Jay Papasan:
I’m Jay Papasan and this is The ONE Thing, your weekly guide to the simple steps that lead to extraordinary results. 

Hey there, ONE Thing family. Jay Papasan here for our final part of this three-part series on wealth building. Today, we’re going to talk about identifying your freedom number. And a freedom number simply means how much unearned income would you have to make every year to be financially free, to not have to work. Work becomes a choice. 

Now, the reason this is important, I’ve coached and I’ve helped and I’ve mentored lots and lots of people on this journey, so has my wife. And so many people out there, they may have some really good wealth building habits, they may have a pretty good understanding of how investments work but, a lot of times, their expectations for what they want in their financial future and how they’re behaving today just are not lined up. And one of the big gaps is that they aren’t really, really clear on where they’re going. 

Now, to make a map between any two places, you need a few data points. And in the world of financial freedom, you need three. Financially, where are you today? Where do you ultimately financially wanna be, which will be your freedom number? And how long do you have to get there? You have the “Where am I today?” and “Where do I want to go?”, fundamentally, you can draw a map between anywhere. And because we’re talking about investing, we want to talk about time as well. 

The biggest lever on your money’s growth will be time, because time doesn’t cost you anything but time. Otherwise, you have to more aggressively work your money or put more money to work. Time is the master of all of those. So, if you’re a younger person listening to this, kudos to you. I wish I had learned this before I was 30. We started a little late, but we did pretty well. If you’re a little later in life and you’re like, “Man, I know a lot but I’m not super clear about this future freedom number. I haven’t really dialed it in,” it’s not too late for you either now. 

Now, most people have vague ideas. That’s okay. They have dreams. How do we dial that stuff in a little bit more clearly? That’s our goal today. Now, I’d say this one more time and I said it in each of these three episodes, I am a journeyer, just like you. I’ve helped write three books on investing. They’ve done very well. I’ve been invited to speak on it in places like Google and other places. I feel very confident about the things that I talk about. At the same time, I am not a licensed financial planner, I’m not a CPA, and I’m not an attorney. So, even though I’m not going to go anywhere close to those ideas, I just want to say right upfront, that’s not the advice I’m giving you. 

Our goal, like in all the books that Gary and I write, can we provide you perspective? Can we give you principles? Can we give you models? Those are the practical building blocks that we need to make great decisions. Gary defines leadership as teaching people how to think, so they can do what they need to do when they need to do it, so they get what they want when they want it. It’s a long way of saying, teaching people how to think. 

The goal of these three podcasts on building wealth is to hopefully help teach you how to think about your money, how it’s made, and how you invest it, and how you spend it, and how you save it, so that you can get where you need to go. That’s the goal here, a little bit of financial literacy and leadership for your life. 

Now, why are we here? I said this in all three episodes. We’re here to build financial wealth, which we define as having the unearned income, so that you can fulfill your mission in life without having to work. Keep repeating it because it’s not a number. It’s not just becoming a millionaire. It is having the unearned income, so that you can live your life mission without having to work. 

And I say this every time, because I love my job, I love my work, just not having to work does not mean that you are unemployed. It means that work is a choice. If you, today, are working somewhere that doesn’t share your values that you don’t love, wouldn’t you love it someday to have the unearned income, so that you could quit that job and go do something you truly loved, that you wouldn’t have to work just to put food on the table, gas in the tank, or pay for that mortgage or your rent. That’s the goal. That’s what we want. 

And there’s a couple of reasons about why we would pursue it, and we’ll go through that. But ultimately, financial freedom, your freedom number, is what is the amount of unearned income you need, so that you can live your life mission without having to work? 

Now, there’s more than one way to get there. I can’t remember who said this, but I always think of it, “If you want to be financially free, you can either live like a monk or you can have millions in unearned income.” So, there’s two extremes. There are people who have all they need because they live so modestly. That’s to live like a monk. “Soup and porridge, I’ve got my brown robes, I’m good to go.” There are people, lots of them on this planet, who have lived that life. They have very simple needs. Therefore, coming up with the unearned income to finance a life mission is not a giant leap.

