Journey to Financial Freedom

Many of us may have said – I want financial freedom. But when asked, you don’t know what is the exact number that could support your retirement. Think of it as a financial map, if you don’t know your destination, you can’t plan for the drive. And if you don’t plan for the drive, you would not know what is the fastest way to reach that destination. 

So, what is the definition of “financial freedom” for you?

There are many rules and definitions and various levels you might find on the internet nowadays. For easy sake, here are the three simple levels for your reference:

  • Level 1 – a number that could cover your “Needs”
  • Level 2 – a number that could cover your “Needs” + “Wants”
  • Level 3 – a number that could cover all your “Needs” + all your “Wants” to achieve the lifestyle you dream of.

Let’s name the three levels as follows:

  • Level 1 = Financial Security
  • Level 2= Financial Independence
  • Level 3 = Financial Freedom


  1. Financial Security

For this first and basic financial threshold, you need to have an amount that is sufficient to cover all essential daily living expenses (or we say your “Needs”) such as rent, living expenses, utilities, transportation, and medical expenses. The basic necessities that you can’t live without, and without them, your life will be impacted.

As an example, rent + utilities + transportation + food + some medical bills = 700,000 MMK/month.

Applying the 25X Rules*:

700,000 MMK x 12 months x 25 = 210,000,000 MMK

You can multiply by 5 or 30 times, whatever numbers could give you a level of comfort and security. If it is 30 times, the total number is 252,000,000 MMK.

It means that the minute you have saved up to 210,000,000 MMK, it will provide you with quite a “secured” life, with monthly expenses of 700,000 MMK for the next 25, or 30 years of your life. You can actually say you have reached Level 1 – financial security.

  1. Financial Independence

After you have defined the end goal of Financial Security, you might want a little more entertainment in your life. You may want to go to the movies, bar, or travel once a year. Whatever the costs associated with these “Wants”, you can add that onto the previous number.

Now, from your previous example, your figure of 700,000 MMK/month is not enough for you to go to the movies or bars every week and travel once a year with your family. You need an extra 300,000 MMK/month for this. That means you will need a total of 1,000,000 MMK/month for your Needs and Wants expenses.

Applying the 25X Rules*:

1,000,000 MMK x 12 months x 25 = 300,000,000 MMK

Once you have acquired this amount, you can say “I have reached level 2 of Financial Independence”, where you can allow yourself to live on 1,000,000 MMK/month for the next 25 to 30 years of your life. At this point, you could actually decide to quit the job or just follow your passion in life without worrying about the financial situation.

  1. Financial Freedom

This is often said to be the most ideal destination because we know most of us once dream to reach financial freedom. But each of us interprets the word “freedom” differently.

Financial freedom could mean you are able to do the things you most desire in life and live the most comfortable and enjoyable life after years of hard work. It could be buying a villa, retiring, traveling, shopping for luxury brands, or simply wanting to build your own farm, fish pond, and grow vegetables.

As for this level of financial freedom, we believe there isn’t a specific number, because everyone will have different expectations and pursuits. After you cover your “Needs” and “Wants”, calculate if you need another 3 million, 5 million or 10 million a month to reach the “lifestyle” you want. Sometimes, it is not the number but you just want to feel happy and fulfilled, free from money pressures and worries. That is still the Financial Freedom definition for you and your family.

And from this number that you have come up with, for example, it has to be 100,000,000 MMK/month for your lifestyle and freedom of living, apply the 25X rule you will reach the total number of 30,000,000,000 MMK in order to call yourself “financially free”.

At this stage, once you know the number, you need to start saving and investing now, set the timeline of when you want to achieve that numbers, and how you go about doing that. This is called the overall money plan and management in order to help you reach your goals.

We hope the next time you set your financial freedom target, you know how to calculate your own number. Depending on what your financial goals are, please note that we have not discussed whether you should have health insurance, and property as an asset from this goal. That means you have to prepare to save or invest in order to have your health covered, and a roof for your family.

*25X Rule is simply an estimate of how much you’ll need to have saved for retirement. It is not 25 years, but sometimes people could easily misunderstand that we should multiply with the number of years we expect to live up to. Please note that if you live during economic turmoil, this rule might not apply because you might need more money to cover the losses during the recession.

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