the day at a spa. And then we have a two day retreat that's gonna be all kinds of good Mindfulness, meditation, yummy food, all the good things. So I'm excited for this kind of down day in between where I get to come in. I can podcast and have some downtime to just kind of let the new strategies sink in and kind of figure out what's next. So I thought what a perfect time to get on a podcast and share some thoughts I have around knowing your number. And I think it's something. That a lot of people don't think about, but having clarity on your personal finances is so key to making sure that your business is operating for you. And what I mean by that is, do you know how much you're spending each month? And I kind of view knowing your financial freedom number as multi leveled. So we have, I mean, Dave Ramsey calls it the like rice and beans budget. mentor, Danny likes to say they had their rice and beans budget, their ground beef budget and their steak budget. So they knew exactly how much they needed to just survive, how much they needed to have, you know, a little bit of nice stuff, some meat and their diet. And then the steak budget was there, what I like to call fat fire. They're the big number. That's like your ideal place that you can spend. Whatever you want I don't, I think it's funny because it's not like it has to be 50k a month. For most people, it's not that high. It's just a number that allows you to be comfortable, to take the trips you want to take, to do the things you want to do, put your kid in the school you want to put them in, whatever it is for you. And I think having clarity on that number is the first step in really building a business around your life because If you're chasing goals in your business of higher revenue, like that's great. I love, you know, revenue targets, but what matters at the end of the day is what you take home. And if you're trying to grow revenue just for the sake of growing revenue, but it's not taking home much for you, then I think it's time to reevaluate and see if there's some things you can do in your business to increase that take home so that you're getting compensated for all the work that you're doing. So, how do you find your number? I personally love Rocket Money. I was a mint girl forever until they went away, which was a very sad day. They got bought out, and then a few years later, it got, you know, taken away from us. It was switched to Credit Karma, but, The features and credit karma weren't exactly what I needed. So I did a lot of comparisons and I didn't want a tool that was crazy expensive. And what I love about Rocket Money is they let me set how much I wanted to pay each month for the subscription. So it's super affordable and they make it accessible. So if you don't have the finances to pay, you can get it for free. I chose to pay for it because I do have the resources too. It's such an easy tool for people who don't have the ins and outs on the finances. And what I mean by that is when, like, I'll go in once a week and categorize my expenses and they make it like a swipe left, swipe right process. I can never remember which way is left and right. Like, is that accept or is that reject? Like, I don't know. I never did the online swiping game for dating. So I have to click the button, but it makes it super easy to categorize your expenses to see where your spending is. So it's easy, like for Eric, my husband, he's not a finance junkie, so he can go in and quickly see where we land and how much we're spending. And it gives you a clear picture of how you're spending compared to last month, which can be super helpful because if you know you had a normal month last month and you spend a lot this month, you can see what that difference is. It also has a lot of functionality to see detailed reports, which I love because I want to see all that detail. But what I would say is like the mobile version is super streamlined for Your average person. And then if you want more detail, you have that functionality on the desktop version. So rocket money is the first thing you link in your bank accounts and your credit cards and all the info you have, and then it pulls your spending together and then you just classify it. And then it uses, the AI tools and all the things to help pre classify. So it gets easier and easier as you use it. And what I like to do is just once a month, go in and pull, how did I spend this month? And one of the things we noticed recently is we had a very high credit card month in November. We bought all of our stuff on Black Friday for Christmas. So we spent a ton in November and then December was kind of a normal month. And then January and February were super low for us. So I dug into the rocket money numbers and realized like we just were not eating out. I was gone traveling a lot. There was a lot of snow days and Eric wound up in the hospital for a week. So there was just a lot of our normal spending didn't happen, but we also didn't notice that like in our spending, I was literally sitting there questioning, like, how did we spend so much last? And I did a deep dive into the numbers and quickly found what happened. It's that we weren't dining out. We weren't buying on Amazon, all these things. So it really helps us get clarity on where we're spending. And we realized that we don't feel a difference. So we could easily cut out the like popping into a gas station to grab a snack or You know, fast food out when we could just go home and get something. Or we also, we were traveling, Eric was traveling a lot up to the mountain house to renovate it. So there was a lot of gas expense. So we realized we can significantly cut our expenses and that makes our number go down. So do you know what your number is? And if you don't get something like rocket money, it doesn't have to be rocket money. It can be whatever you want. That's just a tool that I've used and I really like, and it's pretty user friendly. And after a couple months of using it, you'll get really clear on how much you're spending. And you know, are you spending above your means, or are you spending in line? You, you know, or you should be able to, like, get to, is this your, your beans and rice budget? Do you feel like you're, you know, bare minimum just getting by? Is this your ground beef budget? Or is this your, you know, steak fat fire budget? So having clarity on all of those numbers is kind of the starting point. So if, let's say, you pull all your stuff into Rocket Money, you feel like you're on your ground beef budget, like you're not doing anything extravagant, you're not taking the trips you want, but