Most of us dream of achieving financial freedom — that moment when we don’t have to worry about how we’re going to pay the bills or make rent, when all our basic needs are provided for. When there’s enough left to set aside for whatever we desire, whether that’s paying off debt, recreation, or a long vacation.
But what is financial freedom, really?
Simply put, it’s when you have more passive income coming in than your expenses.
Most people believe that working your way up the corporate ladder to a “good” job is the way to get there. But I’m here to tell you that there’s a better way.
And that way is by building yourself a stream or multiple streams of passive income that can pay for your expenses, and more… without the need for constant, backbreaking work.
Now of course having savings will also aid your path to financial freedom. However, when you pair it with passive income consider yourself in great shape.
What Is Passive Income?
Passive income is exactly what it sounds like: Money that comes in whether you’re actively working or not.
It may sound strange at first, but it really does make a lot of sense.
There are two main ways to create passive income.
The first major type of passive income is an idea most of us are familiar with already: investments. These investments generally create monthly income with a fixed or standard rate of return attached to them. This would include vehicles like bank and government bonds, corporate bonds, t-bills, rental property income, etc.
The second type of passive income is the one that’s harder for most people to wrap their heads around: passive business income. Many people assume that running a business means you need to be constantly working in order to achieve any real success. But that’s actually not true at all.
Instead, what you need to do is create a business that has the potential to be systematized so that it can work without you. That way, rain or shine, money will continue to flow in whether you’re putting in the hours or not.
Let me give you an example: my landscaper in Hawaii. This guy makes about $20,000 a month and only has to manage the accounts. He doesn’t do the actual gardening work himself. He has several guys mowing and blowing and weed whacking, and it all works without him being on site. In short, this business is an ongoing, systemized, money machine.
Good or good?
Of course, passive income is only part of the puzzle. If you have passive income pouring in, but it doesn’t add up above and beyond your expenses, you’ll still never reach a state of financial freedom.
Here’s what you’ll need to know next…
What Are Your REAL Expenses?
The other part is understanding your expenses to what’s actually essential in your life.
When we are talking about financial freedom there are two ways to talk about it.
The first is being free to just be free. This is when your passive income pays for just your basic needs but not much extra like all the extra luxurious in life.
Then the next level of financial freedom where you are able to get whatever you want, when you want it and still not “have” to work.
The ultimate goal is the latter of the two, however, it’s a great first step when you have all your basic needs taken care of, yes or yes?! So it’s best to create a list of your expenses that are necessities and not as a list of “nice to haves.”
You’ll notice when you do this that it’s much easier to cut or simplify the non-essential expenses in your life and you’ll question whether you truly need them in your life. Remember, the best way to make money, is to manage your money well.
How To Find Your “Financial Freedom Number”
So that all sounds great, right? But to some of you, this may still seem pretty out there.
You might be asking, “But Harv, how do I know when I’m bringing in enough money to really be financially free?”
And to that I say this — It comes down to simple math.
The simplest way to do this is…
1. Get an excel sheet or something similar.
2. List out your expenses (the necessities).
For example: Rent, mortgage, utilities, food, debt/loads, insurance, pharmacy and care, doctors, kids care, phone, car and car gas (if it’s necessary), pet care, etc
3. Add up all your expenses.
4. Volia! You have your financial freedom number.
You’ll need to earn at more than this number in passive income to be financially free and have all your basic needs meet.
Here’s An Example…
Here’s a hypothetical example for you… Below is a list of expenses that totals to $5,796.10 per month.
With the financial freedom formula being: Financial Freedom = Passive Income > Expenses…
You’ll need to earn more than $5,796.10 in Passive Income to be Financially Free. Good or good?
Make sure you do that because my guess is that this number is probably as much as you think.
Now that you understand how much you need in passive income to reach financial freedom, the next step is to figure out how to make it happen!
It’s been my experience — and the experience of financial experts I’ve trained — that if you have 8 key elements working for you, you’ll not only be financially free but you’ll financially free quickly.
So to teach you these 8 critical elements I’ve put together a FREE web class called, The Fastrack To Freedom: 8 Critical Elements To Becoming Financially Free Quickly.
For Your Freedom,