I always looked at Financial Independence something I could never attain. That it was only for wealthy rich people! That was until I came across Mr Money Mustash and more people like him I began to realize I could retire early as well!
There are a few ways to calculate your Freedom Number! But today I just wanted to share a simple way I do this.
1. Get all your Bank Accounts, Payslips, Credit Card Statements all open up ready to go!
2. Calculate entire Monthly Expenses: This is a crucial and most important and also the longest part of this exercise. From this you will determine how much you spend. Look over the last 6 months and see how your spending was in each category! Download this free worksheet to help you in this process. This for me is my FINANCIAL FREEDOM NUMBER!!!
3. Calculate how much passive income you are making right now. Look at everything from rentals, to stocks, businesses that are making money while you sleep and anything along those lines.
4. Subtract your expenses from your passive income and the number you get is how much you need to get to financial freedom. Remember the more passive income you gain the less this number is!!!
Let’s do a simple example
My family expenses all add up to 5000 a month. 5000 is my freedom number! Currently my husband is earning $80,000 in his current job. We own two rental property making $200 each a month and also a side business that generates $500 a month without us needed to do anything with it. All up that is only $900 in passive income. In order to reach financial freedom I am still needing to generate $4100 in passive income.
Yes you can gain financial freedom. There are so many paths to doing this. But take the first step and figure out what goal you need to set for your family!
Download the worksheet and don’t delay this journey to freedom!!!