What does being financially free mean to YOU?  Most people think that they would be financially free if they made a million or two. But do you really need that much?  I don’t know the answer to that question as I don’t know you personally but to tell you the truth, I doubt it.  I think you could be financially free with a less money than that.

Real wealth is not a lot of money – for those lucky to have real wealth, they will have good health, happiness and friends and family to celebrate these things with them. 

But most people would also like to have enough money to make life changing decisions i.e. how much money does my part time Internet business need to provide to allow me give up the day job?   Most people when approaching an Internet business will have given some thought to the product or service they wish to provide.  They will have read countless e-books or articles, listened to various gurus on subjects from pay per click, to website optimisation, search engine optimisation, research the best paying affiliate products, Website/blog, Wordpress/Xsitepro etc. How many have given any thought to how much money they need, in short the reason why they are learning all this new stuff?

The traditional measure of wealth is to measure your net worth – you list the value of your assets on one side of a piece of paper and the debts on the other. When listing your assets try and remain realistic. As the current market is illustrating, property values do not always keep increasing and your properties are only worth what people will pay for them.  The value of your debts or liabilities is easier to calculate. All you need to do is have a look at each debt you have e.g. mortgage, credit card, personal loan and contact each provider and ask for confirmation of the outstanding balance.

Your net worth = assets –debts but please don’t panic if this is a minus figure – this measurement is comparable to a companies balance sheet in that it is only a snapshot of your financial situation.

You would never run a company without knowing what it's balance sheet looked like, yet the majority of people haven't a clue what the balance sheet of their life stands at today!

To be financially free, you need to understand what you spend your money on (apart from all of the above ebooks etc you buy from the latest MUST HAVE launch).

The best way to do this is to keep a spending diary for one or three months.  Three months would give you a better picture but I understand it is a bit long for most people.   The majority of people underestimate how much they spend on incidential spending.  A dollar here and there soon adds up.

Add up all of your outgoings both fixed and discretionary spending.  Think of fixed spending as the necessities in life – it would include your mortgage payments, council tax, water rates, any loans or credit card payments, your food expenses, heating, lighting, travel (to work).  In short, any expenses that you can’t avoid paying.  Your discretionary spending is money spent on going out, having fun, presents, holidays etc. 

This is the figure that you need to have coming in month in and month out.  If you were guaranteed this sum of money how different would you life be?  I would hazard a guess that it would be quite different and I would also put my current salary on the fact that you don't NEED a million dollars to provide this level of income.

Working out the above figures takes time and effort but at the end of the exercise you have a much clearer idea of the amount of money YOU and your family need to be free to live the life you want.

Ok so now you know how much you need to earn every month to cover your current outgoings?  Why not see how much you would need to earn to clear all of your debts?  Why have a 25 year mortgage if you could clear it in 5 years? 

Or perhaps your dream lifestyle includes a change of scenery i.e a house in a different state etc.  Go and find the house of your dreams.  Find out how much you would have to pay for it now and work that figure into your calculations.

You would never go on a  long road trip without working out a route yet most Internet marketers and new entrepreneurs do exactly that.  They try making money online - wanting to make their fortune but they get so caught up in following someone else's dream, they forget what it is they actually want.  How do you know you have achieved your ideal life, if you don't mark out your destination in advance?

If you undertake these calculations, you will find that the figure you NEED to be financially free is probably a lot less than you anticipated.  Most of the clients I worked with (in my former life as a CFP) were astounded at how little money they needed to cover their bills as opposed to the levels they anticipated they needed.

The figures will change as your plans change and as the economy changes.   Given the nature of the world we live in, these figures will always be at best a rough estimate.  They are only a tool, but a very important one, in your wealth building arsenal.

As soon as you know the figure you require, your subconscious mind will start working on ways of achieving it.  You will know how many articles you must write, how many ebooks you have to sell, how many hubpages (100 in 30 day challenge anyone :-)) you must write etc

You have the income goal and you know roughly how many products in your niche you need to sell to meet this figure.  Doesn't the dream of financial freedom suddenly start appearing more real?