Post on 16-Apr-2017
Panzer’s Road Map to Financial Freedom
Your 5 Step Guide to Being Financially Free
April 2009
2 Road Map to Financial FreedomPanzer © 2009
What is Financial Freedom?
IS NOT Striking TOTO, 4D or
any other windfall Having money but no
time to spend it Having money but no
health to enjoy it About get rich or die
trying!
IS Being able to determine
how to control your time About living a balanced
life About having passive
income exceeding living expenses
About having health and family to enjoy your passive income
Is a journey
3 Road Map to Financial FreedomPanzer © 2009
What is Financial Freedom?
ConceptPassive income exceeds living expenses
Living expenses = rental, home mortgage payments, utilities, bus/MRT fares, petrol, eating out, groceries, taxes, movie tickets, clothes and accessories, mobile phone bills etc.
Income – Passive vs Earned Earned = Trade time for money, e.g. job, running a
full-time business Passive = Do not trade time for money, e.g. interest
from savings/fixed deposits, dividends from shares
4 Road Map to Financial FreedomPanzer © 2009
What is Financial Freedom?
Earned income is limited by: Time – you only have 24 hours a day Requires you to be there all the time But is the important starting point for financial
freedomGrow your passive income
Is not limited by time $50,000 (wisely) invested at 5%, grows to
$100,000 in 14+ years’ time without you trading your time
5 Road Map to Financial FreedomPanzer © 2009
What is Financial Freedom?
Income Expenses
Savings
Passive income +Savings
+ExpensesConsumption
& lifestyle wantstoday
Savings for future needs tomorrow
Income, Expenses and Savings Flow
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How to achieve Financial Freedom?
Wishful approach Dream of winning lottery Dream of big inheritance
Realistic approach Live within your means Save and invest Grow your means Protect your means
There is 1 chance in 8,145,060 of getting Group 1 prize (i.e.
$600,000 to $1,000,000) in TOTO
Vs
1 in 280,000 of being struck by lightning
Which is more likely?
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How to achieve Financial Freedom?
Hard work Build up investible savings from employment
or business incomeSmart work
Building alternate income streamsPerseverance
Never give up Continuous learning and personal growth
8 Road Map to Financial FreedomPanzer © 2009
How to achieve Financial Freedom?
Panzer’s Road-map
#1 Where are you now?
#2 Whereare you heading?
#3 How do you get there?
#4 How do you become better!
#5 Why did youstart thisjourney?
Road Map to Financial Freedom
© Panzer 2009
9 Road Map to Financial FreedomPanzer © 2009
Step #1 Where are you now?
First, find out where you are in your journey
Compute your net worth = total assets less total liabilities
Assets = home, car, savings, fixed deposits, stocks & shares, insurance policies
10 Road Map to Financial FreedomPanzer © 2009
Step #1 Where are you now?
Personal net-worth = total assets minus total liabilities
Snapshot of where you are in terms of financial freedom
Goal is to move towards positive net-worth
You are financially free where your net-worth earns passive income for you freeing you to pursue your interests
Microsoft Excel Worksheet
11 Road Map to Financial FreedomPanzer © 2009
Step #2 Where are you heading?
#1 Where are you now?
#2 Whereare you heading?
#3 How do you get there?
#4 How do you become better!
#5 Why did youstart thisjourney?
Road Map to Financial Freedom
© Panzer 2009
12 Road Map to Financial FreedomPanzer © 2009
Step #2 Where are you heading?
Where do you want to go? Your destination Set goal(s) – to be
financially free with investible net worth of $500,000 in 20 years’ time generating 10% returns or $50,000 passive income per year
13 Road Map to Financial FreedomPanzer © 2009
Step #2 Where are you heading?
Goal should be SMART: Specific – Achieve $xx,xxx in passive income Measurable - $ or time Achievable/Realistic – realms of possibility Timely – give yourself a deadline
Goals should be aligned to your mission/vision Ask yourself, why do you want to achieve your
goal?
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Step #2 Where are you heading?
Non-financial goals: To have time to do volunteer work To spend more time with family To travel the world To ….[insert your own goal]
Money is not the only constraint Ask yourself, why do you want to achieve your
goal? Can you achieve the goals right now?