A lot of the rest of us have maybe a different vision for our financial future. We’d like to continue enjoying the lifestyle that we have, and that’s gonna mean that we’re going to have to save and invest a certain amount of money after we live within our means every single month, that primary wealth-building habit, we’re gonna have to do that for a period of time, so that eventually we’ll have enough invested enough saved so that we don’t have to work anymore. Work becomes a choice.

A big lever on this journey is going to be your big why. And I’ve mentioned this in earlier episodes. Of the hundreds and hundreds of folks that I’ve worked with on a really personal level, always start by asking the question, “Why do you want to be financially wealthy? Why are you seeking financial freedom?” And all their answers come down to, kind of, basically two categories. I’m either wanting security, I want to be free from the worry around money, or I want to be free, I want to have more choices in my life. 

Security or freedom tend to be the two baseline answers if you dial and you look under the hood and you peel the onion on everybody’s very specific thing. And over time on this journey, if someone becomes more and more confident of their ability to retain and build wealth, then the security tends to move towards freedom. So, it’s one of the reasons we’re calling this your freedom number because by the time we’re getting there, that’s usually the principal thing. I want more choices for my life, for my family, for my loved ones. I want to be able to do what I want to do, when I want to do it, with whom I want to do it for as long as I want to do it.

I think that was Morgan Housel’s definition. I love it, because it’s functional. Wealth to him was being able to do whatever he wants, with whoever he wants, for as long as he wants.  Just freedom. And that’s the choice. Do I want to go on a ski vacation? Do I want to do a driving vacation? Do I want to stay in a Motel 6? Or do I want to stay in the Four Seasons? Those are choices that you get to make if you’ve earned them.

Okay, let’s get to the nitty gritty. Last week, hopefully, you did the homework. If you hadn’t already been doing it, at least once, you figured out what your net worth was. You got our worksheet at the1thing.com/networth and you figured out what are all the assets that I own, and how much are they worth, what is all the debt that I have, the liabilities, and you added those up. Then, you put them together, and at the end of the day, there’s either a positive or a negative number. Either you have assets that are worth more than your debt or debt that is worth more than your assets. Either way, you know where you’re starting. 

As I mentioned in the very first episode, Wendy and I started, the very first time we checked, after both of us working professionally for 10 years, $2,200. If you sold everything in our world and paid off our debt, $2,200 and some Target furniture we didn’t count. So not a lot, but a positive number. Wherever you are, that’s it. 

We also need to ask the question, when do I want to be financially free? This is kind of the distance marker if we were doing a map. I’m at point A, I wanna get to point B – and we’ll define that in a second – how long am I giving myself?  Now, people think about this in a lot of ways. I know people who have said, I wanna be a millionaire by the time I’m 30. A very aggressive, fast goal. They have this idea of what it means to be a millionaire, and they want to get there fast. 

The vast majority of people are thinking about some form of retirement. And for them, that might begin in their 50s, but I think the big meaty center here is most people are planning backwards from sometime between age 65 and 72. That’s that kind of window where a lot of people start thinking, if they’ve done the work before, they can either go part-time or give up their day job and “ease into retirement.” What do I have to do to get to that window, whenever it is for you, so that I can live the lifestyle that I want then? 

On the low end, a monk, or something really ambitious on the other, how long do you have? So you’re gonna have to stop and think, how old are you? I don’t know. I’m sitting here on the other side of this microphone at age 55. My wife and I were planning backwards from our late 60s. We hit our number much earlier than that. I feel very fortunate, but we also did a lot of hard work to get there.

So it might not take as long as you imagine. That was the case for us. If you do the right things and maybe get a little luck or avoid bad luck, you might get there faster. How many years do you have? That’s a number. If you’ve got your phone and you’re not driving or something, or just think about it in your head, just put it out there, “I want to be financially free by the time I’m or we’re at the age blank.” Fill in the blank there. You need to know that. 

