All you have to do is know where you’re going. The answers will come to you of their own accord.
The topic of the book was the incredible opportunity to become wealthy as distributor for the Amway Corporation. The book tells the story of individuals who rose from poverty to wealth working as Amway distributors. I read about a typical day in the life of financially independent couples; they chose when and where to work, spent more time together, travelled more, had more time to spend with their children and owed nothing .
The picture painted by the book about what it looked like to be financially free blew me away. This one book has fuelled my quest for financial freedom for the past two decades. I am making progress in the direction of my dreams.
In order to become wealthy, you need to increase your net worth. Before you can increase your net worth, you need to know how much you intend to accumulate to reach your magic number. Moreover, becoming wealthy depends on; how much money you invest, your return on investment (ROI) and how long you invest your money.
Traditional financial planners will tell you that you should invest for the long term in stocks. The truth is investing in stocks and mutual funds – will not make you wealthy unless you started investing money early. Now, even if you had time on your hands you cannot predict how your stocks will perform. Today we have stories of baby boomers working late into their 60’s and 70’s because they lost huge sums of money in their retirement Accounts – because the stock market crashed just when they were about to retire.
I think the realistic alternative to traditional financial planning advice is to take control of your own cash flow and acquire assets that will help you become wealthy so you can gain financial freedom.
How to find your magic number
In order to start your journey to financial freedom you need to face reality. You need to take into account three kinds of income figures: The first is how much you are earning now. Second, you need to know how much money you will be earning when you become financially free…that is your magic number. In addition, you need to know how much money you need to be earning when you retire.
I believe you already know how much you earn. I want you to go a step further; I want you to find out your monthly cash flow.
What is your monthly cash flow? Your cash flow is the net amount you have when you deduct your expenses and liabilities from your wages.
Income minus (expenses plus liability) = net cash flow
Income is money you earn directly or from investments or your side business.
Expenses are your obligations or expenses, like food, shelter, clothing, property taxes, bills insurance and other items you have to pay for monthly
Liabilities are expenses you have to pay for due to financial obligations like loan payments, and credit card payments.
Once you know your monthly cash flow, you should come up with a figure for how much income; you need to earn living your dream lifestyle.
Let’s say for example you presently earn $50,000 per annum and you want to earn $150,000 as your ideal income.
Your income Gap is $150,000 minus $50,000, which equals $100000. $100000 is your income gap – that is your magic number.
Your goal should be to find how you could increase your income to earn your magic number.
You see, when you know your magic number, you are on the road to financial freedom because you can work towards earning your magic number.