Panzers Roadmap To Financial Freedom April 2009

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Road Map to financial freedom. 5 Step process involving:
1) Where are you now?
2) Where are you heading?
3) How do you get there?
4) How do you become better!
5) Why did you start this journey?

Be well and prosper!

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  • Panzers Roadmap To Financial Freedom April 2009

    1. 1. Panzer’s Road Map to Financial Freedom Your 5 Step Guide to Being Financially Free April 2009
    2. 2. What is Financial Freedom? <ul><li>IS NOT </li></ul><ul><ul><li>Striking TOTO, 4D or any other windfall </li></ul></ul><ul><ul><li>Having money but no time to spend it </li></ul></ul><ul><ul><li>Having money but no health to enjoy it </li></ul></ul><ul><ul><li>About get rich or die trying! </li></ul></ul><ul><li>IS </li></ul><ul><ul><li>Being able to determine how to control your time </li></ul></ul><ul><ul><li>About living a balanced life </li></ul></ul><ul><ul><li>About having passive income exceeding living expenses </li></ul></ul><ul><ul><li>About having health and family to enjoy your passive income </li></ul></ul><ul><ul><li>Is a journey </li></ul></ul>
    3. 3. What is Financial Freedom? <ul><li>Concept </li></ul><ul><li>Passive income exceeds living expenses </li></ul><ul><ul><li>Living expenses = rental, home mortgage payments, utilities, bus/MRT fares, petrol, eating out, groceries, taxes, movie tickets, clothes and accessories, mobile phone bills etc. </li></ul></ul><ul><ul><li>Income – Passive vs Earned </li></ul></ul><ul><ul><ul><li>Earned = Trade time for money, e.g. job, running a full-time business </li></ul></ul></ul><ul><ul><ul><li>Passive = Do not trade time for money, e.g. interest from savings/fixed deposits, dividends from shares </li></ul></ul></ul>
    4. 4. What is Financial Freedom? <ul><li>Earned income is limited by: </li></ul><ul><ul><li>Time – you only have 24 hours a day </li></ul></ul><ul><ul><li>Requires you to be there all the time </li></ul></ul><ul><ul><li>But is the important starting point for financial freedom </li></ul></ul><ul><li>Grow your passive income </li></ul><ul><ul><li>Is not limited by time </li></ul></ul><ul><ul><li>$50,000 (wisely) invested at 5%, grows to $100,000 in 14+ years’ time without you trading your time </li></ul></ul>
    5. 5. What is Financial Freedom? Income Expenses Savings Passive income +Savings +Expenses Consumption & lifestyle wants today Savings for future needs tomorrow Income, Expenses and Savings Flow
    6. 6. How to achieve Financial Freedom? <ul><li>Wishful approach </li></ul><ul><ul><li>Dream of winning lottery </li></ul></ul><ul><ul><li>Dream of big inheritance </li></ul></ul><ul><li>Realistic approach </li></ul><ul><ul><li>Live within your means </li></ul></ul><ul><ul><li>Save and invest </li></ul></ul><ul><ul><li>Grow your means </li></ul></ul><ul><ul><li>Protect your means </li></ul></ul>There is 1 chance in 8,145,060 of getting Group 1 prize (i.e. $600,000 to $1,000,000) in TOTO Vs 1 in 280,000 of being struck by lightning Which is more likely?
    7. 7. How to achieve Financial Freedom? <ul><li>Hard work </li></ul><ul><ul><li>Build up investible savings from employment or business income </li></ul></ul><ul><li>Smart work </li></ul><ul><ul><li>Building alternate income streams </li></ul></ul><ul><li>Perseverance </li></ul><ul><ul><li>Never give up </li></ul></ul><ul><ul><li>Continuous learning and personal growth </li></ul></ul>
    8. 8. How to achieve Financial Freedom? <ul><li>Panzer’s Road-map </li></ul>#1 Where are you now? #2 Where are you heading? #3 How do you get there? #4 How do you become better! #5 Why did you start this journey? Road Map to Financial Freedom © Panzer 2009
    9. 9. Step #1 Where are you now? <ul><li>First, find out where you are in your journey </li></ul><ul><li>Compute your net worth = total assets less total liabilities </li></ul><ul><li>Assets = home, car, savings, fixed deposits, stocks & shares, insurance policies </li></ul>
