Women - Creating Your Financial Freedom

This is the calculation of money you'll need down the road in order to live a very minimal, luxury-free life each month.
You can figure out how much dignity money you'll personally need by determining the smallest amount that it will cost you to live each month.
Don't include any frills.
If you own your house or apartment, your mortgage or maintenance is likely to be one of your major expenses; it is perhaps your single greatest expense.
For many women, eliminating mortgage debt is an essential step to achieving financial independence.
Depending on the current size and condition of your Money Machine, you may find that financial independence may arrive for you only after the mortgage is

paid, whether that date is five, ten, or more years from now.
It might be $1,000 a month or $10,000.
In any event, your dignity-money figure is the target level of income for the first stage of creating your financial freedom.
If you already have your dignity money, then you can feel at ease.
If you have yet to establish your dignity money, then it's time to begin working toward it.


How do you figure out how much your Money Machine needs in order to generate your dignity money? The calculation is simple.
This provides an estimate of how much money you'll need to invest in order to generate the appropriate monthly income.
That means your yearly expenses will total $48,000.
Why? At $4,000 a month, your yearly expenses will total $48,000.
This means that your Money Machine will need $480,000 in order to pay you an annual income at the rate of 10 percent per year, or $48,000.
If your minimal monthly expenses are $6,000, your Money Machine should contain $720,000: $6,000 times 12 is $72,000; adding a 0 brings it to $720,000.
Do your own calculation.
Inflation gradually shrinks your money's value.
Consequently, the amount in your Money Machine will have to be somewhat greater to compensate for the effects of inflation.
A high inflation rate, like the one we experienced in the 1970s, will have a strongly negative effect on the value of the money generated by your Money Machine.
The power of inflation grows significantly as time passes.
But if you expect to work for two or three more decades, inflation will make a noticeable difference.
That seems like a lot of money to feed to your Money Machine, and the thought of how to amass such an amount might be daunting.


Consider Rachel Levine, Lynn Attwood and Betty Scott as they envisioned their financial pictures.
Rachel earns $30,000 a year.
I was wrong.
Rachel and I chatted about the dignity-money concept, and she concluded that she and her husband would want to have $600,000 in their Money Machine.


Rachel enjoys museum work, and David enjoys his work, too.
That's about thirty-six years from today.
2 years.
It is likely Rachel's income will increase with raises, promotions, and career moves, and David's contracting business is expanding rapidly.
As the Levines eventually accumulate more cash to invest, their Money Machine will gain more steam.


Lynn Attwood said: 'To grow my own dignity money, I estimate that I will probably need to put $700,000 in my Money Machine.
To advance to the next step-to live more freely, to travel several times a year, and to entertain and frolic without guilt at some of her favorite stores-in other words, to maintain her present lifestyle-she will have to have more cash invested in her Money Machine - in excess of $1 million.
The important thing to note is that creating the Money Machine begins with securing your financial necessities and then moving on.


Betty Scott figures she'll need less dignity money than Lynn does.
Betty grasps the principle of spending less than you earn and investing the difference and is prepared to do exactly that.
That means her Money Machine will have to contain $420,000 to establish her dignity money.
That means you have to really shave those credit cards," I reminded her.
The benefits of securing income from your Money Machine are pretty obvious.