A short coaching-video transcript explaining a simple wealth-building rule—spend less than you earn and systematically invest the difference—and introducing six progressive levels of financial well-being. The speaker frames an exercise to write out personal six levels and uses conservative 5% return calculations to illustrate "critical mass" (lump-sum) targets for: emergency funds (6–12 months of basic living expenses), financial security (basic living), financial vitality (basic living plus modest entertainment), financial independence (enough to maintain current lifestyle; speaker cites ≈$10–12k/month → ≈$2M at 5%), financial freedom (a higher threshold adding ≈$10k/month), and absolute financial freedom (speaker cites ≈$40k/month). The talk emphasizes liquidity for emergencies, insurance, and that assumed returns may vary.
And now this is a really simplistic definition of how you build wealth. But this is definitely one of those things that common sense is not common practice. It's basically spend less than you earn, like a business, right? You want to have profit, so spend less than you earn and just systematically put money away. So just decide that you're going to put money away and just get it off the table. Like it's not a part of, like it's not accessible. So kind of sweep it off the table, spend less than you earn and invest the difference. Not rocket science. And for some people it's a percentage. You know, just decide on a percentage. And in real estate, you know, if you don't have a steady stream business, there will be months where you lose money. So maybe in that month you're not able to put money away. And we'll go through the levels to make sure you don't have to. You put money too far away. So you like invested in something that might go down and you have to pull it out. So these are the six levels and we're going to go through an exercise here where you're going to write out your six levels and I'm going to show you some quick calculations to figure out what it means to get to whatever level, however you define each of these levels. So the first one is just shit hits the fan, you know, do I have six to 12 months of just non risky invested money that I can get to? So we'll go through the calculations like four things. If you had to cut everything out of your life except basic living expenses, you need six to 12 months of that financial security and then some, you know, insurance and disability insurance. So three, three things for the first, financial protection, financial security. When this talks about critical mass, it's talking about the lump sum. So if you have a million bucks and you invest it in something and you earn a really conservative rate of return, 5%, which is, that's what I'm going to sort of suggest for you guys. You can earn, what's that, 50 grand a year. So you get a million bucks. That's the critical mass, that's the number we're going to be talking about. And you invested at 5%. You can use different, you can use 10%. If you get 10%, but I use 5% in my calculations, that's 50 grand. So even some tax free bonds in certain markets at certain times you can get 5% tax free. So that's $4,000 a month. Critical mass of a million dollars will earn you $4,000 a month of income. So when we're talking about ultimate or absolute financial freedom, it's what critical mass, what lump of money do you need to just earn income without having you to lift a finger? So financial security, we'll call about that. This, this is basic living needs. So on top of financial project. Yeah, basic living needs. Mortgage, food, utilities, transportation, insurance, financial vitality. So in the security world this is like man, shit is really bad. We can't even do entertainment. So in the financial vitality, it's the critical mass to not have to work and to be able to live your life at a basic needs level. Plus basic entertainment and some luxury items so women can buy like you know, one article of clothing a month or you know, you're probably not going daily shopping at that point. And then financial independence, enough cash to live the exact same quality of the life you have today. So all of your monthly expenses, what critical mass, what lump of money would you need to be able to. For me I think it's about ten grand a month is ten to twelve grand a month is what we spend to live pretty kick ass life. So what does that look like? That's 2 million. No, 7 grand a month is 100. So say 100 is 2 million. At 5% will give 100 grand, which is 8 grand. So a little bit more than 2 million at 5%. But you, I mean returns could vary of course. So you're independent from work at that point. Financial freedom. I kept it simple, I just added 10 grand I think on top of that number before it. And I'll show you this in a second. It'll make more sense then absolute financial freedom, sufficient income to do virtually whatever you want. For me this number was 40 grand a month. I think at 40 grand a month I'm probably feeling like after tax money, I'm probably feeling pretty secure to could probably give away 20 grand even to travel, to do whatever the heck I wanted.
