The only number you need to work on to reach financial freedom is your Freedom Factor. Raise it to 100 and your investments can cover your life.
Your Freedom Factor compares what your investments can safely produce each year with what you spend each year. At 100, a sustainable 4% annual draw from your investments covers all of your expenses. That is financial freedom.
Every dollar you invest raises it. Every dollar you cut from yearly spending raises it. Nothing else matters as much.
Include every invested asset: investment real estate, stocks, bonds and funds, retirement accounts, savings, CDs, and private businesses. You may include alternative assets such as investment-grade artwork and precious metals.
Exclude your primary home, second home, vehicles and anything else that doesn't produce income or appreciate.
What you spend in a typical year to live the life you want, including housing, food, travel, insurance and taxes.
Your investments cover less than a fifth of your spending. Focus on building the habit of investing every month.
Compounding is working for you. Keep raising your investments and keep spending in check.
You're at or near the point where work becomes optional. At 100 and above, your investments can carry you.