Toward Financial Freedom

Let's define what necessary to determine of your milestone toward financial freedom.

Your Name:
Monthly cost needed:	$(per month)
This include all basic living cost: food, clothes, transport, all bills, insurance, home maintenance, credit card repayment, mortgage, basic entertainment, etc. But no holiday, no saving or other major purchase included. Only everything that needed to continue 'normal life'

Annual income (combined):	$(per year)
This include all income from salary or work (including your spouse/partner if you have one)

Additional monthly cost for luxury item and lifestyle:	$(per month)
This cost is an additional to all basic living cost above. This is the monthly cost needed for all luxury item and lifestyle (put the monthly repayment for all major purchase as if it's being purchase through a loan) - excluding the basic living cost

Level 1 - Financial Protection

6 months worth of cash to meet all basic needs to survive without anybody need to go to work. So, if something bad happened, you have full 6 months to back to your feet again but continue your life as it is. Do not put this money in term deposit or the like. Put it on your daily saving account or any account that accessible from your ATM card. You might consider have stack of cash from this money. This is pure for emergency only.

Level 2 - Financial Security

12 months worth of all basic living cost. But all of this money is from your investment not from salary or work, for example: profit from share market, profit from your investment business, interest from your term deposit, your rent income from your positive cash flow property, etc. This is a passive income that provide you with financial security

Level 3 - Financial Independence

12 months worth of your earnings from your investment. So, at this stage your total income is basically doubled. In other word, income from your investment have produce the same amount of money that you can get from salary or work.

Level 4 - Financial Freedom

Not only whatever you get from Financial Independence, but also 12 months worth of all the cost needed to cover the living cost plus all lifestyle and luxury item, all from from your investment income. So, at this stage you can cover all the living cost plus lifestyle cost just from passive income derived from your investment. You still have additional earning from your salary / work. But obviously you no longer have to work again.

Level 5 - Absolute Financial Freedom

Your investment income have absolutely covered all your expendentiure beyond your imagination. Absolutely everything that you can buy with money in the world. For quantitive sake, let say at least you have 3 times the amount from Level 4

Reference: "What I Didn't Learn At School But Wish I Had" by Jamie McIntyre..