The three freedom ratio bands
Passive income ÷ monthly expenses. Example: 12,000 ÷ 48,000 = 25%.
The definition
Passive income is money your assets pay you without you working for it: dividends, rent, interest, fund distributions.
What does not count
Growth in an asset's price is not passive income until you sell. The planner only counts what pays out, which is why a big equity portfolio can still show a small monthly figure. This is deliberate. A ratio built on paper gains would look better and mean less.
The freedom ratio
Financial freedom, in Grownz's terms, is simply the point where the monthly passive figure covers your monthly expenses. The ratio is passive income divided by expenses:
- Below 25%: starting.
- Below 100%: building.
- 100% and above: free. That is the Rat Race Exit.
Two ways to move it
Every rupee, dirham, pound or dollar you cut from expenses is income you never have to build. Every asset that pays out, rather than only grows, moves the numerator. The Rat Race Exit Planner shows the gap between the two and the asset library shows what pays.