Now, remember, the longer the runway, the more ambitious you can be. I shared these numbers earlier. If you take $22,000 and $22,250, and you invest it at a rate of return of 10%, it’ll grow 10% every year, that’ll turn into a million dollars in 40 years. That’s a long runway, right? That’s someone who’s 25 thinking about when they’re 65. What if you’re older than that? What if I’ve only got 15 years? Well, that same money, $22,250, invested at 10%, which would be like really good long-term stock returns, if you only go 15 years, guess how much that is. It’s only $93,000. So, it’s less than 10% of what you would get with the same terms for 40 years.

Every year, that compounding gets bigger. If you remember, compounding is not linear. It’s not 101, 102, and 203. You go to 100, and depending on how fast it’s growing and doubling, it goes from 100 to 200 in this many years, and from 200 to 400, and then 400 to 800, and 800 to 1600, you see how that goes. There’s a doubling that happens depending on how fast your money is growing. It could take you 10 years to double or it could take you three years, depending on how aggressively your money is working.

So, we’ve got to figure out that timeline because that will determine how hard our money has to work based on where we are and where we want to go. So, easy enough, write it down, mentally capture it. 

Okay, how much do you want? This is a giant question, folks. What’s your freedom number? What do you want your lifestyle to be? And so, I’m going to break it down. In the book, we’ve got a graph where we talk about three kinds of goals. There’s doable goals, there’s stretched goals, and there’s possibilities goals. And we kind of advocate people push for possibilities.

We’re talking about finances here, and I mentioned it in the first episode. Sometimes, with all the baggage we’ve accumulated around money, and debt, and maybe some bad decisions in our past, some people who start out thinking really big, well, it’ll just shut them down. They’re trying to think bigger than they’re currently able to, and they look up and they go, “I’m just dreaming here.” And then, they don’t do the things. 

So, I will give you permission. I hope that you will stretch or you’ll go to possibilities, but if you’re in that place where your confidence in yourself and your financial decisions is not particularly high, maybe you start with doable. Because here’s the deal, you can let your ambitions grow over time with your confidence and your knowledge. 

So, what does it look like to kind of identify your freedom number in that doable category? A lot of financial advisors would say, when we’re older in retirement, we don’t need exactly as much money as we need today to live our lives. And so, a lot of the calculators, if you look under the hood, they’re assuming that if you get 80% of your current income, if you make $100,000 as a family, if you had $80,000 in retirement, because maybe your car’s paid off or you don’t need two cars, and you’re not paying for college, and you’re not playing for braces with the kids and orthodontics, and you’re not doing all of those things, and you’re in your forever house, you traded up years ago so you don’t have those other expenses.  So, 80% of your current income would be a very traditional way of thinking about it.

So, if you know how much you earned last year, what your current lifestyle is, and that’s sufficient for you, and that’s a great place to start, then just put that number into the calculator on your phone and multiply it times 0.8. That’ll give you 80%. So, that’s your doable financial freedom number. 

What if we want to stretch that? And I run into a lot of folks, and stretching can be a big stretch or a little stretch, but they say, “I just don’t want to live just as well as I’m living today. I aspire for more. And if I’m going to work all of that time, don’t I deserve to have more?” I get it. I’m kind of in that category too. Why not? You know, maybe I want to have a second house. Maybe I want to be able to take my kids or my grandkids with me on a big vacation every year. Maybe you have that person in your family that was the one who made it really well and he provided and helped out other people in their family. 

One of my favorite stories is my dad who grew up on a farm, born on a farm, sharecroppers, very humble beginnings, went to junior college in Mississippi State, worked on a truck and light gas and water. He worked his way up and did really well from where he started. He was able to do things for a lot of his family members that hadn’t gone on that journey with him. And that was one of the most gratifying things for him and it was really gratifying to watch. Maybe you want that to be you. You don’t need more, but you wanna be able to provide more. 

So, why don’t we just take that number that we started with, the doable goal, 80% of your current lifestyle, and just double it. Just double it. It’s not a hard science. We’re talking about the future. Let’s paint a big target. If you thought that maybe you needed $80,000 a year to live on to match your current lifestyle, then let’s aim for $160,000. What would that look like if we had $160,000 coming from all of our investments to live on without having to work? Pretty sweet for most people I can tell you. Other people, that’s still not enough 

So, there’s a third category that we’re going to go into. And the third option is going to be possibilities thinking. And what I like about both stretch and possibilities, knowing most of those financial planners are in that doable area, that 80% of your current income in retirement, if you’re aiming higher and you fall short, hey, you’re still better off than if you’d aimed for the minimums and fallen short. So, aiming high has a real benefit. 

