Have you ever calculated your financial freedom number?
The point in monthly income you need to reach so all your bills are paid and then some? Most people have no idea how much they would need and are only living from paycheck to paycheck. If you want to get out of this so-called rat race, here is a calculator for you to gain clarity on how much you would need and how to take your very first steps to build your very own financial freedom.
The first thing you need to do
in order to get that number is to get clear about all your costs that you have. What I recommend my students is to take the bank account statements of the last 12 months and note down every single expense that they had. From cash withdrawals to credit card payments, insurances and so on.
If you have yearly payments for insurances for example you simply take the sum and divide it through 12 so you get the monthly average. If you pay something quarterly you divide it by 3. You then take all of these numbers and sum them up so you get your monthly expenses. I prepared some spreadsheet for you where you can fill in the numbers so you can download it and can get started right away.
Of course, you also should have money coming in.
You do exactly the same with that. Be aware that you need the after-tax numbers here for your income. That can be a salary, income from your investments, rents etc. At the end of that you will have what we call your cash flow, the difference between your income and your expenses which hopefully is already positive.
Congratulations, you now have done the first step into your financial freedom by earning more than you spend and knowing exactly where your money goes and how much is available each month for investments.
Before we jump ahead to step 2
let's first have a look at the bottom of the spreadsheet. Here you can write down all the Assets and Liabilities that you have to get clarity about your net worth. If you evaluate businesses or real estate I'd suggest to be honest to yourself. That little Condo is unlikely to have tripled over the last year and if your business is still built around you and therefore not sellable it might provide you with an income but is hardly worth millions to others.
Now to step 2:
We know what we are able to invest every month (the surplus we calculated). Now all we need to do is to find a great investment vehicle (well it's no secret that I favor the stock-market over the other possibilities). Once you found YOUR vehicle you then can get started to invest and watch the magic of compounding unfold. Now with more and more money coming in every month you eventually can invest more and more until ... well you already guessed it: All your bills are paid by your investments.
Isn't that a great goal? And it is already closer than you thought isn't it? Now it's up to you to get started. Take the first step today and get clarity about your numbers so you can move forward into the live and lifestyle you really deserve.
Get your Financial freedom calculator for FREE here:
