Rob Bennett in Passion Saving suggests using the income from long term savings to pay for short term goals. But what if you don't have a long term goal? What if your brain is empty of all goals (as mine sometimes shockingly is)? What do you do?
No worries! He gives us the multiply-by-25 rule. Take any annual expense and multiply it by 25. That is how much you need to save to cover that expense for life.
Say you're a crazy Kimber Chin fan (grinning – you'd have to be crazy). I write two novels a year. They sell for $6.00. That is $12.00 a year to buy everything I write. Multiply that by 25 and you should save $300 to cover that expense for life. Yep, you can read everything I ever wrote forever! What a happy day (for both you and me)!
Seriously… the hubby and I do this all the time. We'll sock away $200 in an investment paying 10%. That $20 is a breakfast for the two of us every year in Paris. It is a concrete goal. Not some airy fairy save X amount type of goal. We can see, touch, and, in this case, taste it.
Unfortunately, most people will not pick up this book based on the title alone. The S word no one likes. The people who truly value the innovative financial thinking it holds will walk on by. It is a shame because it is a great book, a great return on the cover price.