You’ll know how tall you are, probably your weight, how much your mortgage is and many other numbers which affect you life, but you may not know your 3F’s.
If you’re thinking about Side Incomes or any income for that matter the 3F’s are an important figure and should be central to your thinking at least.
All of us have a Financial Freedom Figure, or 3F’s, and it is a number which probably sits on that cusp between stress and worry, and being relaxed.
Your Financial Freedom Figure is the amount of money you need every month to meet your commitments and living expenses. It doesn’t include all of the luxuries you might want but is the amount of money you need each month to break even.
A bit like waistlines, our 3F’s will change over time. As family sizes grow, or shrink, as mortgages are taken on or paid off and commuting requirements vary with different jobs, so will our 3F’s.
To calculate your own Freedom Figure sit down and make an assessment of what your committed and essential expenses are. Be tough on yourself. Having a cable TV provider is an extra choice over Freeview for example.
Items you will include for a monthly figure are:
- Rent or mortgage
- Monthly food shop
- Essential clothing like school uniforms or specific clothes for work
- Any outstanding loans on cars or other items
- Any fixed debt repayment
- Commuting/travel costs
- Annual Insurance/12
- Other essential annual costs/12
- Heating and utilities
- Phone and broadband
- and anything else which is essential to you.
When you have added this all together you will effectively have your 3F’s.
If you compare that number with your total monthly income then you will end up with a positive or negative number.
If you are not earning enough to meet your 3F’s then that gives you a target for any Side Income effort you take on. It will help you to clarify how much commitment you need to put in to achieve your Freedom and start you in thinking about what Side Income stream would most suit your needs.
Of course, your income may already exceed your 3F’s. In which case great. But that’s not the end of it. What if you want an extra holiday a year, or to buy a boat. In such cases you are now defining the scale of additional income you will need and again this will start to point you towards Side Income streams appropriate to your skills and interests.
All photos by Unsplash
