Prime
About your wealth-building barometer
Jeanpo Olowo. PHOTO/FILE
What you need to know:
- Financial freedom is a journey, it’s not something that happens overnight. Its work, attitude, mindset and commitment.
The Testing Stage is the fourth stage of our Foundation, Analysis, Building, Testing (FABT) framework. This stage gives us the ability to measure our financial freedom efforts from foundation to the building stage of our framework. We use a tool called the BM Wealth Barometer that is made of measures that help you understand your progress in your financial freedom journey.
It’s of the utmost importance that you are able to test your progress. You need to check whether you are achieving the goals you originally set out. Financial freedom is a journey, it’s not something that happens overnight. Its work, attitude, mindset and commitment. Every individual or business opt to decide their pace and speed of their financial freedom journey. Through these tests and how happy you are with your financial freedom efforts, you will be informed on your need to increase your momentum.
“You can’t get to where you want to go without knowing where you’re starting from,” says Grant Sabatier, the author of the Financial Freedom book.
In his book he says you need clarity and to take stock of your financial situation — how much money you have, how much you owe, and what your goals are.
Our BM Wealth Barometer is made up of the following tests that will inform you of your level on the Barometer. The Financial Control Test is our bare minimum that every wealth builder should strive for.
This is when you have saved up three months of your living expenses, have shelter, are able to take your children to good schools which are relative, and own a car or basic means of transport for easy mobility. This is the lowest level.
Financial Stability Test is when you have savings that cover three to six months of your living expenses that make what we call your emergence fund. You have some peace of mind that if something unexpected should happen, you have enough time to recover financially. Though be careful that you don’t stay at this level and think you have arrived.
The Financial Security Test is when you have six to 12 months of your living expenses saved up, your Investment Income is able to cover up your basic living expenses but not a whole, and have enough passive income from your Investment Income to cover your minimum basic lifestyle.
“Basic lifestyle” means living with only the necessities such as food and shelter. Here you have reached some form of financial freedom.
Financial Independence Test is when you have saved 12 to 24 months of your living expenses, enough passive income from your investment to cover all your living, discretionary expenses and some personal luxury expenses. This level is what most people and businesses strive for.
Financial Freedom Test is when you have constant cash flow for life, your investment income covers all your current monthly expenses. Reaching this level of wealth means that you have the option to never work again and still maintain your current lifestyle and meet all your basic necessities. The Financial Abundance Test is the ultimate level everyone dreams to have. Enough passive income to afford anything you want, and can live your dream lifestyle. At this point, your investment portfolio is making more money than you need in life.
Your financial freedom journey requires perseverance and commitment. These tests on our BM Wealth Barometer will inform you, keep you in check and on Track. Remember you can lose it all. Our best teacher was the recent Covid pandemic crisis. Keep testing yourself and your business against our barometer so that you are on course with your desires.
Dr Jeanpo Olowo, Advisor/Consultant: Financial & Business Operations. [email protected].