you're also able to buy. Eggs. That's been like the hot thing lately is the price of eggs. So you're still buying eggs, but you're not going on the cruise every year. So that's your ground beef budget. So from there, you can take those categories for your spending and break it down to, okay, what if we had to cut back? What could we cut back and get to bare bones on? And that gives you your ground beef. Or your, I'm sorry, rice and beans. And then you can say, okay, we'd like to do these vacations every year. I'd like to add in a massage or getting my nails done or whatever it is. Those are very feminine answers. Maybe adding on a CrossFit membership. So figuring out like kind of what that steak budget looks like, and then you can build your finances around that. So if you own a business. You can back into the numbers of, okay, so let's say you want 15 K a month as your ground beef budget, your middle of the road budget, and your business is making 10 K a month. So you have a 5, 000 month gap. You can then back into, well, how many clients do I need to bring in or how many sales do I need to make to get that extra 5 K a month? And then from there, you can get really clear on backing into the marketing metrics of, Okay, if I need, let's say, two clients a month to reach that gap, you know, account for taxes as well. So I generally factor in a 15 to 20 percent tax rate. So once you account for that, then you can say, okay, let's say I need two clients a month to reach that 5, 000 a month number. How many people do I need to reach out to, to get two clients? And you can back into, okay. If I convert 40 percent of the sales calls I have, let's say 50 percent for math sakes, because I'm not interested in doing complicated mental math right now. So if you want to convert two people, half of them close, you know, you need four sales calls. And let's say of the people you reach out to, 10 percent will actually convert to a sales call. So you need to contact 40 people a month to get to that 5, 000. Hopefully this is making sense. So how do you find 40 people a month? That's the problem at this point. It's not how do I generate 5, 000. It's really clear of how do I contact 40 people a month. And the reason I like looking at it that way is there's two different types of measures in our business. We have lag measures and we have lead measures. So the lag measure is that profit is that revenue coming into your business, the 5, 000 that you need to take home. The lead measure is the number of people you contact, so the lead measure is the thing that you can directly control. The lag measure is the result of that lead measure. So we want to focus on lead measures because we can't force somebody to pay us for our services or buy our goods, whatever it is, but we can go out there and pound the pavement and have the conversations. And get really clear on what type of people are more likely to convert. So let's say, what if you know a certain group of people, let's say people A, they're going to convert at that 10 percent number. But if you have another group of people that are more likely to work with you and they convert at 20%, so then all of a sudden, instead of needing 40 people, You need 20. I think that math's right. If it's not, I promise y'all I'm good with numbers. I'm just not good with mental math. So you need less people. So the whole point of that is to saying, having these numbers helps you get really clear on the, the things you need to do in your business to really move the needle. So you can then back into how much work you need to do to get to that number. So we have our ground beef number, our middle of the road. Let's say we're trying to get to 25k a month. because we want to go on trips or put our kids in a new school or whatever the fun thing is that you want to do. I don't know. Putting your kids in an expensive school is not super fun. I mean, we do it and it kind of hurts paying that almost second mortgage every month. So whatever it is that is important to you, it's really important to us that our kids are in the school. So it's worth it, but it is painful. I'd much rather spend that money on a cruise, but It's neither here nor there. So we get really clear on that next level number and then we put the systems in our business to reach it. But we know exactly the steps to take to get there. Now, let's say you are working a standard hourly salary job. You're an employee for another company. So it's not as simple as going out and getting more business, but you know, you wanna make an extra$5,000 a month. Are there things you can do within your work to potentially get a pay raise? I know 5, 000 a month is a huge pay raise. So maybe it's looking at some side hustles. Could you potentially start an Etsy business? Or I don't know. I mean, there's a great site Side Hustle Nation. I think his name is Nick Loper. Don't quote me on that. That's a great resource that you can go and look at and get some information on some side hustles Instead of spending your evenings watching Netflix, you could be researching a side hustle and doing something to get you to that financial number you want to be at. So I know with the standard employment situation, it's not always easy to get that big of an increase, but what if you could invest in some certifications or change career paths or look at it from a very open mind and there might be more options out there than you realize. So my whole point in this conversation is to help you get really clear on the actions you need to take to reach the goals that you have. So if you can back into exactly how much sales activity you need to be doing each month to get to that number that you want. Whether it's your bare bones rice and beans number or your steak number, it doesn't really matter. You know where you're at. You know how to reach the next level. You can really get clear on that and then build a plan around it to reach that goal. And I think that clarity is so key. There's also an opportunity to review your personal expenses and see if you can make some shifts in how you spend. Could you potentially Trade in your car and get a more affordable car note. If your house payment is high, there are tons of budgeting tools out there that tell you kind of what the standard is. And I would say you don't want your housing to be more than a third of your income. So if you're, you know, house poor, maybe look at moving. But having a clear view of your finances and there's two levers you can pull. You can cut the expenses or you can increase the income. So once you have that clarity, it can lead to such big results. And