Paths to Prosperity
MVF as a Tool to Achieving Financial Freedom
Recently, a friend of mine quit her job. She left with:
No backup plan.
No safety net.
No plan to return.
No, this wasn't some impulsive reaction to a subpar meeting with a manager or something mundane. The roots of the quitting had been building for years. Her fast-paced startup employer pushed her in every way possible — working insane hours, decreasing headcount, and promising titles and promotions that never came. The list of bad experiences was long. All this left her burnt out, overworked, under-appreciated, and underpaid, and I can fully relate.
However, these instances of burnout and disillusionment are not isolated incidents. According to a recent report by Deloitte, 60% of employees are thinking about leaving their job for one that better supports their mental well-being. A recent LinkedIn study found that almost 70% of Gen Z and millennial Americans plan to leave their jobs in 2023. If it's not clear, workers are not having it.
The Dependent vs Independent Mindset
When I first left my salaried position in 2015, I thought I knew what I was doing. Once the money started coming in, I thought everything would be simple.
I had a salaried mindset, and a dependent mindset.
Meaning: I was looking at my potential earnings and comparing them to my compensation as a salaried employee because that's all I understood then. I figured, okay, if I made $X/year as an employee, I need to get my business(es) to make that much, and it will work. Forget taxes, business expenses, etc. — that was all I needed.
Surprisingly, as most entrepreneurs find out, I realized that I needed both more and less than I thought; because money is different for entrepreneurs. You need more, because the government wants a lot more of it. You need less, because your life changes. Your needs change. Your wants change. Your drive changes.
A salary is a tradeoff for part of your soul. It's not just money, it's potential. Your potential to find joy, value, and a satisfaction on your own path. Potential is hard to quantify, but it's safe to assume it's worth much more than your salary.
For years, I had the wrong mindset. I associated money with success, and therefore I always wanted more. To this day, I still struggle with it.
What changed?
I changed my definition of enough by defining my MVF.
What is MVF?
After realizing that just replacing my salary was not a reasonable calculation for my work or the goals that represented a life well-lived, I decided to make a new calculation. A calculation that would capture the financial thresholds that I wanted to reach, keeping me from the hedonic pursuit of 'more.'
As a product leader, I decided to build on one of the most familiar and popular models: the MVP, defined as a Minimum Viable Product. In the startup world, your MVP is not an end state but a starting point. The MVP is the minimum set of product features or functionality that a startup can build to validate its product/solution.
Similarly, MVF is the minimum financials required to help creatives and entrepreneurs validate and build their path.
M = minimum income
V = viable income
F = f*** it income
Saucy, I know! Every creator or entrepreneur should know these three numbers by heart. Until you know those, you’ll always want more. Let’s dig into them a bit more.
(M)inimum Income
Definition: what you need to pay your basic expenses.
Minimum can easily sound like you're underestimating yourself or aiming too low, but it's quite the opposite. In the salaried world, where your worth correlates to compensation, we're conditioned to believe that anything less than max compensation is a sign of failure. Once you start making money independently, the money doesn't represent your worth or value; it's a proxy for building the life you want. The goal isn't to kill yourself to get to the next level; it's to keep yourself happy and motivated. Setting a lower threshold helps keep your efforts in check and ensures you're not putting yourself or your family at risk more than necessary. Too often, entrepreneurs and creators are optimistic and stick it out longer than necessary — I've certainly been guilty of this myself. Having a lower threshold gives you flexibility, which is the goal.
Sample Calculation: {current basic expenses} * 1.1
Example: {rent, utilities, etc.} * 1.25
(V)iable income
Definition: what you need to pay expenses and up-level your lifestyle.
Viable is the goal that people think about most when they think about starting a business. It’s the number we instinctively calculate because we intuitively strive to keep our lifestyle intact. For me, this calculation has changed over the years, but it’s been the most useful. Setting this number is critical because it’s the number that keeps you accountable and meets the threshold of why you would set out on your own — to build a sustainable income that you enjoy and have full authority and autonomy over. Don’t try to cheat on this one; it should be the most accurate.
Sample Calculation: {average TTM basic expenses} * 1.25
Example: {rent, utilities, etc. * 12} * 1.25
(F)*** it Income
Definition: what you need to do, whatever you want, indefinitely.
Alright, here's where the numbers get fun: they are incredibly high but not high enough to be impossible. The key is to use expenses instead of earnings to calculate the target because it encourages you to keep your expenses in check if you want to hit your goal. Every time you increase your costs, you increase the change you won't hit your target. If you're okay with that, then great. Life is about tradeoffs, so choose carefully.