Possibilities, maybe you wanna be a millionaire, a decamillionaire, a multi-multimillionaire. You get to choose, but you need to go back to that first question, what’s your why? Why is that important to you? What’s the cost of failure? I know a lot of people that are very aspirationally saying, “I want a net worth of $10 million,” and they just kind of picked it out of the air. They haven’t actually thought about what that would mean to them and whether or not they would be motivated to avoid failing at getting it. 

So, pick a bigger target. It can be as big as you want, but be clear that you’re aiming for it for a lot of reasons because, in my experience, if it’s purely aspirational, most big goals require us to make some hard decisions along the way. We may have to choose between doing A and B, and A is the easy thing and B is the hard thing. And a lot of the big prizes come from doing the hard things. You’re not going to do the hard things unless there’s some serious motivation there, which is why so many people don’t. So, if you’re going for a big-possibilities goal, figuring out your why is gonna be your ally along the journey. 

So, here’s the caveat on this whole process. Wherever you start, you can always adjust along the way. I know people who looked up and they said, “I’ve aimed too low, I wanna aim higher. I now have confidence and I believe I can make this happen faster and bigger. And I have really come into clarity around why I wanna make that journey.”

My wife and I at one point, I can remember my wife saying, “Why don’t we just go small? We’ve got enough. Let’s just stop.” And we literally had a moment where we were thinking like, “How do we level off this plane? We don’t want to increase our altitude anymore,” because maybe it was a little scary at that moment or maybe it was  feeling like work because we’d been doing all the hard things, and we didn’t want to do the hard things. But we sat down and we looked at our values and we figured out exactly why we wanted to continue on the journey and how far and how much. 

And once we got clear, and I think that was that half habit we talked about last week of kind of revisiting and revising along the way, we got clarity and were able to paint a path forward. Know that you can always do that. You can raise your goal, you can lower your goal, you can keep your goal, but this is a starting point. 

Last week you figured out where you were, what your current net worth was. I’m gonna walk you through the math of how to take this target of income and flip it into net worth and vice versa before we go to the break. But now, we have the time, we have all three of the data points we need to paint your map. So, let’s walk through a little bit. I’ll give you my journey and then I’ll walk you through the math and then we’ll take a break. 

Wendy and I started wanting to be net worth millionaires and unearned income of $75,000. We were young, I couldn’t imagine not working. I was like, even if I’m waiting tables or bartending or working in a bookstore, if we didn’t have debt and we had 75 grand, I thought we would be amazing. And we had this goal of the network, but we didn’t connect all the dots on what that meant. Later on, as our ambitions grew, we set our sights on what would it look like for us to build an investment portfolio that yielded $500,000 a year. 

And then, at some point in the future, because we’ve been doing this, remember, since 2002 is the first time we started this process, and around 2003 or 2004, we made the commitment to really go all in as investors. A long time on this journey, we raised our sights again, but we had our reasons. So, how does unearned income show up when you have all of these different things you’re doing with your money? 

So, I’m gonna walk you through something called the 4% rule. And this was huge for us because in the beginning it was very complicated. I was like, “Well, you’ve got your stocks. And I’ve got some that if I sell them, I have to pay taxes. And I’ve got maybe a mutual fund over here and a Roth over there, and this and that, a rental property,” you looked at all of these different things and it felt very complex. The way we got to a simple but conservative measure is the 4% rule. 

So, there was a researcher in 1994, the first time this came out, his name was William Bingen. It was later repeated and validated by researchers at Trinity University in 1998. They did a long study. They looked at different investment portfolios, a mix of stocks and bonds, and they looked at them over a long period of time, like 50 years. And they went all the way back to 1921, and then we go, let’s look at 1921 to 1971, and then 1922 to 1972. Like they just went year by year, and they looked at all of these different portfolios in real time, like what historically happened. And what they figured out is that with the right balance of stocks and bonds – I think it was 60/40 – that if you invested in the market, that if you only in retirement drew down 4% of the total value, it was 95% likely that you would not run out of money for 30 plus years. 

