Today I ask you how much money you need to change your life. You can answer by:

  • Working out where you stand now according to material wealth and emotional wellbeing.
  • Deciding where you wish to be.
  • Examining your motivation.
  • Estimating how much money you need to achieve the change.


Over the last week I’ve heard people, again and again, tell me that they’ll do ‘X’ when they win the lottery.

This made me think about the cost of our dreams. So, let me ask you a question:

How much money do you need to change your life?

It is right – money can change your life for better or worse. (We all hope that the change will improve our lives but sometimes it doesn’t work out like that.)

You may find that you don’t need to win the lottery to transform your life and start living the life you want not the life that historical accident and destiny dealt you.

Oh, and so that we get this one out of the way, please assume that I’m your fairy godmother for the duration of this exercise – the last thing you need is to get distracted by the (im)possibility of coming up with the goods.

Work out how much money you need to change your life

I asked John, my husband, how much money does he think we need to change our lives. He came up with a complex formula (not unexpected) mumbling about a fraction of the difference between debt and…Or well. We have no debt and the calculation was so hard it made my head hurt (now, this is some going).

Do you know what was interesting?

Using his complex formula John came up with a number very similar to mine. Yep, the number I worked out by using a very simple, four step sequence.

These includes:

  • Working out where we are now in terms of material wealth and emotional wellbeing.
  • Deciding where we wish to be in the first instance.
  • What is my motivation or what I’d change.
  • Estimating the amount of money these changes require.

This four-step process is specific to you.

I don’t know your situation: you do.

I don’t know what you want from life: you do.

I don’t know what would make you commit: you do.

Grab a piece of paper and work it out.

How to work out where you are in terms of material wealth and emotional wellbeing

money you need to change your life

You can do this by simply describing your situation. In my mind, this is not going to help much – I believe you need to work out a structured portrait of your current material and emotional state around money. Anything else may help you decide how much money you need to change your life but I’m doubtful.

In the table below are the questions you need to ask yourself, and answer, to work out your current situation. (If you are unsure about what some of these notions mean, you can check them out in this post about the importance of financial health.)


Do you have enough money to meet your basic needs of shelter and food?


Do you have debt?


Is your monthly cashflow positive?


Do you have a money buffer?


Do you have a mortgage?


Do you have pension?


Do you have insurance?


Do you have investments?


What are your three biggest money fears?  
What are your three biggest money hopes?  

Now, let me tell you how this works. This is probably going to work best by example.

Scenario One: You don’t have enough money to meet your basic needs

I really don’t expect many of the people reading this blog to fall under this category; not because TMP is somehow superior but because I doubt people who don’t have enough to meet their basic needs have the energy to read blogs about money.

Still, if this is where you are, you won’t need to answer the rest of the questions about material wealth.

Scenario Two: Precarious money and wellbeing situation

If you fall in this groups of people you likely have debt, mortgage and pension but your cash flow is not positive; it is neutral (you spend everything you earn) or negative (you spend more than you earn). In both cases you have no financial stability – in the former because you live hand-to-mouth and in the latter because you are getting further in debt.

Scenario Three: Stable money and wellbeing situation

In this case you have little or no debt, may have mortgage, your cash flow is positive, and you have a money buffer. You are not materially rich, but your wellbeing is moderate to high – you may notice that your money hopes are more important determinant of your behaviour than your money fears.

Scenario Four: Growth money and wellbeing situation

Being a member of this group means that you have no debt, small(ish) mortgage or the money to pay it off were you to decide to do so, solid money buffer, pension and insurance, growing positive cash flow and investments. Your behaviour is driven by positive motivation (your money hopes) and you have few, if any, money fears.
Now, over to you to work out to which group you belong.

Decide where you wish to be

While deciding where you wish to be in material wealth and wellbeing is entirely up to you – after all it your dream you will be chasing – there are some rules.

Remember that estimating how much money you need to change your life you need crucially depends on your vision of your future.

There is a sequence that you must follow: you cannot just over one of the scenarios discussed in the previous part. E.g. if you don’t have money to meet your basic needs you can get to ‘growth money and wellbeing’ but you need to take it in stages – first, you’ll need to move to ‘precarious’, then to ‘stable’ and so on.

In brief, you could get anywhere but it is a matter of sequence and time line.

What is your motivation (what would you change)?

Why do you want to change your money and your life?

Answering this one simple question means will not only help you keep your eye on the ball but also means that you will make very different changes.


Money as such is rarely the motivation powering our actions; it is a tool. Big dreams keep us going. What is YOUR big dream?

Is it to make sure that your children have a better start in life than you had?

Is it to be able to live for some of the year in an exotic land?

It is all good. Just dream; and dream big.

(As a side note, I would have never managed to pay off £100,000 worth of consumer debt without having the dream of not worrying about money ever again.)

Estimate how much money you need to change your life

To estimate how much money you need to change your life, you need to get a bit more specific with the changes that you have to make. Once you’ve worked exactly what you will change, you can estimate the costs.

How much money we need to change our lives: example

This is where we are:

I’d place us in the last group, e.g. ‘growth money and wellbeing’. Before you judge and think that what I do with money and life is so far removed from your situation that I cannot possibly be helpful, I’d like to remind you that only eight years ago we were in ‘precarious money and wellbeing situation’. Not to mince my words about it, we nearly lost everything.

Now we:

  • Have no consumer debt;
  • Our monthly cashflow is positive and growing;
  • Have a money buffer (approximately a year of living expenses);
  • Have a mortgage and we also have the money to pay it off if we decide to do so;
  • Have great pensions (more a matter of historical accident and luck than foresight but still…);
  • Still have life insurance and I’m still worth obscene amount of money dead;
  • Have various investments and growing them;
  • I have very few money fears; and
  • My biggest hope is to build our material wealth to a level where I never have to be employed again (if I chose not to be) and never worry about money again. This way, I’d be able to focus on what really matters to me.

Where I want to be:

Where I want to be, comes from my biggest hopes.

I’m shooting for financial independence (have been aiming at FI for couple of year now but just didn’t think that this is so important that I bother you with it).

If you’ve read The Money Principle in the past, you may have noticed that we are de facto financially free: we got there about a year ago.

So, what is this talk about financial freedom being my aim, you may ask.

Well, do you remember when I was telling you about the different degrees of financial independence according to Tony Robbins?

We are at the level of ‘financial vitality’. What I’m working towards is ‘financial freedom’ (the level of financial independence where you could step up your lifestyle) and ‘absolute financial freedom’ (this is the level where money is no longer an issue).

Hence, my number is large. You may remember that after we paid off out debt in 2013, we set ourselves a rather ambitious goal: by October 2018 to have £2,5 million liquid (or equivalent which works out at £10,000 passive income per month). We also developed a retirement calculator that allows people to estimate how much they may need in retirement.

(There will be a dramatic report on this one at the end of October; yes, our deadline for achieving absolute financial independence is in approximately two months.)

When I first shared our new goal we got some scepticism: don’t let this distract you.

Dream big. Even if you miss your goal, you are still likely to achieve more than if your dreams are modest.


You know that you can get anywhere in life (and money) if you have an inspiring dream, a good plan and the staying power to stick with it for the long run. Planning needs you to know how much money you need to change your life.

I can’t help you dream; this is something you’ll need to work out on your own. I can, however, help you work out how much money you need to put behind your dream. This is what reading this post will do for you.

How much money you need to change your life? Please do share.