What is your financial freedom number?

What is your financial freedom number?I recently re-read human behaviour specialist Mavis Ureke’s book Managing Emotions for Financial Freedom which looks at the invisible forces driving your money habits. Having read the book before, I was initially just looking for her reference on the Financial Freedom number – this is the amount of money you need to no longer rely on a salary – yet two hours later I had read the book cover to cover.

Our paths to financial freedom are laid with booby-traps of our own making. Only once we understand how we relate to money, can we achieve true financial freedom.

For Ureke, financial freedom is not a number so much as an ability to learn and master emotional detachment around your money, to stop money having power over you and to not be dominated by money-related negative emotions. She describes financial freedom as being “when you are not a servant of money, but money is instead your servant, meaning it obeys you, and when you say come, it moves towards you.”

Ureke uses her own experiences with money to understand how her money attitudes, which developed as a child, were sabotaging her ability to be financially free. She identifies a moment on her financial journey, when she started to create an emergency fund: “There was a consequent shift in my emotional energy, as I saw the money available in my account and it gave me so much emotional stability that I could show up authentically in my work or relationships without insecurity or anxiety.”

While she deals with nine different values and beliefs we attribute to money, knowing what to do with money to create financial freedom is an important step towards reaching that freedom.

“You may have a lot of money but if you do not know what to do with it, it will soon be gone. Alternatively, you may not be earning more than you are because you have no clue what you would do with it if you had it, or of who you really are, so you feel timid, uncertain and afraid to get it,” writes Ureke.

Educating yourself is key

So spending time educating yourself about your money, and about how to manage it on a day-to-day basis, as well as investing for growth are all part of the journey to financial freedom.

Ureke also believes that self-worth is the key to financial success. “Once you feel unworthy because you have no money, you feel unworthy to receive it or earn it or have it, so when you do get it, you blow it because you feel unworthy to possess it.”

If you find yourself spending to impress or just because you only see money as a way to owning more things, you may want to spend time understanding how you feel about yourself. Do you believe yourself to be worthy not only of money, but of love and respect?

The calculation

To reach true financial freedom, you need to change the negative patterns and attitudes you may have developed around money. But in the meantime, if you want to know how much money you need to be free from working for a salary, here is how to calculate it:

  • Take your total monthly expenses and multiply by 12
  • Then divide this number by 0.08 to understand what you need in today’s value.

For example, if your total monthly expenses are R28 000, then multiply that number by x 12 (= R336 000), then divide by 0.08 to get: R4.2 million.

This would be your target financial freedom number. If you want to know what is stopping you from reaching it, read Ureke’s book, Managing Emotions for Financial Freedom: The Invisible Forces Driving your Money Habits.

This article first appeared in City Press.

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