I’ve realised that I’ve been talking about achieving “financial freedom” but I haven’t really defined what that means to me. I’ve taken Kim Kiyosaki’s definition from Rich Woman which basically defines financial freedom as:

Having more money (which you don’t have to work for) coming in every month than monthly expenses going out.

The money coming in may be generated from:

• businesses that you own but do not require your active participation
• businesses that you have invested in
• income generated from real estate investments
• income generated from paper assets (like dividends from stocks)

If you have to physically work for the money, then it’s not counted.

Your monthly expenses should be everything that you have to spend on in order to maintain your existing lifestyle. If you have to cut down on expenses to make ends meet then that is not achieving financial freedom.

So an example of being “financially free” would be:

If my monthly expenses to maintain my current lifestyle is $2500/mth and my income generated from my investments is $3000/mth, then I am financially free.