Financial Freedom: Creating Your Freedom Number

To figure this number out, you must have an accurate measurement of your monthly burn rate. This is what I call the freedom number. It’s how much cash flow you need monthly that will fully compensate for your burn rate or your lifestyle needs.

I determined my freedom number many years ago when my daughter was very, very sick.  The question at the forefront of my mind at the time was, “Do I have enough to sell my practice and spend more time with her?”

I had to look at my investments and figure out how much cash flow I was generating from my multiple income streams outside of my practice.

Replacing my active income (trading time for dollars) gave me the ability to sell my practice at a very young age.

It’s not because I was more financially responsible than most others. It was because I had created alternative asset investments (particularly in real estate) to produce cash flow that could replace my income.

The accumulation model, the default model of Wall Street and Financial Advisors, is all about saving. Saving is a good discipline, but it’s not enough.

It’s not a bad habit to save money in a tax brokerage account or in a 401(k) tax deferral account. It just doesn’t produce the result of freedom when most people want it or need it.

The 401(k) Lockbox Was a Cop Out

All retirement, tax deferral 401(k) or IRA models are lock boxes. You can't access that money without paying a tax penalty until you're 59 and a half. (Yes, there are exceptions to accessing some accounts at 55, but it’s still a large limiting factor.)

Even if you've been disciplined and saved all your money, you can't have freedom until you're 59 and a half. What if you want freedom sooner?

I needed freedom a lot sooner than that to dedicate my time to my daughter. If you don’t keep your freedom number and how to create replacement income top of mind, then you’ll never be free.

“If you can't learn to make money while you sleep, you'll work until you die.” – Warren Buffett

The concepts that have been commonly taught for many years only benefit Wall Street and financial advisors.

The whole construct of a 401(k) was a pivot from the defined benefit pension plans that companies offered.

The 401(k) was created to unburden companies from the large liability and cost of supporting their workers past their retirement. It was a shift of responsibility from companies to workers. 

The 401(k), however, does not work. It provides a pittance of what people need to really enjoy the freedom they want.

Active Participation Required for True Freedom

You must be actively involved in creating your Plan B wealth outside of your primary business or practice. Until you do that, you'll never know how much is enough.

Until you determine your freedom number and how to achieve it, you'll never have the freedom to live your life on your terms way before the average retirement age (62 in general, 69 and rising for dentists).

If you want to gain more time back in your life and reach freedom sooner, you must create your blueprint plan with measurable milestones for your freedom now using the right investment vehicles.

I've done it for myself, and I've done it for hundreds of others. I have a new book coming out, Scaling Time Versus Wealth, that shows you the concepts and frameworks you can use to create your blueprint plan. You can preorder your free copy here.

Make 2025 about what you want in your life. Use the concepts in my new book to create the opportunity to change your life, to create replacement income, and to make the memories you’ve been putting off.