I've seen it with clients I work with. One couple, they had a flipping business and a rental business. And I want to say it was like 10 K in overhead for the both businesses for marketing, for their team all the things that they had going on in their business. And we did an expense cutting exercise for one and got them off of a software platform. On to something more affordable and then a couple other things that we cut and then we also looked at backing into the number of deals they needed to do to cover their overhead. And what we quickly realized in this project was they were buying a ton of houses, but they were keeping a lot. And when you keep a rental, you might generate two, 300 a month. Which is great because that's forever, you get the tax benefits, you get the appreciation, like there's so many benefits to it and it's great. But it wasn't helping them in the short term. It was a great strategy for the retirement, for the long term plan, but there were short term goals that they just weren't able to meet because they were keeping the properties. So we sat down and realized that in order for them to cover the overhead that they had, they had to flip at least one house a month. And Once they had that clarity, they knew, okay, if I want to keep this house as a rental, then I have to go find another one that I have to flip. And that clarity allowed them to just grow exponentially. I mean, it was insane watching them shift. And all it was, was just instead of keeping everything as a rental, they sold some. And I know it hurt them a little bit because some of them are really good deals. But it allowed them. To reach their current needs in a way that they hadn't been just by having clarity on this one number. So how can you find the clarity in your business around your financial freedom number? I would start 100 percent with the personal finances and see, are you actually spending money on the things that are important to you? I know like Eric and I had, we talked about this before, the Netflix account, we were never using our Netflix account, but we were still paying for it. So do an expense audit. I know that's happening in the federal government right now, and no matter your political beliefs, that's a good practice to do in your own personal finances. So go through and do an expense audit of your personal finances and see where can you cut expenses. And then also look at that in your business. Are there things you can cut in your business that are no longer necessary or aren't producing enough revenue to justify the cost of having it so that you can take home more because bringing in revenue is great. It's the lifeblood of the business, but well, cash is really the lifeblood, but that's another tangent, but you have to have revenue to run a business. The thing is though, if you're spending it on other people's salaries who aren't performing. Or on software that you don't really use, or there's a cheaper alternative. Really go through with a fine tooth comb at least once a quarter on your personal and business finances to just get a clear picture of how you're spending. And it's, you know, it's interesting because we talk about weight loss and it's like, if, if weight loss was just a mental game, we'd all succeed. Cause we know calories in calories out. You have to burn more than you're bringing in. But there's this emotional human behavioral aspect to it where you see the piece of cake, you want the piece of cake, you eat the piece of cake. And the same goes with our finances. So having really clear guardrails for your finances is what's going to set you up for success. So we're going to go through with our fine tooth comb and inspect our personal and business finances. And then we look at what's the number we need to. Maintain the level of comfort that we want in our finances. And then once we have really clear numbers around how much we need to bring home to feel comfortable or to reach that next level, whatever it is for you, then you reverse engineer the number that you need and the clients that you need to reach that number. And then we get all the way up to how many people do I need to be calling every week or every month, whatever it is. to lead to that revenue result that leads to the profit result. And then from there, we have that clarity. We go do the action and we optimize our marketing strategy to target the people with the most optimal conversion rates. And then you have your target and then you work on the next target. So that's how I think about reaching financial goals. And I know it can be a little complicated, especially if you're not a numbers nerd like me. So if you have questions and want to dig into it more, feel free to reach out. Tiffany at Energetic CFL. I'd love to chat. I'm also working on some online masterclasses to just help answer some of these questions. I've gotten a lot of questions around Where do certain expenses go for the books? Should I consider an S corp this year? All kinds of stuff like that. So if you have those kinds of questions, please feel free to reach out. I'm hosting masterclasses pretty regularly now to answer questions like that. So if that's something of interest, please definitely reach out so I can help support you. And I love hearing from you and your feedback on these podcast episodes. So if you have any thoughts or suggestions or questions, anything like that, please. Shoot me an email, Tiffany at energetic CFO dot com. And that is all I have for you today. So I look forward to chatting again soon and hopefully this helps give you some clarity on how to get to that number that you need to bring in each month to reach your goals. And just a reminder, I mean, this can apply to, if you have a job, this is just like a PS afterthought. If you have a job and you're trying to build passive income, Having the clarity of how much passive income you need to be able to leave that job will help give you the ability to take that leap. So this applies kind of across a lot of scenarios, but having that clarity is so important. So if I can help in any way for you achieving that clarity, please reach out and I hope you have a great rest of your week. See you later. Thanks for joining me on this episode of the Energetic CFO Podcast. Remember, small steps can lead to massive rewards. By taking action, staying disciplined, and seeking knowledge, you can achieve your financial dreams. If you enjoyed this episode, please be sure to share, like, and subscribe. And don't forget to leave a comment with your thoughts and questions. Until next time, keep learning, keep growing, and keep thriving.