Today’s Financial Wednesday Blog Post, I will like to share with you is a concept that I learn from Adam Khoo’s Secrets Of Self Made Millionaire Book. It is a very practical and easy to understand concept that I applied and share with all my clients.
This is what I call the 4 levels of wealth. You have to go step by step, level by level in achieving your financial dreams.
Level 1 : Financial Stability
You have achieved financial stability when:
1) You have accumulated enough cash to pay for your 6 months expenses
2) You have hospitalization insurance and sufficient life insurance coverage, should death, permanent disability or 30 critical illnesses were to strike.
You must be really secure in this before proceeding into the next step to achieve financial security.
Imagine a person who has no money in the bank, no hospitalisation insurance plan, no life insurance plan, BUT HEAVILY INVESTED IN STOCKS (where many experience paper loss at this moment)…….
one day….touch wood…..get hit by a lorry. How will he or his family SURVIVE that financially ?
Level 2 : Financial Security
You achieve financial security when you have accumulated an amount of Positive Cashflow Assets (Investable Assets) that generate passive income to cover your MOST BASIC expenses.
Most Basic expenses refers to:
1) Home mortgage
2) Public transportation expenses
3) Food for you and your family
4) All Insurance premiums
These are just necessities that you spend on to lead a simple lifestyle. Should you stop working today, do you have enough passive income to pay for your simple expenses? 🙂
Level 3: Financial Freedom
You achieve financial freedom when you have accumulated an amount of Positive Cashflow Assets (Investable Assets) that generate enough passive income to sustain your CURRENT LIFESTYLE.
If you have a car, have a maid, have a golf membership club NOW, financial freedom means your passive income is enough to pay for all these expenses should you stop working today.
Are you FINANCIALLY FREE? 🙂
Level 4: Financial Abundance
This is the best!
You achieve financial freedom when you have accumulated an amount of Positive Cashflow Assets (Investable Assets) that generate enough passive income to sustain your DESIRED LIFESTYLE.
Your passive income must be able to pay all your expenses when you lead the LIFE OF YOUR DREAMS.
Example you like to drive a porsche, live in a private condominium facing the sea (my goal 😛 ), send your kids to the best school in town, you may be expecting a monthly flow of about $50,000 worth of passive income.
So guys…. Are you working your way up to financial abundance or continue to feel shiok2 be trapped into the rat race where someway, somehow, somewhat, your money seems to vanish in thin air at the end of the month? Work it out! 🙂
p.s. By the way, if you wish to discover a simple & halal way to create a positive monthly cashflow and calculate your net worth for FREE, then please click here…
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This post was written by:
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like this post a lot. thanks for sharing.
Suhaila >>> Thanks! Glad, you like my post! 🙂
Thanks for the post, great to find a Singaporean online site that speaks about personal finance management.
Just wanted to drop a comment on this particular post, there wasnt actually ‘strategies’ on becoming a millionaire listed here, just various stages of financial prosperity.
But overall great blog, definitely will be adding this to ‘my favourites’
Cheers