If you’re familiar with the idea of a lifestyle business, you may have heard the term, “lifestyle design.”
So what is lifestyle design, anyway?
Lifestyle design involves mapping out your ideal life, how much it will cost, and what business best supports this ideal lifestyle.
This is step one in building a lifestyle business that prioritizes your ideal lifestyle over profits.
After Jasmine and I designed our ideal lifestyles, we had so much clarity regarding our lifestyle business!
We knew exactly how much we needed to grow our income to support both of us leaving the corporate world.
My only wish with lifestyle design is that I had done it sooner!
Many people agree that lifestyle design is a good idea.
But few people actually take the time to do it.
My goal in this post is to help you actually get it done!
Because once you have a clear goal in mind for what you want your life to look like, it’s much easier to achieve.
And although it might be tedious at first, you will thank yourself once you’ve done it!
How To Do Lifestyle Design
Lifestyle design starts with the idea of what you want your ideal life to look like.
As you design your ideal lifestyle, you typically ask yourself questions like:
- how much housing costs,
- what insurance policies you want to have,
- how large your emergency fund should be,
- how often you will eat out at restaurants,
- how much you will spend on groceries,
- what your miscellaneous/fun budget will be,
- and more.
I know this can seem very overwhelming.
But don’t worry.
I’ll break it down into simple steps.
Start documenting your current lifestyle’s expenses.
Not everyone knows what they want their ideal life to look like.
In fact, most people have an easier time knowing what they don’t like than what they do like.
So, if you’re feeling stuck, just start by documenting your current expenses.
When documenting your current expenses, you may begin to see what areas of your life you would like to change.
Put your expenses in a spreadsheet.
At this point, I recommend opening up your personal finance tracker if you use one to look at your actual expenses.
So if you have Mint, Personal Capital, YNAB, or something else, pull it up now.
If you don’t have a personal finance tracker, don’t sweat it.
You can always pull up your credit card or bank statements.
Or you may already know how much these things cost, and you can just put amounts next to the items below.
- Car insurance
- Health insurance
- Dental/Other insurance
- Personal subscriptions (like Netflix)
- Retirement savings
- Phone plans
- Business expenses
- Credit card annual fees
- Eating out at restaurants
- Car registration
- Car maintenance
- Hair cuts
- Friends and family budget (gifts, etc.)
- Travel budget
I pulled these categories straight from our own lifestyle design spreadsheet.
But you may have other expense categories I haven’t taken into account.
Regardless, I recommend putting all of these categories in a spreadsheet with amounts next to them.
I also highly recommend looking up the exact amounts of these expenses!
Most people (Jasmine and I included) have inaccurate estimates of their expenses.
Make sure the math works.
Hopefully, now you have the majority (if not all) of your expenses in a spreadsheet.
If you’re doing this on your own, remember to make all your expenses have matching time frames.
So if you list one monthly expense and one annual expense, remember to account for these different time frames.
Ultimately, you want to have a list of expenses you can sum to get a figure that makes sense.
Create an additional frugal and luxury budget.
Hopefully, you have a decent idea of your current expenses thanks to this exercise.
Now, I want you to make two copies of this budget.
One copy will serve as your frugal budget, and the other copy will serve as your ideal or luxury budget.
The Frugal Budget
I recommend a frugal budget for two reasons.
- You can use your frugal budget as the minimum hurdle level of income to earn with a lifestyle business to leave your day job.
- Your frugal budget is the basis for an emergency fund (more on this in the next section).
As you plan your frugal budget, make sure it’s realistic.
(People tend to overestimate how much they can curtail their spending.)
On the other hand, you also want your frugal budget to actually save you money.
Trying out your frugal budget when you don’t need to is a great way to make sure it actually is realistic and saves you money.
In fact, I recommend living according to your frugal budget for at least one month to see how it works.
You may find that you spend more money than you anticipated and need to adjust your frugal budget.
Or you may find that you could cut costs even lower!
Regardless, planning and experiencing a frugal budget is important for lifestyle design.
Most personal finance experts recommend having an emergency fund.
Emergency funds are a certain number of months’ expenses set aside in the event of (you guessed it) an emergency.
Whether you lose your job, your health, or have some out-of-nowhere big expense, having three to six months’ savings is important.
If you never end up using your emergency fund, you are blessed!
But nothing can buy the peace of mind of having three to six months living expenses saved.
In the context of lifestyle design, I recommend having six months of frugal living saved for your emergency fund.
This way, if anything happens to your employment or lifestyle business, you know you can scale back and have six months’ expenses covered.
The Luxury Budget
For most people, planning the luxury budget is the most fun part of lifestyle design.
This is where you get to dream about the life you want to live!
So if you want a yacht, multiple homes, or there’s something else on your wishlist, here’s where you budget for it!
Obviously, your lifestyle business doesn’t need to fund a luxury budget.
But it’s fun to dream!
And if you choose a great business model for your lifestyle business, there’s no reason your business can’t provide for a lavish lifestyle eventually.
Maybe you feel like you’re already living a luxury lifestyle you can’t afford.
But don’t worry.
It’s rare for anyone to look at their finances and be pleasantly surprised by how little they spend.
Instead, if you’re anything like me, your cost of living probably creeps up if you don’t pay close attention to it.
The good news is, knowing how much you spend is the first step towards change.
Take a Stair Step Approach
If building a business to support your lifestyle feels impossible after lifestyle design, don’t worry.
I remember feeling that same way.
I graduated from college with a degree in French, almost $70,000 of debt, and zero job prospects (at first).
Eventually, I got a low-paying entry-level job.
Then I got married and my wife added her low-paying entry-level job income to our budget.
Over time we got raises, slowly chipping away at our debt.
Years later, we finally paid it off!
About that same time, the lifestyle business we had been working on after hours started taking off too.
By 2019, we were making enough income from the lifestyle business for Jasmine to quit her day job and work on it full-time.
Then we finally did lifestyle design to see exactly how much we needed to make for me to leave my job.
And now we have our target business income level in sight for me to leave the corporate world!
In short, we have gradually shifted from corporate income to lifestyle business income.
And this is what I would recommend to anyone trying to build a lifestyle business.
Don’t feel like you need to make all your income from your lifestyle business immediately.
Instead, I recommend the sort of gradual approach that we pursued.
How to Take the First Step
Taking the first step towards lifestyle business doesn’t need to have anything to do with lifestyle business.
In fact, the first step could be getting off your employer’s health care plan.
What to do about healthcare if you’re not with an employer is actually the most common question I hear related to entrepreneurship.
However, my wife and I haven’t been on my employer’s healthcare for years!
Instead, we use a faith-based health-cost sharing program.
Figuring out something as important as healthcare before you make the switch to a lifestyle-business-funded life is a great way to start lifestyle design.
But there are other ways to take the first step too.
In fact, if you’ve stuck with me through this post, and you’ve done lifestyle design, that’s a very important step towards living the life of your dreams!
I hope this post has enabled you to plan your ideal lifestyle!
If you need any help at all, let me know in the comments!
And once you feel comfortable with your lifestyle designs, check out my post about lifestyle business.
In that post, you’ll learn how to build a lifestyle business that can support the lifestyle you’ve designed!