So, the idea is, if I’ve got my investments out there, I can draw down 4% per year from whatever my total amount is and that’s what I have to live on. And if I’m doing that at just 4%, my principal is still growing, it’s there, that’s the money that’s still left over, and it’s gonna outpace that and inflation. So, that’s the 4% rule. So, if you had a million dollars in retirement savings, 4% of that would be $40,000.  That’s a healthy thing to kind of record in your mind. For every million dollars I’ve got invested at the end, if it was just stocks and bonds, I could pull down $40,000 for every million, live on that without worrying that I’m gonna run out of money before I die, and that’s 30 plus years.

If you’re starting at age 65, man, I hope I live long enough to run out of money in playing that game, because that means I’m getting way up in my 90s, maybe in my 100s. That’s a great problem to have. And I’m sure by the time you got there, you’d figure it out too. So, that basically means you got enough. You got enough. So, 4% is the number. 

I’ve since seen research, some people would say, “Oh, I’m more conservative, it’s 3.5%.” I’ve also seen compelling arguments that it could be 5%. I’m just going right there in the middle, the original research, it’s very handy. For every million dollars in your future investment, that’s your net worth, call it all the things you own, 4% of that, you could draw down without worrying about running out of money. So, $40,000 for every million. So, we can make a goal of a net worth that 4% of that number would be what our freedom number is, that income, that $80,000 or $160,000 or maybe it’s $500,000 you want a year.  That’s one way to do it. 

Kind of a simple method is also, hey, I want to have X amount of income, I want to have $40,000 a year, what net worth would I have to accumulate? Just multiply the income you want by the number 25. $40,000 times 25, guess what? It equals a million. So, you can go 4% of the net worth or take your income number times 25. You can get at it either direction with fairly simple math. If you’ve got a smartphone around you, you’ve got a calculator, you can figure that out. 

Those are really important ideas for you because we have where we are today, whatever your number is, we started at $2,200. How long do you have?  And now, the goal number, and if you can record those numbers, maybe you have to pause, maybe when you get home, or just keep them in your head, or you’ll do this math when you get home because you’re gonna download the worksheet. We’ll have these worksheets at the1thing.com/freedomnumber. We’ll have a worksheet to walk you through all of this. So if you just wanna listen and do that later, we’re good to go. 

So, you now know how the math works, and you understand that you’ve got this distant goal of all of your investment portfolio, and you can live on about 4% of that, and that would be your freedom number. We now can do the math. The question I get a lot right now is, hey, but didn’t you talk to us about active lending and active ownership, real estate, and businesses? 

In my experience and in my studies, when I look at investment real estate, or active lending, or active ownership of business, when those perform well, they will yield more cash flow in addition to appreciation. Rental properties throw off cash flow, net operating income if you’re in that commercial lingo, and you can expect a certain amount of appreciation. Businesses will sell for some multiple, and they also, if they’re healthy, are gonna yield cash flow. Those are things that I think, I just put them all in the same bucket with 4%. 

Wendy was on a plane, and I’m gonna tell you the story, then we’re gonna go to the break, and we’re gonna come back, and I’m gonna help you calculate your freedom number. She was on a plane, and she was sitting by a guy, and they just struck up a conversation. Turns out he was an investor, kinda like us. He owned a few businesses, he owned some real estate, he had his job income, and he was older though.  

And he asked how old our kids were. And I think Wendy brought up something about, “Hey, we’d worked through our will recently and had to update it.” And he just shared, “I made the decision that my kids are probably not going to be entrepreneurs and they’re not going to be real estate investors. I can’t count on it. So, I’ve got it worked out that upon my death or before my death, I’m going to take all of these other exotic things that I do, and put them into kind of a traditional portfolio,” because if it’s all in stocks and bonds and municipal bonds or whatever else, it just feels like safe stuff, there are lots and lots of advisors that can help them. And that was something that we stocked away.

