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14 DAYS AGO • 3 MIN READ

The Target Monthly Income Framework

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I’m looking at this view as I write this letter…

I could get used to it!

I’m enjoying a week away with my family, but I’ve committed to writing this newsletter - no excuses. So I’ve dragged myself away from the buffet to get it done.

Here we go…

Today, I want to share a framework that transformed my business and personal life: the Target Monthly Income Framework.

‘How Much Money Do You Need to Earn Each Month?’

If you’d asked me this when I started my business, I would’ve said, “Erm, as much as possible?”

But that mindset caused issues. I found myself saying yes to every opportunity no matter what. I was a busy fool and running a business with no intention.

Eventually, I asked myself, “What am I doing this for?”

My answer: owning a business is about creating autonomy.

I want to do what I want, when I want. That’s why I started doing my own thing.

Around the same time, I read about the Target Monthly Income Framework, and it was exactly what I needed.

The idea is to figure out what you need to earn each month to live your ideal life, then craft your business around that - optimising for efficiency and profitability.

That way, you take care of your financial needs whilst having plenty of discretionary time to do the things you love (an indicator of how wealthy you actually are IMO).

Let’s break down the framework and look at how to apply it.

How Much Are Your Living Expenses?

Start by calculating your personal monthly living expenses. This includes:

- Housing (rent or mortgage)

- Utilities (electricity, water, internet)

- Groceries and dining out

- Transportation (car payment, gas, public transport)

- Insurance (health, home, car)

- Leisure and entertainment (subscriptions, hobbies)

- Miscellaneous (unexpected expenses, personal care)

How Much Are Your Business Expenses?

Running a business comes with its own set of costs. List all your business-related expenses:

- Office rent

- Software and tools

- Marketing and advertising

- Professional services (accounting, legal)

- Subscriptions (industry publications, research tools)

- Miscellaneous (office supplies, travel)

How Much Do You Want to Save for Your Ideal Future Life?

It’s important to plan for the future. Decide how much you want to save each month for:

- Retirement

- Emergency fund

- Major future purchases (house, car, vacations)

- Education (your own or children’s)

Setting aside savings ensures that your business isn’t just supporting you now but also preparing you for future stability and opportunities.

How Much Tax Do You Need to Pay Based on the Above?

Calculate your expected tax obligations based on the above numbers:

- Personal taxes

- Business taxes (depending on your location and business structure)

Consult with an accountant to get accurate estimates and ensure you’re setting aside enough money each month to cover your tax liabilities.

⬆️ That is Your Target Monthly Income

Add up your monthly living expenses, business expenses, ideal savings and taxes. This total is your target monthly income. This figure gives you a clear goal to aim for each month.

How to Use This Framework

With your target monthly income defined, you can start to plan how to achieve it.

The idea is to hit this number in the most efficient way, so you can spend time on activities that give you a full and varied life. In my case that’s family, health, travel, creativity and side projects.

Here are some ways to hit your target monthly income:

1. X Amount of Retained Clients: Identify how many clients you need on retainer to cover a your target income. Retained clients provide consistent, predictable revenue.

2. X Amount of Projects: Determine how many one-off projects you need to complete each month and the average project value.

3. X Amount of Sales: If you sell products, figure out how many units you need to sell. This could include digital products, courses, or physical goods.

4. X Amount of Days Worked: If you work on day rates, divide your TMI by how many days you want to work each month. This helps you set your rate and know how many days you need to sell each month.

5. Mix and Match

In my case, I combine a few different income streams to hit my target monthly income. Retainers make up 35%, and I try to make up the rest with bespoke projects. If required, the odd one-off day rate tops me up for the month.

Extra Tip: Put Tax and Savings into Separate Accounts and Don’t Touch Them

At the end of every month, immediately put the relative amount for taxes and savings into separate bank accounts. This way, you’re not tempted to dip into these funds for day-to-day expenses. For more on this idea, read the book Profit First.

** Disclaimer** I am not a financial expert. Always consult with a professional first.

Conclusion

Defining your target monthly income allows you to build a business that supports your ideal life. Instead of aimlessly chasing growth at all costs, you can focus on a clear target every month, and only take on the projects and clients that align with your financial goals and lifestyle.

What did you think of this framework? Hit reply and let me know.

Can You Help Me?

I hope you enjoyed this letter. If you found it useful, please can you forward this email to one friend who might enjoy it too? They can sign up here if they see the value.

See you next week for another framework.

Garth

NO SUNDAY BLUES

Stories & insights on building a fulfilling business & life

Landing in your inbox - every Saturday

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