DO YOU REALLY NEED $1M FOR FINANCIAL FREEDOM?

One million dollars to escape the rat race! Really? We have no idea where this magical figure arose from that most of us perceive to be the magical number to retire or achieve financial freedom. Our guess is it was a repeated line in the sand by financial commentators to try make their argument.

Now this figure might be correct but correct for only a small minority of us. Why? Well, the short answer is there are many variables that need to be factored into coming up with a financial freedom number for each of us (we’re all unique). And as soon as you have a figure, many variables that are usually outside our control change, and then this figure needs to ideally change. But don’t stress as we are firm believers in close enough is almost always good enough when working out this number - anything more will cause analysis paralysis! 

There are two learnings we want you to take away from this week’s Money in Minutes:

1. Getting an understanding as to what you need financially to one day retire from working, or in other words, to be financially free, is incredibly valuable and important!
2. Via our Wages to Wealth program, we can help you to quickly and easily get the guidance and pathway to clarity over your future financial freedom needs – as a start, Module 2 has many answers and might require minutes, not hours of your time

With the couple of minutes we have left, let’s implant some simple considerations you need to think about, as each goes a long way to helping you determine your future wealth needs:

• How many more years of earning an income do you anticipate having?
• How are you progressing with your wealth building – what’s your net worth?
• Are you single or a couple?
• How long do you envisage being retired for?
• How much money do you guess you’ll need to fund your lifestyle each year in retirement?
• Are you wanting to rely on the Government Age Pension?

If you’re young(ish), please don’t bank on this being a safety net!

• Do you wish to leave a financial legacy for any of your loved ones?
• Don’t forget the dreaded mortgage – aka factor it in if it won’t be paid off in time

As you can start to see, there is quite a bit to consider, and this list isn’t exhaustive. BUT it’s much easier than you think to get a decent understanding of how much financial wealth you’ll need, and how you are tracking to achieve such.

Many of you will likely need over the hypothetical $1M, and yes many of you will likely need much less. Getting some clarity will provide you with confidence moving forward so you know what you’re doing with your money.

Can you spend freely?

Could you have retired yesterday?

Or:

Do you need to be frugal?

Perhaps you need to work longer?

Wouldn’t it be nice to know the answers to these questions, which we think are quite important? Well, with a little elbow grease, you can! Just follow our lead and yell out if you get stuck or want a helping hand. Module 2 of the Wages to Wealth program is a great place to start. And if you find that your finances are not where they need to be, don’t worry, as there are almost always strategies available to close the wealth GAP.

Remember: money is the fuel we use to live our best lives – it pays to be good at it!

Cheers,

Dan and Dave