Calculate Your Road To Financial Freedom. It’s Not Impossible!

Financial Freedom is something that many of us see as impossible. A lot of us think that we require millions of dollars a year to become “Financially Free”, but this is not the case.

Being “Financially Free” or “Financial Independence” means that you have enough income to pay for living expenses for the rest of your life without having to be employed or being dependant on others. This income is commonly referred to as passive income.

In Tony Robbins’ book, MONEY Master the Game: 7 Simple Steps to Financial Freedom you find 5 financial dreams.

  1. Financial Security– Monthly expenses including rent/mortgage, food, utilities
  2. Financial Vitality– Pay for half of your current life-style
  3. Financial Independence– Pay for your current life-style
  4. Financial Freedom– Pay for your current life-style + up to 3 luxury items
  5. Absolute Financial Freedom– Pay for all your big wants in life

It is suggested to start with the first dream which is Financial Security. This will ensure that you don’t overwhelm yourself while learning the tricks to become financially free. You can work on your dreams while raising the standard of living and improving your quality of life.

  1. Financial Security

Wouldn’t it be fantastic if all your basic expenses were covered? Your passive income will cover your home mortgage for as long as you live, utility bills, food for the family, basic transportation and basic insurance costs.

How to calculate the passive income required of your Financial Security Dream:

Fill in the below calculations to figure out your monthly cost of basic expenses based on Tony Robbins’ book.

    1. Mortgage/ Rent   $ ______  Month
    2. Food (Family)     $ ______  Month
    3. Utilities                $ ______  Month
    4. Transportation   $ ______  Month
    5. Insurance            $ ______  Month

Total Basic monthly expenses  $ ______ Month
Total Yearly Expenses  $ ______ Month x 12 = $_________

  1. Financial Vitality

Financial Vitality covers half of your current lifestyle including the basic expenses.

“Pop the champagne, because when you’ve reached Financial Independence, you no longer have to work to have the same lifestyle you have today!” 

How to calculate the passive income required of your Financial Vitality Dream:

Fill in the below calculations to figure out your cost Financial Vitality based on Tony Robbins’ book.

    1. ½ of current monthly Clothing Cost   $ ______  Month
    2. ½ of current monthly dining and entertainment cost   $ ______  Month
    3. ½ of current little luxury cost (gym, massages, golf, manicures) $ ______ Month
    4. Total Basic Monthly Expenses (see Financial Security) $ ______  Month

Total monthly expenses Vitality  $ ______ Month
Total Yearly Expenses  $ ______ Month x 12 = $_________

  1. Financial Independence

Financial Vitality covers your full current lifestyle including the basic expenses.

How to calculate the passive income required of your Financial Independence:

Fill in the below calculations to figure out your cost Financial Independence based on Tony Robbins’ book.

    1. Current monthly clothing costs  $ ______  Month
    2. Current monthly dining and entertainment costs  $ ______  Month
    3. Current little luxury costs (gym, massages, golf, manicures) $ ______  Month
    4. Total Basic Monthly Expenses (see Financial Security)   $ ______  Month

Total monthly expenses Independence  $ ______ Month
Total Yearly Expenses  $ ______ Month x 12 =  $_________

  1. Financial Freedom

Financial Freedom covers your current lifestyle and a few luxury items that you have always wanted.

How to calculate the passive income required of your Financial Freedom:

Fill in the below calculations to figure out your cost Financial Freedom based on Tony Robbins’ book.

    1. Luxury Item #1      $ ______  Month
    2. Luxury Item #2      $ ______  Month
    3. Luxury Item #3      $ ______  Month
    4. Donation                 $ ______  Month
    5. Total Monthly Expenses (see Financial Independence)  $ ______  Month

Total monthly expenses Freedom  $ ______ Month
Total Yearly Expenses     $ ______ Month x 12 =  $_________

  1. Absolute Financial Freedom

Can you imagine that you can reach absolute financial freedom?

How to calculate the passive income required of Absolute Financial Freedom:

Fill in the below calculations to figure out your cost Financial Freedom based on Tony Robbins’ book.

    1. My Big Want #1   $ ______  Month
    2. My Big Want #2   $ ______  Month
    3. My Big Want #3   $ ______  Month
    4. Total Monthly Expenses (see Financial Freedom) $ ______  Month

Total monthly expenses Absolute Freedom   $ ______ Month
Total Yearly Expenses   $ ______ Month x 12 =  $_________

But how do you get this “Passive Income”?

According to Tony Robbins’ book MONEY Master the Game: 7 Simple Steps to Financial Freedom you’ll need to multiply your annual expenses by 20 to figure out how much money you need in assets. This assumes a conservative approach that assumes a 5% Rate of Return or Return on Investment (ROI).

In other words, if your basic expenses for the year cost $35.000, then the critical mass in your “Money Machine” would need to be $700,000. 5% ROI will generate $35,000 a year on income to cover your basic expenses.

If you’d like to find out more I highly suggest reading his book or any of the other suggested books.