Tony Robbins wrote in his book, ‘Money, Master The Game: 7 Simple Steps to Financial Freedom’,
there are 5 different levels of financial dreams that will set you free.
- Financial security
- Financial vitality
- Financial independence
- Financial freedom
- Absolute financial freedom
Here is how you calculate how much you need for financial security, as an example, according to Tony.
- Rent or mortgage payment: RM1500
- Food, household: RM600
- Utilities – phone, electric, water, internet: RM360
- Transportation: RM400
- Insurance: RM200
Total basic monthly expenses: RM3,060
Total basic annual expenses: RM3060 x 12 = RM36,720
If you can build your money machine, that is a portfolio that generates 5% return every year, you will need to accumulate RM734,400 to achieve your first financial dream, financial security. You still have to work to generate income, but you can rest assured that your basic needs are taken care of. According to Tony, this basic expense represents 65% of expense for most Americans.
From then, Tony listed how to calculate the rest of the financial dreams as milestones to celebrate in your life.
Here’ s another straight forward way to calculate your financial independence and financial freedom benchmark.
Financial independence = financial security x 2 = RM734,400 x 2 = RM1,468,800
Financial freedom = financial security x 3 = RM2,203,200
It is possible for everyone to achieve Financial Freedom with proper planning and discipline. Now that you have determined your numbers, all it takes is to calculate how much you need to set aside monthly to achieve your financial dreams. Start now!