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Step #3 How do you get there?
#1 Where are you now?
#2 Whereare you heading?
#3 How do you get there?
#4 How do you become better!
#5 Why did youstart thisjourney?
Road Map to Financial Freedom
© Panzer 2009
16 Road Map to Financial FreedomPanzer © 2009
Step #3 How do you get there?
Compute your income and expenditure
Savings = income minus expenditure
Increase savings: income expenditure both
17 Road Map to Financial FreedomPanzer © 2009
Step #3 How do you get there?
Income Expenses
Savings
Passive income +Savings
+ExpensesConsumption
& lifestyle wantstoday
Savings for future needs tomorrow
Income, Expenses and Savings Flow
To be financially free,#1 increase your
income
To be financially free,#2 reduce your
expenses
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Step #3 How do you get there?
Savings Live within your means
At whatever income level, spend LESS than your income
High income <> high savings unless you control spending
Invest savings Generate passive income from interest,
dividends, royalties etc.
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Step #3 How do you get there?
Grow your means Develop alternate sources of income
Blog monetisation Sell stuff on eBay Sell eBooks, subscription based courses, wordpress
themes Provide consulting Affilitate programs – sell other people’s stuff Give tuition on weekends/evenings Take up part-time job
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Step #3 How do you get there?
Protect your means Consider insurance needs Term, whole-life, hospitalisation and surgical
insurance Distinguish between investing and
insurance Not necessarily the same
21 Road Map to Financial FreedomPanzer © 2009
Step #3 How do you get there?
Protect your means Invest in your health
Regular exercise Balance diet Manage stress
Insurance Whole life or term policies Hospitalisation and surgical
Enjoy family and friends
You are the main income
generator!
22 Road Map to Financial FreedomPanzer © 2009
Step #4 How Do You Become Better?
#1 Where are you now?
#2 Whereare you heading?
#3 How do you get there?
#4 How do you become better!
#5 Why did youstart thisjourney?
Road Map to Financial Freedom
© Panzer 2009
23 Road Map to Financial FreedomPanzer © 2009
Step #4 How Do You Become Better?
Benchmarking Grow your net-worth You improve on your own score
Materialism Realise that high income <> high net-worth Every $ you spend/save grows/reduces your
net-worth Decide if you’d rather spend/save
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Step #4 How Do You Become Better?
Sharpen the saw Learn new skills, experiences, abilities
Public speaking Information technology Project management Personal effectiveness
Healthy body, healthy mind and vice-versa Save money on medical bills Feel and look better Work more effectively
25 Road Map to Financial FreedomPanzer © 2009
Step #5 Why Did You Start This Journey?
#1 Where are you now?
#2 Whereare you heading?
#3 How do you get there?
#4 How do you become better!
#5 Why did youstart thisjourney?
Road Map to Financial Freedom
© Panzer 2009
26 Road Map to Financial FreedomPanzer © 2009
Step #5 Why Did You Start This Journey?
What does financial freedom mean to you? Materialism vs. value-for-money Consumerism vs. deferring instant gratification
Alignment to values What does being financially free allow you to
do? Balancing between today’s wants and
tomorrow’s needs
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Step #5 Why Did You Start This Journey?
What does financial freedom mean to me? Panzer’s experience:
Paid off housing loan Less stressed at work Enjoy family time more Know that I have a plan Am not dependent on CPF Life Pursuing life with renewed energy and spirit Not yet financially free… but getting there
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Step #5 Why Did You Start This Journey?
What would financial freedom mean to you? Your experience, you decide!
__________________ __________________ __________________ __________________
Be well and prosper.
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To find out more…
Visit http://fivecentstencents.com/blog Email him at panzer@fivecentstencents.com Follow Panzer on http://twitter.com/panzergrenadier
Panzer Panzer is a 30-something accountant who finally grasped the
concept of financial freedom at the ripe old age of 32. Ever since, he has been travelling on his journey towards financial freedom and documenting his adventures through his blog Five Cents Ten Cents.
His first self-published book, “Panzer’s Guide to Financial Freedom: It’s Your Money and It’s Your Life“, was launched in November 2008 sharing his thoughts on his journey towards financial freedom.