You get what you focus onWhether it is a new job, building a new business, acquiring money, wealth & a rich lifestyle
Canfield says that you must decide to be wealthy - to be wealthy is a decision that each person must make! The thought occurred to me:
- do you have to know what wealthy means?
- & do you have to know how to acquire wealth?
NO you dont! You dont have to worry about HOW you are going to become wealthy According to Canfield (
See the Secret)
- first you need to
DECIDE what you want
- then you need to
BELIEVE that it is possible
- you need to recognise that you
DESERVE it
- then you FOCUS on it by thinking about it and
VISUALISING that you already have it
- Finally, you need to pay the price to get it - disciplined
EFFORT and
PERSEVERANCE over time
NEXT:
decide what wealthy means to you
Jamie MacIntyre helped me with this - he wrote an interesting book called:
What i didnt learn at school
but wish i had
Chapter 10 in particular is refers to establishing your financial goals. He begins by asking the question:-
What is the true measure of wealth? He provides this as the answer:-
It is how many days from now you can continue to live
without the need to work!
Then he provides a way for you to figure out how to make your
Personal Financial Dreams a reality!!
He discusses FIVE levels of FINANCIAL WELL_BEING to help clarify what financial dreams are important for you to achieve.
- - - the 5 LEVELS of a FINANCIAL PLAN - - -
- Financial Protection
- Financial Security
- Financial Independence
- Financial Freedom
- Absolute Financial Freedom
After you define your
Financial Goals:- short-term (3-36 months), Intermediate (3-10 years) & long-term (10+ years) then you can figure out what level of
Financial Well-being you need to support your
Financial GoalsFirst Level: Financial ProtectionThis is your liquid assets - this is the amount of money you need to cover your current monthly overheads: - for example
- Mortgage/rent
- Power
- Transportation costs
- Food
- Insurance and so on
Notice that it does not cover you credit card of debt repayments -- it is simply the amount of money you need to cover the basics & to survive financially for each month - then you
DECIDE how many months of protection you want.
My financial protection planMy
monthly overheads:- - - $3000 (approx)
I decided that i wanted
6 months protection == $18,000
So, i need to put aside $18,000 to complete the first level in my Financial Plan
Second Level: Financial SecurityThis is the amount of money you will need to be
independent of the basic necessities such as food, clothes & transport i.e Your Financial Protection figure
Thus, $Financial Security = $Financial Protection
So, if my $Financial Protection = $3000 per month
Then, for 12 months of security i need $36,000
So the
Annual income i need from investments to achieve
Financial Security FOR LIFE = $36,000
Third Level: Financial IndependenceThis is the amount of money you need to be
Independent from work!
Financial independence is achieved when your investments produce an income equal to your WORK INCOME
My Monthly Income = $5000
Over 12 months = $ 60,000
So, my goal is to produce
$60,000 per annum from investments to achieve
Financial IndependenceFourth Level: Financial FreedomThis level of income is about LIFESTYLE - this is the amount of money you require to live in the lifestyle you desire:
So, besides your currently monthly income, you will need enough extra income to purchase the lifestyle, the 'other things' you would like to have but cannot currently afford!!
Perhaps:
- the hummer
- the beach side property
- the 35ft boat
- the regular holidays in exotic locations
and the list goes on!!
Here is how i worked it out:
- Calculate the extra monthly income you need to buy the 'other things'
- Add that to the amount you need for Financial Independence
- This figure represents the monthly income you need for Financial Freedom
SO - for me
- Extra income i would like =$10,000
- Monthly income required to achieve Financial Independence = $5000 [see above]
- Monthly income required for Financial Freedom = $15,000
Over 12 months = 6 x $15,000 =
$180, 000 to achieve FINANCIAL FREEDOM
Fifth Level: Absolute Financial FreedomThis occurs when your investments provide you with the means to do whatever you want, whenever you want, wherever you want, and with whom ever you want!!
To work this out:
- Create a list of all the things you would acquire if you were absolutely financial free & figure out how much this would cost you per month
- Add this to the monthly amount you need for Financial Independence
- Multiply the figure (monthly) in item 2 by 12 (annual)
For me:
- Total additional income required = $25,000
- Monthly Financial Independence figure = $5000
- Total Monthly amount required for ABSOLUTE FINANCIAL FREEDOM = $30,000
12 months x $30,000 =
$360,000 per annum to achieve
ABSOLUTE FINANCIAL FREEDOM!!!Back to Canfield discusses the steps towards weatlh as:
Step one: determine your net worth
Step Two: Determine what you need to retire
Step Three: Become aware of what you are spending
Step Four: Become financially Literate
Canfield also refers the WEALTH QUADRANT
This model was developed by Lee Brower who refers to weatlh as assets categorised into four areas:
- Human assets
- Intellectual assets
- Financial Assets
- Civic assets
Your
human assets are those assets that enrich you:- it comprises of family, character, values, health, happiness, well-being, ethics & morals, habits, & relationships
Intellectual assets includes all of your accumulated knowledge & experience:- wisdom, formal education, ideas, life experiences, reputation, skills & talents, alliances
Your
financial assets is the accumulation of cash, stocks & bonds, retirement plans, businesses, real estate and so on
Finally, your civic assets is your contribution to taxes, charities & scholarships plus private foundations and perhaps research & development