YOUR FREEDOM NUMBER.
Your freedom number is the amount of passive income you need, to fully satisfy your living expenses. Once you achieve this amount of passive income, you may no longer need a full-time job as you will be living off of your passive investments and will be able to fully enjoy the life given to you.
So, what is that number for you? If you don’t know, don’t worry. Just keep reading.
CALCULATING YOUR FREEDOM NUMBER.
Calculating your freedom number is easy. It is the average amount you spend on a monthly basis. If you are organized with your spending records, this will take as little as 10 minutes. If not, you may need to spend a couple of hours pulling together records of your various spending outlets. Either way, the time invested here is well worth it. Here are the steps to calculate:
- Figure out how much you spend on a monthly basis:
Look back at all of your spending mediums for the last 12 months—including bank statements, credit card statements, debt payments, charity donations, etc.—and try to remember any cash transactions as well.
- Put them all into a single spreadsheet:
Put together all of the transactions you have made in the last 12 months into a single Excel spreadsheet.
- Divide by 12.
Take the sum of all of the transactions you have made in the past 12 months and divide it by 12. Assuming no drastic life changes occurs, this is your average monthly spending, otherwise known as your freedom number.
Once your passive income surpasses this amount, you are free!
For example. Let’s assume Ronke Jacobs looks back at all of her transactions over the past year and determines that she spends approximately #50,000 each month. Once her passive investments generate #50,000 per month, she is “free.”
Being “free” means you can live your current lifestyle, exactly how it is, without working. Before elevating your lifestyle, you need to increase your passive income to the amount you desire. If you want to live a lavish lifestyle of spending #500,000 a month without working, then you will need to increase your passive income to that amount prior to living that life.
Keeping your full-time job will likely help you attain this goal quicker by providing a steady paycheck that can be used to invest.
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