You arrange your life to match your unconscious expectations of what amount of money you “should” have—this is your money set point. You have an upper limit that prevents you from busting through your comfort zone, and a lower limit that prevents you from financially crashing.
Your upper money limit
The upper limit is the reason why some people can’t sustain making a lot of money—think about lottery winners or professional athletes; 80% of them lose all of the money they made within a couple of years!
To help identify your upper limit, think about an amount of money that you feel absolutely comfortable generating as income on a monthly basis. You should have zero physical reaction to this number.
Now, double that number . . . how did that feel? Did you start to react? If that number was still in your comfort zone, try increasing it by $5,000 . . . how about now? Play around until you find a number that makes you nervous; that’s your upper limit.
If you’re an entrepreneur, another way to understand your current upper threshold is to think about your monthly income and HOW you generate that amount. You know exactly what needs to happen to create that income, right? So raising that income number and identify how that new amount would get generated. At some point, you might be at a loss as to how on earth you’re going to generate $XX,XXX every month. That’s your upper threshold.
I recommend averaging the physical reaction number and the income-imagination number. It’s easy (and I think fun) to calculate how you’re going to make scads of money, but your tummy will tell you how much of that feels like your reality at the present moment.
Your lower money limit
On the lower limit, ask yourself: If you couldn’t do the work you’re current doing, what amount of money do you know you could go out and generate in another way?
I knew a client once who made really good money, but said, “If everything went to hell, I know I could go out and get a job waitressing and make enough to cover the basics.” Her basics were about $40,000 annually, so that was her lower limit.
Another way to understand your lower limit is to understand what you consider to be essential expenses in your life—people usually find a way of paying for those regardless of their circumstances. What are your non-negotiables? For example, when I was bootstrapping my first business, I cut out a lot of restaurant expenses but still insisted on eating healthy food and keeping my gym membership. I can’t imagine a scenario where I couldn’t afford those things.
Life coach Martha Beck used to provide pro bono counseling to recovering addicts, and she commented that she was always amazed at how these people would always find a way of paying for the drugs, regardless of their circumstances—and one person she spoke to had a $180,000/year habit!
Net cash flow
Another aspect of your money set point is net cash flow. Some people’s expenses always seem to go up when they are making more money—unexpected expenses and self-imposed standard of living increases– and go down when they are making less money. So no matter how much they make, they always seem to end up with the same result (entrepreneurs need to be especially conscious of this dynamic!).
When you’re in that situation, you want to find away to make MORE money and KEEP more money, right? And with most things, clarity is the first step. Clarity around exactly what money is coming into your household every month, and clarity on the best use of every dollar leaving it.
And yes – to really take care of this issue for good, some people are going to need to delve deep into the mental, historical and behavioral issues they have with money. You have to ferret out all of the ideas and thoughts that contribute to your dynamic before you can change it.
How to raise your money set point
The easiest way to raise your money set point is to consciously plan how you’re going to allocate it. Every year, I make a list of everything I want to spend money on, in addition to my normal monthly expenses and savings (of course, this list gets changed, updated and reviewed several times per year as I think of new things and cross off old ones). For me, this list creates the WHY behind increasing the upper limit. If I can reasonably predict how I would allocate the money, then I have no internal conflict about generating it.
If you think you might have upper limit issues, you might want to post this list someplace conspicuous, to remind yourself why it’s so important for you to raise your limit. The more you tend to “settle” for what you get money-wise, the more frequently you should look at the list.
And if you really think you have upper limit issues, you might want to get some support in generating the list, to help you see the possibility and reinforce the idea of expecting more.
What do you think? How is your money set point affecting you?
P.S. This post goes hand-in-hand with the concept of money blocks, and if you want to read more about how they might be affecting you, click here.
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