panzers roadmap to financial freedom april 2009

Panzer’s Road Map to Financial Freedom

Your 5 Step Guide to Being Financially Free

April 2009

2 Road Map to Financial FreedomPanzer © 2009

What is Financial Freedom?

IS NOT Striking TOTO, 4D or

any other windfall Having money but no

time to spend it Having money but no

health to enjoy it About get rich or die

trying!

IS Being able to determine

how to control your time About living a balanced

life About having passive

income exceeding living expenses

About having health and family to enjoy your passive income

Is a journey



ConceptPassive income exceeds living expenses

Living expenses = rental, home mortgage payments, utilities, bus/MRT fares, petrol, eating out, groceries, taxes, movie tickets, clothes and accessories, mobile phone bills etc.

Income – Passive vs Earned Earned = Trade time for money, e.g. job, running a

full-time business Passive = Do not trade time for money, e.g. interest

from savings/fixed deposits, dividends from shares



Earned income is limited by: Time – you only have 24 hours a day Requires you to be there all the time But is the important starting point for financial

freedomGrow your passive income

Is not limited by time $50,000 (wisely) invested at 5%, grows to

$100,000 in 14+ years’ time without you trading your time



Income Expenses

Savings

Passive income +Savings

+ExpensesConsumption

& lifestyle wantstoday

Savings for future needs tomorrow

Income, Expenses and Savings Flow


How to achieve Financial Freedom?

Wishful approach Dream of winning lottery Dream of big inheritance

Realistic approach Live within your means Save and invest Grow your means Protect your means

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?



Hard work Build up investible savings from employment

or business incomeSmart work

Building alternate income streamsPerseverance

Never give up Continuous learning and personal growth



Panzer’s Road-map

#1 Where are you now?

#2 Whereare you heading?

#3 How do you get there?

#4 How do you become better!

#5 Why did youstart thisjourney?

Road Map to Financial Freedom

© Panzer 2009


Step #1 Where are you now?

First, find out where you are in your journey

Compute your net worth = total assets less total liabilities

Assets = home, car, savings, fixed deposits, stocks & shares, insurance policies

http://www.flickr.com/photos/bpende/2450763882/


Step #1 Where are you now?

Personal net-worth = total assets minus total liabilities

Snapshot of where you are in terms of financial freedom

Goal is to move towards positive net-worth

You are financially free where your net-worth earns passive income for you freeing you to pursue your interests

Microsoft Excel Worksheet


Step #2 Where are you heading?







© Panzer 2009



Where do you want to go? Your destination 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



Goal should be SMART: Specific – Achieve $xx,xxx in passive income Measurable - $ or time Achievable/Realistic – realms of possibility Timely – give yourself a deadline

Goals should be aligned to your mission/vision Ask yourself, why do you want to achieve your

goal?



Non-financial goals: To have time to do volunteer work To spend more time with family To travel the world To ….[insert your own goal]

Money is not the only constraint Ask yourself, why do you want to achieve your

goal? Can you achieve the goals right now?


Step #3 How do you get there?







© Panzer 2009



Compute your income and expenditure

Savings = income minus expenditure

Increase savings: income expenditure both

http://www.flickr.com/photos/kozumel/2160201272/



Income Expenses

Savings

Passive income +Savings

+ExpensesConsumption

& lifestyle wantstoday

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



Savings Live within your means

At whatever income level, spend LESS than your income

High income <> high savings unless you control spending

Invest savings Generate passive income from interest,

dividends, royalties etc.



Grow your means Develop alternate sources of income

Blog monetisation Sell stuff on eBay Sell eBooks, subscription based courses, wordpress

themes Provide consulting Affilitate programs – sell other people’s stuff Give tuition on weekends/evenings Take up part-time job



Protect your means Consider insurance needs Term, whole-life, hospitalisation and surgical

insurance Distinguish between investing and

insurance Not necessarily the same



Protect your means Invest in your health

Regular exercise Balance diet Manage stress

Insurance Whole life or term policies Hospitalisation and surgical

Enjoy family and friends

You are the main income

generator!



Benchmarking Grow your net-worth You improve on your own score

Materialism Realise that high income <> high net-worth Every $ you spend/save grows/reduces your

net-worth Decide if you’d rather spend/save



Sharpen the saw Learn new skills, experiences, abilities

Public speaking Information technology Project management Personal effectiveness

Healthy body, healthy mind and vice-versa Save money on medical bills Feel and look better Work more effectively



What does financial freedom mean to you? Materialism vs. value-for-money Consumerism vs. deferring instant gratification

Alignment to values What does being financially free allow you to

do? Balancing between today’s wants and

tomorrow’s needs



What does financial freedom mean to me? Panzer’s experience:

Paid off housing loan Less stressed at work Enjoy family time more Know that I have a plan Am not dependent on CPF Life Pursuing life with renewed energy and spirit Not yet financially free… but getting there



What would financial freedom mean to you? Your experience, you decide!

__________________ __________________ __________________ __________________

Be well and prosper.


To find out more…

Visit http://fivecentstencents.com/blog Email him at [email protected] Follow Panzer on http://twitter.com/panzergrenadier

Panzer 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.

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.

http://fivecentstencents.com/blog/2009/01/31/not-so-secret-diary-of-a-cpa/

panzers roadmap to financial freedom april 2009

Economy & Finance