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I am deeply inspired by this young Singaporean millionaire who by the age of 26 made his own self-made title.   This is a chapter of his book.  Four Levels of Wealth.  This may be arduous to achieve but it’s never impossible.

Everyone wants to be wealthy. And to reach your financial dreams, you must identify first the specific levels of wealth that are achievable and attainable. First, FINANCIAL STABILITY. You are financially stable when you have enough liquid assets to cover your current expenses for at least 6 months and when you have insurance to protect you and your family’s lifestyle should there be any sudden crisis happens. If you meet this level, you will have a peace of mind. Any unexpected challenges happen to occur; your family will not be compromised or slid into debt. This will make sure that you will have adequate time to look for new sources of income to put you back on track. At the same time, you will have the financial stability to quit your job and invest your time to look for other means of resources—business perhaps. To meet this level, you should accumulate enough liquid assets to cover current expenses for at least 6 months. Commit to save a minimum of 10-15% of your net income. Multiply your monthly expenses by six. This should be the amount you need to have in a year to meet financial stability. Next, FINANCIAL SECURITY. You have achieved this level when you have through the investment of time, money and ideas added up a significant amount of Cash Flow assets that generate enough passive income to cover you MOST BASIC expenses. In other words, you can stop working and keep up a very basic lifestyle. And if you continue to work, all your active income can be channel towards investments and further compound your assets and increase your income streams. You know what they always say; the rich gets richer and richer. Now, basic expenses are no more than a house mortgage, public transportation, groceries, interest payments for debts and insurance. Of course, we shouldn’t be satisfied being at this level. To meet this, generate more passive income. Create a range of cash generating assets. Build cash generating cash flow assets like intellectual property and home-based businesses that requires ideas and time, but very little capital. You don’t need to be Einstein to build a good business. Find out people’s needs. Make use of your idea, time and interest. This doesn’t have to be high capital ones, they can be a home-based Internet business that could through time & hard work and generate more than 100% return. Then, FINANCIAL FREEDOM. It is when you have through the investment of time, money and ideas added up a significant amount of Cash Flow assets that generate enough passive income to sustain your CURRENT LIFESTYLE. When you reach this level, you can stop working and keep up your current standard of living. People who achieve this level love their jobs so much they don’t want to quit. Being free of financial pressure & worries and working just out of passion is an amazing feeling! To meet this, further increase your existing cash flow assets and add new ones so that you can hit your new targeted passive income. Lastly, FINANCIAL ABUNDANCE –the ultimate level of wealth. It is when you have through the investment of time, money and ideas added up a significant amount of Cash Flow assets that generate enough passive income to sustain your DESIRED LIFESTYLE. Your desired lifestyle is the monthly expenses that will take for you to live your dream life. But remember, the more luxurious your lifestyle is, the longer it will take for you to achieve Financial Abundance. Now, you can choose to stop working and live your dream lifestyle indefinitely! Again, people who reach this level usually love their jobs they keep on working for fun and compounding their wealth. To attain this topmost level, decide on your dream lifestyle. Estimate monthly expenses on that lifestyle. Multiply that by 12. That’s what you need to generate per year. Accumulate enough cash flow assets that generate a passive income of the product of the expenses per year.

source: Chapter 5 of Adam Khoo’s book Secrets of Self-made Millionaires

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