So, don’t get overly concerned about detailing this out. Like we’re trying to come up with a good rule of thumb, so that if we can build a certain amount of net-worth wealth, we have a reasonable, safe expectation for how much we could draw from that on an annual basis to live on without running out. And if we had to liquidate some of it and put it into stock so that we knew that the math works, I think we’d make that decision down the road. Right now, we just need to have a reliable target. 

All right, I’ve given you the basics. You know where you’re starting. You know how long it’ll take you to get there. You’ve either come up with a doable, a stretch, or a possibilities goal for your future income, and you know how to play around with whether that’s an income goal or a net worth goal. Let’s take a quick break. And on the other side, I’ll walk you through the last piece of math, so that you can make great decisions on the journey. 

Okay, welcome back, folks. We’ve got all the pieces together. Now, how do we do the math? I’m an English-French major, and I started looking up and saying, “Wow, how do I do this? If I’ve got $22,000 and I want to grow it to a million, and I’ve got 40 years, how do I back out the rate of return?” If you Google that, you’re going to get a very hardcore, serious kind of formula where you have to do not the square root but the 40th root of a number. And I had to Google how to do that, okay? So it was very, very complex. 

So, yes, you can follow that formula. I’m gonna give you the easy hack. You can use the free version of ChatGPT, and it will do all of this for you. And I’m gonna walk you through the prompts, and we’re gonna have those in the worksheets for you. But what we want to do now, based on where we are, where we need to go, that freedom number, and how long we’re giving ourselves to get there, we’ve got to figure out how hard our money has to work in between. This is getting back to the core problem I’m wanting to solve with this episode in this series. 

So many people have a fairly vivid dream of their freedom number, what they want that retirement to look like, and they know where they are today, and they know how long they have to get there, but the investment choices they’re making along the way are not sufficient to get them there. Because the math is complex, because not everyone has a financial advisor that can help them with their particular strategy, whether it’s just a straight-up traditional investment or you’re doing loans and real estate and businesses, how do I figure out how hard my money has to work so I know if I’m on track or not? 

So, here is the prompt that I worked out. It’s fairly simple and it works. What annual rate of return is needed for an initial investment of blank to grow to blank over blank years, assuming compound growth. This is gonna be in the show notes, it’ll be in our little worksheet. What is the annual rate of return needed for an investment of, use $22,250 to grow to blank, or 1 million in our example, over blank years, 40 in our example, assuming compound growth. The little dots will spin, lots of little hamsters will work in some AI machine around the world, I don’t know how it works, but it’ll spit back the answer. And the answer in that case is 10%. 

That’s how that works. That’s a complex math thing to get out. But now you know, if I had 40 years and this is how much I have to invest, I have to invest it in a vehicle that I believe will yield about 10%. Now, 10%, that’s in the range for most traditional stocks. I tend to lean towards 8%, but I’ve heard as high as 12%. So maybe that’s in the middle. That’s up to you to decide whether just staying in the stock market for a long period of time would get the job done.

Now, what if you know that what you have today is not all you’ll have? What if you think, “Well, what if I’m continuing to take about 10% of my income, whatever that might be, and invest it?” All you have to do is take that original prompt and add one little phrase to the end. What annual rate of return is needed for an initial investment of $22,250 to grow to $1 million over 40 years, here’s the next part, assuming compound growth and I invest an additional $6,000 each year.

So, you’re assuming that you and your family will be able to throw another $6,000 a year in the kitty.  Maybe you make 60 grand and you’re setting a goal on the best 10% of my income and whatever my choice is You do that. Guess what? You don’t need a 10% rate of return anymore. You need a 5.5%. If you thought you could do that, and you had 40 years, and you wanted a million dollars, man, again, stock market probably is going to take you well beyond that based on historical performance.

So, that prompt is basically what annual rate of return is needed for an initial investment of blank to grow to a future investment of blank over a blank number of years, assuming compound growth with an additional investment of blank per year. It’ll all be in writing. You can just copy it, put in the blanks, what you want, and ChatGPT will tell you the answer. That’s the rate of return that you need to achieve for you to reliably hit your goal. That rate of return is everything, folks. If I know how hard my money has to work, I can make great decisions along the way. 

