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Money is important. And more money makes you happier, but only up to a certain income level, as various studies have shown. Even lottery millionaires are similarly happy or even unhappier after a year than before the “big win.”

We should have an amount of money that enables us not to worry too much. At the same time, we should not have so much money that we have to worry about it.

So, it’s helpful to know how much money you need for yourself and your family to be happy. Because going forward, you are carving out time for the important things and not simply increasing your income even more.

Jean-Jacques Rousseau (1712-1778), the French writer and philosopher during the Enlightenment period, said it succinctly and eloquently: “The money you own is the means to freedom, the one you chase, the means to servitude.”

Here is your task for today:

Write down in your notebook, which purchases you’d like to make in your life and approximately when. First, concentrate on the absolutely necessary ones. Maybe you want to save up for a home of your own. Then think about how much money you’ll need to take out a mortgage and, if necessary, to save money for a down payment. Divide the down payment amount by the number of months remaining until the planned purchase date.

Sample calculation for planned property acquisition

Today's date:November 2020
Planned purchase date:June 2025
Estimated purchase price:$250,000 (of which $50,000 down payment)
Time Nov. 2020 to June 2025:54 months
Monthly required savings rate
for the down payment:
$50,000 / 54 = $926/month
At an interest rate of 1.5% after purchase, the loan is due for $750 per month, to be earned from July 2026 and paid off for 27 years.

Calculate the amount of money you need for all your other plans (e.g., buying a car, costs of educating children, etc.) and add up your daily expenses. The sum is the net income you need to earn per month for the life of your choice.


As a self-employed person, you have to keep an eye on many costs that you have little or no need to worry about as an employee.

  • You bear the financial risk on your own, and you have to insure yourself, i.e., take care of health, pension, care, and social security contributions.
  • The minimum contribution to voluntary, statutory health insurance is high, and private health insurance quickly becomes expensive in old age or with family. In addition, you often have to advance medical costs, which puts a strain on your cash flow.
  • One of the most common stumbling blocks for the self-employed is a tax payment that often comes years later and is much higher than expected. A critical tip: set up your own bank account for tax payments, into which you always pay 30% of your roughly estimated profit. You should also report any drop-in profits directly to the tax office, as the tax authorities will calculate your tax burden based on your profits in recent years.

Sample calculation for living expenses

 per month
Housing costs (monthly rent, utilities)$1200
Food (e.g., food, drinks, hygiene/beauty products)$500
Transportation (car costs, public transport tickets, airfare)$450
Education (training and study fees, material costs)
Vacation (approx. 2,400 euros per year)$200
Sports and leisure (gym, streaming services, theatre)$20
Medical Expenses$200
Other (telephone, internet, mobile phone, GEZ, etc.)$80
Cost of living$1900
Reserves for education of children$331
401(k)/Retirement provision $240
Installments for existing loans (student)
Reserves for real estate$926
Costs for the future$1600
Necessary net income$3500
Net income of spouse$1950
Necessary income from self-employment$1550

After you have made the calculation: Is it about as much as you earn (net) per month today? It’s probably more rather than less. This means that your previous income is insufficient for your desired lifestyle and that you’ll either have to earn more net income than today or financially adjust your desired lifestyle.

If it is substantially more, first check whether your plans are essential at the planned level and in the near future. You should have a realistic income target so that you don’t raise the bar for your independence too high. Remember that your income can increase in the next few years if you are enthusiastic about a job and your business grows. If you are not in a high-paying job and your previous income has been sufficient for your life, aim for a similar income for the next two or three years.

If you are in a well-paid job today – one that demands long days, weekend work, loads of responsibility and stress – consider an acceptable and feasible lower income amount given significantly decreased burden, stress, responsibility, and health risks.

Wrap your head around the value of having more time for your family, yourself, and your hobbies. What does it mean to you? What is it worth? Everything in life has a price. You’ve already established the costs associated with your high income. So, eliminating those costs means paying the price of a lower income.

Suppose this isn’t possible because you have so many financial obligations. In that case, I strongly recommend first establishing whether you cannot and do not want to reduce them, for example, by selling property to pay off debts. Even if this change’s cost means financial loss, no money in the world can outweigh your health and your lifetime experiences.

How much money do you need per day? To calculate the number of actual working days per year as a self-employed person, we have to deduct – depending on your business model – holidays, continuing education, holidays, sick days, etc.

Let’s assume that of the 365 days; you don’t work on weekends (104 days), public holidays (between nine and 16 days), holidays (25 to 30 days), in case of illness (about five days), and for continuing education (about five days). That leaves 211 days per year or, on average, 17.5 days per month.

That results in a required daily net income of:

$1550 ÷ 17.5 ≈ $89 /day

Now increase the amount by your average tax rate to calculate your necessary gross income:

Gross income = net income x (1 + tax rate in percent ÷ 100)

Example of required net income (at a tax rate of 45 %):

  • per year 12 x 1550 x 1.45            = $26,970
  • per month 1550 x 1.45                     = $2247.50
  • per day 89 x 1.45                          = $129.05
  • per hour 05 ÷ 4                        = $32.14  (for four hours/working day)

With this exercise, you now know how much money your business idea has to yield per hour, per working day, per month, and per year. This is critical information for many future decisions and for your business model, which you will soon develop in the 90-Day Program.