If you’re reading this blog, reaching financial freedom is probably high on your list of goals. One of the keys to reach financial freedom is to leverage what I refer to as the “money muscle.” No I don’t mean borrowing money to buy stocks (invest on margin), rather, I’m talking about having money working hard for us. How do we keep more of our money and have our money work hard for us instead of having to work hard for money?

Clarity = Power.
The first step to keep more of our money and have our money work hard for us is to have more financial clarity. The more clarity we have on how to reach financial freedom, the more power we have. To have clarity on financial freedom, we must first determine our key objective when it comes to money.

What’s your objective when it comes to money?
Is your objective to have enough to live the rest of your life worry free?
Is your objective to have enough so you can travel around the world?
Is your objective to have enough to enjoy all the leisure activities you want?
Is your objective to have enough to leave a legacy to your kids and the future generations?
Is your objective to have enough to help others?

For Mrs. T and I, our key objective is to have enough to have more options and freedom in life. Instead of having work dictating how we go about with our daily lives, we will have the freedom to decide how we go about with our daily lives. Having this level of freedom to decide what we can do will allow us to truly and fully enjoy our lives. We no longer need to “book” vacation times. Want to go on a last minute spontaneous adventure? Sounds good, let’s go!

Another objective I have is to help others. One of the items in my bucket list is to write a $1,000,000 cheque and donate to a local charity one day. I believe being financially free will allow me to reach that dream one day.

As you can see, there’s nothing wrong of having multiple objectives. 🙂 Identifying your key objective is extremely important in gaining clarity.

Earn enough passive income to pay for the lifestyle that you desire.

When passive income is greater than what you need, you’re financially free. It’s pretty simple right?

Here are two primary sources of passive income
1. Investment income (i.e. money working hard for you)
2. Passive business income (i.e. business working hard for you)

Investment Income

Investment income is money that come from investments like stocks, P2P lending, or real estates. Investment income takes time to build.

Dividend growth investors and passive index ETF investors are putting money aside each month to increase their investment income. By setting up a plan and executing it, Mrs. T and I have been able to increase our dividend income from less than $700 per year in 2011 to over $10,000 last year.It has been a tremendous amount of growth in 4 years time frame. We are working hard to continue such growth.

Passive business income

Creating a business is easy, to have the business profitable can be challenging. No wonder so many businesses go out of business after a year. What’s even more challenging is make the business passive so you don’t need to be involved. When this happens, the income from these businesses are truly passive. What are some examples of passive business incomes? Selling books or ebooks, selling storage spaces, having a parkade business (i.e. parking lot), selling online courses, creating a mobile app, and etc. There are many different passive business opportunities available to all of us. The key is to get started on one.

As you can tell by now, this blog is primarily focused on investment income, more specifically, income from owning dividend paying stocks. Although this is our focus for generating passive income, it doesn’t mean that we’re not establishing passive business income streams. Mrs. T and I have published a couple of cookbooks and have been working hard to generate more book sales. It’s been about 3 years since we published our first cookbook. To be perfectly honest, this road has been more challenging than we expected. After showing our books at a few major international book fair, we seem to have picked up some steam on our cookbook business! Hopefully we will start generating more passive income from our cookbook business moving forward.

It’s great to have passive income but the key is to receive passive income from multiple sources. The more passive income sources you have, the more diversify your income is.

Let’s summary the keys to reach financial freedom with what I so-called Tawcan’s magical financial freedom formula.

Are you ready?

Wait for it…

Wait for it…

Here it is!

Financial Freedom = Working Income + Saving + Investment Income + Passive Business Income + Simplification

It’s a really straight  forward formula if you think about it.

Working Income

Reaching financial freedom doesn’t mean you have to stop working. Many early retirees still continue working but in a different function. For example, Joe at RetireBy40 works on his blog and generates part time income. Mr. Money Mustache has a carpentry/house building business. The so-called internet trolls will probably argue that these two individuals are not “retired” as they’re still “working.” But we’re talking about financial freedom here, not retirement. 🙂

When we reach financial freedom, we plan to work part time to continue generating income. Part time work like my photography business and perhaps some financial consulting work. Who knows, maybe this blog may generate some cash flow in the future. One can dream right?


Living below your means and having a frugal lifestyle are key contributors to allow one to reach financial freedom and stay financially free.

Investment Income & Passive income

See above. 🙂


Are there things in life you can simplify to save money? Perhaps you can sell things that you no longer use, reduce your media consumption, reduce your cellphone data plan, consolidate all your debt, reduce your wardrobe, or create & stick to a mail plan. There are many ways to simplify your life to save money. You can then use the money saved to invest.

On a related note, while I love ramen and I think it’s absolutely delicious, eating ramen every day as a way to save money is probably not a good way to simplify your life. You’ll probably  end up with some health problems in the long run due to the high sodium level in ramen….

(Eating ramen is probably not a good way to achieve financial freedom)

We all must pay attention to these five components in the financial freedom formula both individually and in combination. These components are interdependent as they must work together in synergy. When you have them working in synergy, you’ve truly leveraged your money muscle.

Want to take some action after reading this post? Here are 3 things to do in 30 minutes that will set you up for a better financial future.

1. Learn about possible long term investments that you’re comfortable with that will generate passive investment income.
2. Learn how to invest in one of these investments.
3. Work on creating passive business income streams.

Now get to work!

Written by Tawcan
Hi I’m Bob from Vancouver Canada, I am working toward joyful life and financial independence through frugal living, dividend investing, passive income generation, life balance, and self-improvement. This blog is my way to chronicle my journey and share my stories and thoughts along the way. Stay in touch on Facebook and Twitter. Or sign up via Newsletter