Do you know what does it really mean to be financially free and abundant? Contrary to what most people think, wealth is not how much income you can produce. A person with a $100,000 income may not be less wealthy than someone with a $10,000 income. Let me share with you this very comprehensive definition Mr Adam Khoo uses in his Secrets of Self Made Millionaire.
The Concept of Wealth
Wealth is
... Not how much money you earn
... Not how many luxuries you appear to have
... Not just about your net worth
Wealth is the number of months or years you can sustain your desired lifestyle if you stop working now.
As a result, your Wealth is determined by...
1) Your Monthly Expenses, Lifestyle
2) Your Liquid Assets
3) Your Monthly Passive Income
Wealth is Measured In Terms of How Much Time You Have To Do What You Really Want...
Example 1
Steve earns $10,000 a month as a senior account director. His monthly expenses total $8,000. He has less than $16,000 in savings. He has no Positive Cash Flow Assets. If Steve stops working or loses his job, his current savings would last him for two months. His wealth is two months.
Example 2
Anna earns $3500 per month as a marketing manager. Her monthly expenses are $2500 per month. Over the last 20 years, she has accumulated over $380,000 worth of Positive Cash Flow Assets, stocks, bonds, fixed deposits. In total they generate an average return of 8% per annum,i.e. $30,400. If she continues a lifestyle of $2500 a month, she could stop work now and sustain her lifestyle indefinitely. Even without her salary, the cash flow from her investments $30,400 more than cover her monthly expenses of $2500. Her wealth is infinite. She has reached Financial Freedom.
Step By Step Towards Freedom then Abundance
In The Secrets of Self Made Millionaire, Mr Adam Khoo then taught us how to identify the 4 levels of wealth. In that part of his program, he gave specific step-by-step instructions on how to derive at where you are currently and subsequently how to design a time line and schedule to achieve each level of wealth to ultimately reach Financial Freedom followed by Abundance. He later introduce stragteies to achieving the schedules by teaching you how to massively increase your income in CD 4 and 5. Here we are going to share with you a compressed definition that will be sufficient for you to work out where you are and where you want to go. We will go through the "how to get there" in the subsequent chapters.
Step 1: Financial Stability
Source From Secrets of Self Made Millionaire
This is the most basic level of wealth that you must attain.
You have achieved Financial Stability when:
1. You have accumulated enough liquid assets, cash & short term FD, to cover your expenses for a minimum of 3 months.
2. In addition, you have purchased hospitalization & surgical H&S and life insurance with critical illness & permanent & total disability to protect you and your family's lifestyle should you be permanently disabled, unable to work or if you pass away suddenly.
When you have attained financial stability, you will have the peace of mind that should any unexpected challenges befall you, e.g. retrenchment, business failure, pay cut, death, disability, you and your family's lifestyle will not be compromised. You or your family will have the adequate time to look for new sources of income to put you back on track.
You will also have the financial stability to quit your job and invest your time to build a business should you need to.
Financial Security
You have achieved Financial Security when you have through the investment of time, money and ideas, accumulated a CRITICAL AMOUNT of Positive Cash Flow Assets that generate enough passive income to cover your MOST BASIC Expenses.
Your Basic Expenses Should Include Not More than the following:
1. House mortgage and related expenses such as utilities and conservancy fees.
2. Public Transportation expense.
3. Food for you and your family, household groceries
4. All Taxes & Interest payments for debts owed.
5. All Insurance premiums including life, disability and house.
When you reach the level of Financial Security, you will be able to:
1. Stop working and still be able to maintain a simple and basic lifestyle.
2. Channel almost 100% of your active income to increasing your Positive Cash
Flow Assets, all your basic expenses are taken care of by your existing passive income or purchasing luxuries.
Financial Freedom
You have achieved Financial Freedom when you have through the investment of time, money and ideas, accumulated a CRITICAL AMOUNT of Positive Cash Flow Assets that generate enough passive income to sustain your CURRENT LIFESTYLE.
When you reach the level of Financial Freedom, you will be able to:
1. Stop work and maintain your current standard of living indefinitely.
2. Channel 100% of your active income, should you still work) to charity, purchasing luxuries and to increase your Positive Cash Flow Assets.
3. Be free of financial pressure and worries.
Financial Abundance
You have achieved Financial Abundance when you have through the investment of time, money and ideas, accumulated a CRITICAL AMOUNT of Positive Cash Flow
Assets that generate enough passive income to sustain your DESIRED LIFESTYLE.
When you reach the level of Financial Abundance, you will be able to:
1. Stop working and live the lifestyle which you truly desire.
2. Channel 100% of your income should you still be working to charity, purchasing even more luxuries and dream assets.
3. Be totally free of financial pressure.
To know more simply visit us at our official website now.
As an inspirational mentor, Daniel had been helping people around the world to achieve their goals and dream. To achieve what they really want and financial freedom
For more information, please copy and paste this link [http://www.roadtoff.com]
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