    10. 10. Step #1 Where are you now? <ul><li>Personal net-worth = total assets minus total liabilities </li></ul><ul><li>Snapshot of where you are in terms of financial freedom </li></ul><ul><li>Goal is to move towards positive net-worth </li></ul><ul><li>You are financially free where your net-worth earns passive income for you freeing you to pursue your interests </li></ul>
    11. 11. Step #2 Where are you heading? #1 Where are you now? #2 Where are you heading? #3 How do you get there? #4 How do you become better! #5 Why did you start this journey? Road Map to Financial Freedom © Panzer 2009
    12. 12. Step #2 Where are you heading? <ul><li>Where do you want to go? </li></ul><ul><li>Your destination </li></ul><ul><li>Set goal(s) – to be financially free with investible net worth of $500,000 in 20 years’ time generating 10% returns or $50,000 passive income per year </li></ul>
    13. 13. Step #2 Where are you heading? <ul><li>Goal should be SMART : </li></ul><ul><ul><li>Specific – Achieve $xx,xxx in passive income </li></ul></ul><ul><ul><li>Measurable - $ or time </li></ul></ul><ul><ul><li>Achievable/Realistic – realms of possibility </li></ul></ul><ul><ul><li>Timely – give yourself a deadline </li></ul></ul><ul><li>Goals should be aligned to your mission/vision </li></ul><ul><ul><li>Ask yourself, why do you want to achieve your goal? </li></ul></ul>
    14. 14. Step #2 Where are you heading? <ul><li>Non-financial goals: </li></ul><ul><ul><li>To have time to do volunteer work </li></ul></ul><ul><ul><li>To spend more time with family </li></ul></ul><ul><ul><li>To travel the world </li></ul></ul><ul><ul><li>To ….[insert your own goal] </li></ul></ul><ul><li>Money is not the only constraint </li></ul><ul><ul><li>Ask yourself, why do you want to achieve your goal? </li></ul></ul><ul><ul><li>Can you achieve the goals right now? </li></ul></ul>
    15. 15. Step #3 How do you get there? #1 Where are you now? #2 Where are you heading? #3 How do you get there? #4 How do you become better! #5 Why did you start this journey? Road Map to Financial Freedom © Panzer 2009
    16. 16. Step #3 How do you get there? <ul><li>Compute your income and expenditure </li></ul><ul><li>Savings = income minus expenditure </li></ul><ul><li>Increase savings : </li></ul><ul><ul><li> income </li></ul></ul><ul><ul><li> expenditure </li></ul></ul><ul><ul><li>both </li></ul></ul>
    17. 17. Step #3 How do you get there? Income Expenses Savings Passive income +Savings +Expenses Consumption & lifestyle wants today Savings for future needs tomorrow Income, Expenses and Savings Flow To be financially free, #1 increase your income To be financially free, #2 reduce your expenses
    18. 18. Step #3 How do you get there? <ul><li>Savings </li></ul><ul><ul><li>Live within your means </li></ul></ul><ul><ul><ul><li>At whatever income level, spend LESS than your income </li></ul></ul></ul><ul><ul><li>High income <> high savings unless you control spending </li></ul></ul><ul><li>Invest savings </li></ul><ul><ul><li>Generate passive income from interest, dividends, royalties etc. </li></ul></ul>
    19. 19. Step #3 How do you get there? <ul><li>Grow your means </li></ul><ul><ul><li>Develop alternate sources of income </li></ul></ul><ul><ul><ul><li>Blog monetisation </li></ul></ul></ul><ul><ul><ul><li>Sell stuff on eBay </li></ul></ul></ul><ul><ul><ul><li>Sell eBooks, subscription based courses, wordpress themes </li></ul></ul></ul><ul><ul><ul><li>Provide consulting </li></ul></ul></ul><ul><ul><ul><li>Affilitate programs – sell other people’s stuff </li></ul></ul></ul><ul><ul><ul><li>Give tuition on weekends/evenings </li></ul></ul></ul><ul><ul><ul><li>Take up part-time job </li></ul></ul></ul>
    20. 20. Step #3 How do you get there? <ul><li>Protect your means </li></ul><ul><ul><li>Consider insurance needs </li></ul></ul><ul><ul><li>Term, whole-life, hospitalisation and surgical insurance </li></ul></ul><ul><ul><li>Distinguish between investing and insurance </li></ul></ul><ul><ul><li>Not necessarily the same </li></ul></ul>
