REAL ESTATE B-SCHOOL HIGHLIGHT: Six Steps to Financial Freedom

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Transcript:

So there’s a document, What Does Financial Freedom Mean to You? And I want you to spend some time with it. It’s the last document in Blueprint Tools in your Google Drive.  And it’s really easy.

It takes you through 6 levels of financial freedom. And it starts at the basic levels here. One and two are financial protection and financial security. So it talks about the necessities of living – mortgage, transportation, utilities, food, insurance. For us, it’s about $4500 / month.

Financial protection is having 6 months of your basic living expenses put away. So for us, that’s $26,700.

That’s the first level of financial freedom that you should meet, having 6 months’ worth of living expenses put away. And then if you were to earn 5% interest on a certain number, a critical mass number to be able to throw off the expenses necessary to live on a basic level, the critical mass for financial security, which is the second financial freedom level, would be about $1M.

So if you had $1M invested at 5%, rate of return, you’d be able to throw off $53K per year and live at a basic level.

From there you go to financial vitality. So you take the $4450 from here. You add in basic entertainment, college education, some clothing and luxury items. So you’re $4450 goes to $6250 / month, or $75K per year. If you gross that up at the 5% annual return, you need a critical mass, or liquid amount of cash at $1.5M.

From there you go to financial independence. You take the $6250 - to make numbers simple, I just added $3750. So $10K / month is $120K after tax per year. So your critical mass will be $2.4M. From there I added $10K on top to achieve financial freedom. So at $20K per month we could live a pretty kick-ass lifestyle. That would mean $4.8M in the bank.

And then we take the $20K, and we add $20K for absolute financial freedom. If I had an amount of money in the bank that could throw off $40K a month that I could spend without taking away from the principle, $9.6M would be that number.

At 5%, it would throw off $480K per year. So this is just a helpful, very simple tool, but a helpful tool for you to realize what you’re shooting for.

So if you have no savings right now, the first goal is to get to financial protection. So get 6 months put away. And then beyond there, you’re building a critical mass. An amount of money through your automatic wealth-building machine to build out these different levels of financial freedom.
I’m not trying to get preachy on you if you’re not in a good financial position. But your ability to speak the truth in this area of your life is all that matters.

So again, lots to take action on there. But monthly financials huge. Marketing ROI is huge. 90-day cash flow forecast is huge. Financial freedom and considering those 6 levels is huge. Got to take action on these items.