Wendy and I, before we had ChatGPT or anything else, we would go, if you Google IRS.gov, their compound interest calculator, you can do all of this math. They’ve got a very complicated program to do this, but we would just play for scenario after scenario after scenario because our brains cannot do compound. We can’t do compounding for the future. We’re linear thinkers. Maybe some super smart people that I’ve never met can do this in their head, but the more you do it, the better you get at understanding the relationship between how much you invest, how hard it works, and how long it’s working, to get really surprisingly big numbers on the other side. 

So, that’s a big piece. We’ve got all the prompts for you in the worksheet, but if you can figure out where you are, where you want to go, how long you have, you use that formula to figure out how hard your money has to work along the way, whether or not you’re investing more, you can do both scenarios, now, you’ve got all the pieces for you to make great decisions navigating your way to your financial freedom. 

That’s how it gets done, folks. A lot of people, they just play at it. They either get lucky or they fall short or maybe they go ahead, but they don’t actually stop and do the math. With the tools we have today, thank you ChatGPT, thank you Google, thank you the calculator on my phone, we have everything we need to make better, better decisions. 

Now, the last step in this puzzle is you have to invest for the ROI you need. I would love it if we started this journey and all you needed was five to eight percent. There’s so many traditional vehicles that can get you there. You could get into municipal bonds that might be on the low end of that. A lot of mutual funds will be on the higher end of that. You might have to go into more individual stock, but all of this stuff is very mainstream. There’s so much reliable information out there to do it. 

If you’re a little later in life or you have bigger plans, you may then have to move into more active lending and active ownership investments. Can you make loans to people? Can you start being the bank? Because you’ve saved up enough money, you can loan it. You are taking the risk, but now you can secure it against the house they’re flipping and get a higher rate of return and make that money work. Maybe you’re gonna buy the real estate. Maybe you’re gonna buy a business or grow a business. Those are the places where that rate of return happens faster and you can track it over time. 

Now, hopefully, if you’re doing the work, you get the worksheets. I know this is a lot for a podcast, but hey, man, I don’t want you to be average. The ONE Thing is about extraordinary. This is about extraordinary results. These are the simple as I know how to make it for to give you the information you need to go from where you are to where you hope to go financially, your freedom number, and the amount of time that you wanna get there, you’ve now got all the decision-making tools. You back out how hard your money has to work, and now you’re making informed decisions. 

If you’re working with a realtor, with a business broker, with an investment advisor, you can say, “Hey, I need my money to compound at this rate. Do we feel like where we’re putting our money is gonna get us there?” If you don’t want to be the expert, you can hire them for the journey, but now you know how to hold them accountable to the results you need. 

All right. So, my challenge for you this week, I want you to download the worksheet at the1thing.com/freedomnumber and I want you to create your map to financial freedom. If you’re like me, English-French major, some of this math sounds scary. I’ve given you all the cheat codes, I’ve given you the formulas. They’re in the worksheet, just punch them into your Google, punch them into your chat GPT and the smart AI bots will do the math for you. You don’t actually have to do it. You just have to know the inputs to get the outputs you need. Go figure out your map to financial freedom, so that you can start navigating your finances in a way that will reliably get you from where you are to where you want to be. 

Well, I hope you’ve enjoyed this three-part wealth building series. I sure enjoyed recording it. Next week, we’re going to bring in my good friend,  Anne-Laure Le Cunff. She’s a neuroscientist and an author, and the brains behind Ness Labs. It’s her 100,000 plus subscriber newsletter where she explores all things about the brain and productivity. She’s got a brand new book coming out called Timing Experiments, which really connects well to The ONE Thing. I hope you’ll join us next week. You’ll learn lots and you’ll be smarter for it. 

0:36:32 Disclaimer:
Any text or materials generated by artificial intelligence, AI, should be reviewed for accuracy and reliability as there may be errors, omissions or inaccuracies. 

This podcast is for general informational purposes only. The views, thoughts, and opinions of the guest represent those of the guest and not KWRI and its affiliates and should not be construed as financial, economic, legal, tax, or other advice. This podcast is provided without any warranty or guarantee of its accuracy, completeness, timeliness, or results from  using the information.