    21. 21. Step #3 How do you get there? <ul><li>Protect your means </li></ul><ul><ul><li>Invest in your health </li></ul></ul><ul><ul><ul><li>Regular exercise </li></ul></ul></ul><ul><ul><ul><li>Balance diet </li></ul></ul></ul><ul><ul><ul><li>Manage stress </li></ul></ul></ul><ul><ul><li>Insurance </li></ul></ul><ul><ul><ul><li>Whole life or term policies </li></ul></ul></ul><ul><ul><ul><li>Hospitalisation and surgical </li></ul></ul></ul><ul><ul><li>Enjoy family and friends </li></ul></ul>You are the main income generator!
    22. 22. Step #4 How Do You Become Better? #1 Where are you now? #2 Where are you heading? #3 How do you get there? #4 How do you become better! #5 Why did you start this journey? Road Map to Financial Freedom © Panzer 2009
    23. 23. Step #4 How Do You Become Better? <ul><li>Benchmarking </li></ul><ul><ul><li>Grow your net-worth </li></ul></ul><ul><ul><li>You improve on your own score </li></ul></ul><ul><li>Materialism </li></ul><ul><ul><li>Realise that high income <> high net-worth </li></ul></ul><ul><ul><li>Every $ you spend/save grows/reduces your net-worth </li></ul></ul><ul><ul><li>Decide if you’d rather spend/save </li></ul></ul>
    24. 24. Step #4 How Do You Become Better? <ul><li>Sharpen the saw </li></ul><ul><ul><li>Learn new skills, experiences, abilities </li></ul></ul><ul><ul><ul><li>Public speaking </li></ul></ul></ul><ul><ul><ul><li>Information technology </li></ul></ul></ul><ul><ul><ul><li>Project management </li></ul></ul></ul><ul><ul><ul><li>Personal effectiveness </li></ul></ul></ul><ul><ul><li>Healthy body, healthy mind and vice-versa </li></ul></ul><ul><ul><ul><li>Save money on medical bills </li></ul></ul></ul><ul><ul><ul><li>Feel and look better </li></ul></ul></ul><ul><ul><ul><li>Work more effectively </li></ul></ul></ul>
    25. 25. Step #5 Why Did You Start This Journey? #1 Where are you now? #2 Where are you heading? #3 How do you get there? #4 How do you become better! #5 Why did you start this journey? Road Map to Financial Freedom © Panzer 2009
    26. 26. Step #5 Why Did You Start This Journey? <ul><li>What does financial freedom mean to you? </li></ul><ul><ul><li>Materialism vs. value-for-money </li></ul></ul><ul><ul><li>Consumerism vs. deferring instant gratification </li></ul></ul><ul><li>Alignment to values </li></ul><ul><ul><li>What does being financially free allow you to do ? </li></ul></ul><ul><ul><li>Balancing between today’s wants and tomorrow’s needs </li></ul></ul>
    27. 27. Step #5 Why Did You Start This Journey? <ul><li>What does financial freedom mean to me? </li></ul><ul><ul><li>Panzer’s experience: </li></ul></ul><ul><ul><ul><li>Paid off housing loan </li></ul></ul></ul><ul><ul><ul><li>Less stressed at work </li></ul></ul></ul><ul><ul><ul><li>Enjoy family time more </li></ul></ul></ul><ul><ul><ul><li>Know that I have a plan </li></ul></ul></ul><ul><ul><ul><li>Am not dependent on CPF Life </li></ul></ul></ul><ul><ul><ul><li>Pursuing life with renewed energy and spirit </li></ul></ul></ul><ul><ul><ul><li>Not yet financially free… but getting there  </li></ul></ul></ul>
    28. 28. Step #5 Why Did You Start This Journey? <ul><li>What would financial freedom mean to you? </li></ul><ul><ul><li>Your experience, you decide! </li></ul></ul><ul><ul><ul><li>__________________ </li></ul></ul></ul><ul><ul><ul><li>__________________ </li></ul></ul></ul><ul><ul><ul><li>__________________ </li></ul></ul></ul><ul><ul><ul><li>__________________ </li></ul></ul></ul><ul><li>Be well and prosper. </li></ul>
    29. 29. To find out more… <ul><li>Visit http://fivecentstencents.com/blog </li></ul><ul><li>Email him at [email_address] </li></ul><ul><li>Follow Panzer on http://twitter.com/panzergrenadier </li></ul><ul><li>Panzer </li></ul><ul><li>Panzer is a 30-something accountant who finally grasped the concept of financial freedom at the ripe old age of 32. Ever since, he has been travelling on his journey towards financial freedom and documenting his adventures through his blog Five Cents Ten Cents. </li></ul><ul><li>His first self-published book , “ Panzer’s Guide to Financial Freedom : It’s Your Money and It’s Your Life“, was launched in November 2008 sharing his thoughts on his journey towards financial freedom . </li></ul>

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