How to Actually Achieve Freedom in Business

_{1,461 Words | 6 min 5 Sec Read}

Welcome to another issue of Passionate Income.

Today we’ll be discussing a concept known as the Solvable Problem.

While most people spend their lives constantly chasing more, this can lead to a lack of satisfaction, anxiety and burnout. By positioning your financial goals as a problem to be solved, however, you can eliminate ‘money anxiety’ for good.

Let’s dive in.

I first heard of the Solvable Problem concept from a business coach named Nic Peterson back in 2020.

Long story short, the Solvable Problem refers to your long-term financial situation. In particular, positioning your retirement goal as a ‘problem’ that can be ‘solved.’ Let me explain.

In business, most people set goals around some kind of revenue or sales KPI.

They want to get X number of clients, make X number of sales, or hire X number of employees by ___ date. On the surface, there’s nothing wrong with this as long as you approach understand the difference between lead indicators and lag indicators.

The problem with these types of goals, however, is that they don’t account for the long term.

Yes, getting to $10,000 per month can help you live your ideal lifestyle in the short term. But have you ever done the math to figure out if that level of income is enough for you to invest and hit your retirement goals?

For most ‘online entrepreneurs,’ the answer is a resounding “No.”

Depending on the source, most ‘experts’ say millennials and Gen X’ers will need between $2 million and $15 million to retire (with younger age groups needing more given the impact of inflation).

Admittedly this is a huge range where things like taxes, lifestyle, and cost of living can have a dramatic range on how much you’ll actually need.

Either way, regardless of what the dollar amount is, the Solvable Problem allows entrepreneurs to eliminate the anxiety they feel around wanting to “scale their business” and increase their income.

The reason this matters is because most anyone who’s ambitious will spend their entire life chasing more.

More clients, more income, more material possessions.

But if you’ve ever lived this way, and achieved an important financial goal, you know just how quickly the satisfaction (assuming you even feel any) wears off.

Which is why people refer to the constant pursuit of ‘more’ as chasing the horizon: No matter how close you think you are, your brain keeps moving the goal posts.

Now, having goals is not a bad thing.

As most young founders who sell their companies find out, too much leisure time at a young age can lead to very dark places. As Napoleon Hill once said: "Idleness is the glove into which the devil slips his hand."

Despite this, there’s a difference between the healthy pursuit of goals, and quite literally never letting yourself feel satisfied.

So the question becomes: Where is the happy middle?

How can you construct your life so that you’re mentally stimulated in a worthwhile pursuit, but at the same time, able to relax knowing you’re on the path to achieving your long-term financial goals?

The answer is the Solvable Problem.

Rather than setting an ambiguous goal like $10,000 per month, the Solvable Problem requires you to define:

1. What age you want to retire at

2. How much you’ll need to retire, accounting for black swan events

Solvable Problem = Dollar Amount by Age

For some people, that could be $5 million by 65. For others (e.g. someone who plans to move to a developing country with little to no taxes), that number could be $1,000,000 by age 40.

The dollar amount and age you choose are irrelevant.

What matters is creating a long-term financial plan you can “chase” based on a monthly contribution. And the way you calculate that is to identify how much you need to invest now - and every month moving forward - to hit your retirement goal.

Admittedly, this can be a messy process.

But generally speaking, using the S&P 500 average annual return of 7.5% is a good start.

Yes, things like crypto can drive astronomically higher returns. But they can also crash 40-80% in a matter of weeks. And because of that, the older you get, the more conservative you’ll need to be with your investments.

From there, the next thing you have to figure out is how much after-tax income you need to fund both your lifestyle and retirement fund.

Let’s say you’re 30 years old, have $0 invested, and that your Solvable Problem is to retire with $5M by 65. Meaning, you have 35 years of compounding to take advantage of.

Using a compound interest calculator, someone in this situation would need to contribute $2,500 per month - at an average growth rate of 7.5% per year - to retire with $5M after 35 years.

And of course, they would have to make this in addition to their lifestyle spending (for the sake of round numbers we’ll ignore the technicalities of pre-tax ROTH IRA contributions, etc).

What makes the Solvable Problem so fascinating is that once you hit your number, any energy invested into making more than that amount is wasted.

Why?

Because you’re already on track to hit your long-term goals.

Think of it like biking from Los Angeles to San Francisco.

If you think the journey will take you 14 days, and you’re OK with the journey taking 14 days, why would you beat yourself to get there in a week?

Why would you push your body, risk an injury, or ride in the dark when you’re already on pace to hit your target within an acceptable timeframe?

Odds are, you wouldn’t.

The problem is, when it comes to money, we as humans are driven by greed and scarcity. In fact, in many cases, we feel both emotions at the same time.

On the one hand, we’re terrified of losing it all and ending up homeless or bankrupt.

On the other, we want to make our millions now. Immediately.

See, getting on board with the Solvable Problem philosophy requires you to slow down. Which, in today’s hustle culture and instant gratification society, is difficult for people to wrap their heads around.

The reason this is so important is because many entrepreneurs spend years (and even decades) beating themselves up for not making XYZ level of income (or hitting a $__ million exit by some arbitrary age).

Unfortunately, spending year after year worried about money can dramatically decrease your quality of life.

Which is why this concept is so powerful:

Once you “solve your problem,” meaning your income funds both your desired lifestyle and retirement goals, you can relax.

You can free yourself from the shackles of blindly chasing more.

You can escape the consumerism rat race of needing to keep up with the Joneses.

In conclusion, solvable problems are how you define when enough is enough.

They’re how you achieve freedom.

And not only financial freedom, but the mental freedom that comes along with unshackling yourself from the belief you need to spend 50 to 100 hours per week behind your computer.

So, if you’ve set New Year’s resolutions in the past, but don’t have the best track record of hitting your goals, maybe it’s time you define your Solvable Problem.

Then, once you define it, make it your mission to hit that monthly number.

More important, after you hit your target, give yourself permission to relax.

Question how you’d like to spend your time now that you have rock-solid certainty you’re on the path to financial freedom.

On the surface, living this way may sound ‘easy.’

Sadly, doing so flies in the face of everything we’ve been taught about having a career, the 40-hour workweek, and productivity in general.

And because of that, adopting this philosophy requires a complete overhaul of your perspective on work, retirement and long-term goal achievement.

But if you can flip your perspective, you’ll unlock the one thing 99% of us got into business for in the first place: True, soul-level Freedom.

💡 Takeaway: Most ambitious, entrepreneur types spend their entire lives unfufilled because they’re constantly chasing more. The Solvable Problem, however, allows you to relax into the confidence of knowing you’re on track to hit your goals in an acceptable timeframe.

I'll leave you with this quote…

Post Of The Day

Tweet Of The Day