The 4% Rule

I was chatting with a friend the other day and discussing goals and setting a life vision.  Her concern was that she was working to pay her mortgage and her bills and not to fulfill her dreams.  She couldn’t see how chasing her dreams would pay the mortgage.

The challenge we all face is that we look at the immediate and the details in front of us.  Those are the minor hurdles that keep us from moving forward and taking steps toward our goals.

If our focus is to simply pay the mortgage and our bills then we are not striving for greatness, we are hoping to get by.  Instead, I said, “Dream big.  Take your love and make it as big as you can!  When your dream takes you over, there will be more than enough money to pay the bills and plenty more.”

As we chatted I mentioned “The 4% Rule”, which is based on some statistics I read about some time ago and use as a measuring stick or a rule against which I can make decisions. 

Results from a 2003 Gallup survey say that although about half of people aged between 18 and 29 believe they will one day be millionaires, the reality is that if you have a group of 100 people at aged 25, by the age of 65-

  • 4 are financially independent and one of them is rich
  • 55 are dependent on others (government, friends and charities)
  • 25 are still working
  • 16 are dead

These numbers are backed up by statistics from the U.S. Labour Department, The National Centre for Health and the  U.S. Department of Health and Human Services. 

Essentially what this means is that when you look around at what people are doing, recognize that for 96% of them the future is not necessarily the brightest.  My mother always said that the “hard road today becomes the easy road in the future.”

Let me be clear that the 4% rule is not advocating a perfectionist approach to life, nor does it advocate a keeping up with the Joneses mentality.  The 4% rule does come from financial statistics, but it refers to much more in life than simply just your financial well-being.  I believe that your health, well-being and success are determined by a lot more than simply your bank balance or net worth.  The 4% rule covers all aspects of life – health, career, relationships, family, hobbies, finances etc.

It’s easy to do what everyone else does – that’s why everyone does it.  But the very successful people are doing the opposite.  So if you’re making a decision about what you should do, try filtering the decision with “The 4% Rule” and see what the future might look like.

Many decisions like choosing to not watch television, limiting the amount of toys our children have and how we spend our time have been made through the looking glass of “The 4% Rule”.

When deciding on chasing your dream, realize that probably only 4% of people do… there’s your opportunity!

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This entry was posted in Be Inspired, Coaching, Goals, Personal Coaching, Vision and tagged , , , , , , . Bookmark the permalink.

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