While I have yet to reach this number personally, I like to know what it is to keep it in mind so I continue making the right tradeoffs. Setting the goal before you have a taste of the riches can help remind you that you've reached your goal but achieved more than you ever imagined. It's not just an important financial reminder; it's an important reminder for your mental health.
Sample Calculation: {10 year annual expenses} * 10x
Example: {rent, utilities, etc. * 12 * 10} * 1.25
Setting Your MVF
Look, everyone's numbers are going to be different. Some people live a more frugal existence. Others love to enjoy the fruits of their labor.
Match Your MVF to Your Business. Aligning your MVF calculations with the type of business is important. If you’re a consultant, ensure you calculate for slowdowns. If you’re a creator, think about how your expenses scale as you create and publish more. Ensure your assumptions stay consistent because things will change, and you must act fast.
Create a Plan and Timeline. The biggest challenge isn't generating income; it's generating consistent income. People often return to a salaried position because their revenue dips or stops altogether, and they suddenly feel the pressure to return to the perceived safety of a paycheck. You don't want to restart the engine, so create backup plans that prepare you for the instabilities that are sure to come. Remember: solid, consistent revenue always beats amazing one-time revenue.
Define it. Track it. Iterate. Alright, so now you have your numbers set. Don't just calculate them; track them. Be sure to look over them quarterly and re-assess your expenses and assumptions. The goal isn't to set it and forget it — it's to set it and strive for it.
Here's a calculator that you can use to define your MVF:
Challenges of Hitting Your MVF
You're good to go now that you have your numbers, right? Well, sort of.
When I started on my own, I did many things wrong. As you step off the dependent/salary train, life hits you in the face. You realize that these calculations are just that, calculations. I promise that the numbers will change once you're in the thick of it. The biggest challenges I see for people trying to set MVF milestones are:
Rejecting uncertainty - Removing uncertainty isn't possible, so at some point, we all have to accept that we can't control everything. Accepting uncertainty allows you to pivot, iterate, and take things as they come.
Lifestyle creep - When you're on the salary train, it's easy to slowly and steadily increase your lifestyle requirements; it's called Lifestyle Creep. And when you leave the dependent mindset, resetting your lifestyle to match your goals is critical. One of the hardest things people experience is a perceived downgrade in anything, so the earlier you start adjusting, the easier it will be.
Conflating ambition with earnings - More than anything else, unhooking your brain from the idea that money = happiness {or insert feeling}. Money is a tool. It helps us do things, but it will not give us anything more than that. Anyone who's earned a lot or become wealthy knows it's true.
Setting MVF too low - We all know the stories of the founder that ate ramen, slept in their car, leveraged their mortgage, etc. And we repeatedly glorify these stories. But honestly, it's toxic. People need to eat. The pursuit of greatness has destroyed people and broken families. Setting realistic targets ensures that you don't damage every aspect of your life and potentially spend years trying to recapture what you missed out on.
Aiming too high, too fast - Aiming too high seems like a silly problem to have. We all want to be billionaires, right? Sure. But we won't all be, and it's critical to realize that building anything takes time and a lot of patience. And people without money can't have either. Yes, some people quit their job and make 3x their old salary within six months — but it's rare. According to an Influencer Market Hub survey, 35% of the creators surveyed have built an audience for over four years and currently earn over $50k annually. Clearly, it's possible to reach a livable wage, but be realistic about what your business can — and should — make and in what timeframe.
“Your money doesn’t determine how rich you are, your desires do”
Unlocking Exponential Optionality
Before you put in your notice or take that next giant leap, it's crucial to have a plan and a path to creating exponential optionality. The plan isn't meant to be a perfect map of how you'll reach one specific place but rather a way to permit yourself to try things. When you know what you need, finding what you want is easy.
MVF is critical for anyone looking to carve their path and remove their reliance on a standard employer income stream. Whether you want to be a creator, an entrepreneur, a solopreneur, or explore your curiosity, financials are the biggest hurdle to breaking free. By setting these goals early, you'll be able to:
Reduce financial stress
Gain freedom and flexibility
Take risks and invest in business or career
So often, we get enamored with the idea of creating that we miss out on the things in life. Money doesn't buy happiness, but sometimes it can be a helpful signal as to whether you're living a life that meets your needs.
It's important to remember that these numbers are meant to help you, not define you. Even more importantly, a plan is just that — it is not set in stone. Part of the journey to finding your path may mean returning to the employment train. And that is okay. You can always get a job. It's not the end. Life is long. You may need to take a few runs at it. Your work is meant to set you up to do what you love.
Setting your MVF reduces the financial cravings you'll experience along the path forward. We deserve to want what we have and not feel pressured to want more. When we define our MVF, we're telling the world and, more importantly, ourselves that there is a definition of enough. And, as any ambitious person knows, this is the hardest thing to do.
