I was away the last 3 days attending a workshop called ‘Millionaire Mind Intensive’.   We were introduced to formula for generating wealth.  In the next few postings I would like to share my take away for me for these 3 days .

Firstly, on Financial Freedom, achieving Financial Freedom is not difficult as long we develop the habit of proper Money Management.  The most critical factors in the financial freedom equation are:

Financial Freedom = Working Income + Saving + Investment + Passive Income + Simplify

We don’t need to be rich to be free – we have to be free first then becoming rich will be easy.  We should Simplify our life so that our passive income can pay for our living so that we don’t have to struggle!

We have to pay attention to each of the 5 factors and make sure that they are at the same level so that less energy is needed to get to the destination we wanted – Financial Freedom!

To achieve this goal we have to have a proper Money Management Method.  The most important part of managing money is to divide our income into different accounts, each for a specific purpose:

1. Financial Freedom Account (FFA) – 10%

This is the account where we MUST put aside.  The capital here can be used for investment.  The interest generated by this account can be used but NEVER the capital in this account.    The idea of this account is to create a Golden Goose for us so that when we stop working we get to spend the INTEREST and not the Goose.

2. Long Term Savings for Spending (LTSS) – 10%

This is the account for spending.  We can use the money in this account for major expenditure like a new car, paying off a mortgage, children education, vacation, etc.

There can be more than 1 LTSS accounts if there is a need to have a clearer segregation of the specific purpose.

3. Education (EDU) – 10%

This is the account for our personal improvement.  This is necessary and important so that we can expand our Comfort Zone to increase our Financial Zone.

 If you are NOT growing, you are Dying!

It is very important that we keep growing!

PS:- For parents, the children’s education fund should be placed in the LTSS account.

4. Necessities (NEC) – 55%

This is the necessities account to pay for our basic needs like bills, mortgage, rent, food, gym membership, haircut, clothing, etc.

The percentage recommended here can be reduced if the basic needs are simplified, or if we do not need to live on 55%.  By simplifying our needs, the excess amount can be put into the other accounts so that we can grow the other account faster.  It will be excellent if we can put the excess into the FFA so that we are able to achieve our objective of financial freedom faster.

 Always think LONG term!

5. Play (PLAY) – 10%

This is the account where we can use to pamper ourselves – to buy extra piece of nice clothing, fine dining, mini getaway, etc.

It is recommended that we fully utilized the money here every month to pamper ourselves.  The longest period we can keep is every quarterly if the items that we want to buy requires longer saving period.

6. Give (GIVE) – 5%

This is the account where we can use to pay for helping others – like a donation to charity.
The money for the different accounts can be kept in separate jars or separate banking and investment accounts.  This way we will not overuse any of the amount that the different accounts is setup for.

One important to note is that the actual dollar value put into each account is not important, it is the habit of putting money into each of the different accounts that is important.  Once we have created the right habit the rest is easy.

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Dare to Dream! Continual Self Development is the Key to Success!
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