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You have seen how project management can help you start your journey towards financial freedom. My earlier post talked how we can begin phase 1. Let’s recap what are the 4 phases in project management:

Four Phases of Project Management

1. Definition Phase

2. Planning Phase

3. Execution Phase

4. Closing Phase

Work Breakdown Structure

To continue on the definition phase, you need to develop 1.3 Work Breakdown Structure (WBS) or to list the activities or next actions that will help you achieve your objectives.

Using the example given in my previous post, the objectives could be to:

Objective #1: To generate $50,000 annually in passive income

Objective #2: In ten years’ time

Objective #3: Saving up investible capital of $500,000 (generating 10% per annum)

Objective #4: While still spending time with family on weekends and evenings.

How do you break-down the activities needed for you to achieve these objectives.

Let’s list what you need to do to obtain $50,000 passive income. Assuming I can get a return of 10% annually, I would need $500,000 investible capital to generate that type of passive income. How do I get $500,000? By living within my means and saving.

To save $500,000 in ten years time is to save $50,000 each year. So I could breakdown objective #1 into smaller tasks:

Objective #1: Generate $50k in passive income annually

Tasks

1.0 : Save $50,000 a year

1.1: Make additional $xx,xxx in earned income (from job)

1.2: Generate passive income of $x,xxx (from blogs, selling stuff on eBay, selling ebooks etc.)

1.3: Build necessary skills/experience for higher paying job

2.0 : Learn about living within my means

2.1 : Borrow and read library book on personal finance

2.2: Cut down consumption of soft-drinks during lunch

And so on… It is intuitive, you need to analyse what are the individual tasks that help you achieve your goals. The idea behind listing all the tasks is trying to achieve completeness. You aim to brainstorm ways that you can reach your obectives.

Applying the project management method gives you a structure in which you can take your main objectives and break them down into do-able tasks and sub-tasks. You decide how detailed you want to be. You want to be comprehensive enough to cover the steps needed for you to move forward towards your goal.

Organisation Breakdown Structure

In a typical project management approach, you would also list a organisation breakdown structure to determine the roles and responsibilities of people performing the various roles. Since this is your personal financial freedom project, you can skip this part since most of the doing is by you yourself.

Identify Resources

Projects consume resources and your personal financial freedom project is no exception. You will need to plan for what are the books, references, time effort and knowledge/skills you need for you to succeed on this project.

What resources do you think you need for your own project? How will you go around to obtain them? Share with Panzer in the comments section.

Be well and prosper.

Flickr! image by Geodog

I’ve  just completed a two-day course on Project Management and realised that the bits and pieces are starting to fall into place.

My journey towards financial freedom has been to pursue my objective, which is to be financially free where passive income generated from investments exceed my living expenses. When I have achieved that I will consider myself financially free.

My book, “Panzer’s Guide to Financial Freedom” has been requested by more than two hundred people since I first launched it in November 2008. I realise there is a need for people to have a step-by-step guide to embark on their financial freedom journey.

I’ve created this series to show how you can initiate your own “Financial Freedom Project”. It uses a simplified but formal project management approach and shares how you can implement processes and structures to help you become financially free.

Project Management

What is a project? It is a series of tasks that leads you to an outcome. There is a beginning and an end and you consume resources to reach the outcome.

I see my outcome of achieving financial freedom as a project. It has a start and end date. I consume resources as I go along, i.e. you need to work and consume time to generate income and savings towards building your investible savings. Ultimately, it is a series of tasks that need to be coordinated into a coherent whole towards moving me closer each day towards financial freedom.

How can project management help?

Project management can help us achieve financial freedom as it imposes a structure for us to adhere to. The key processes of project management are as follows:

1. Definition Phase

2. Planning Phase

3. Execution Phase

4. Closing Phase

Today’s post will examine part of phase one to see how we can apply some of the concepts in Project Management to our journey towards financial freedom.

1. Definition Phase

In its simplest form, defining what our financial freedom project is is to set purpose, scope and objectives. What do you mean when you say you want to be financially free?

Using the project management (PM) approach, you need to set the [a] purpose and scope as well as [b] objectives. Let’s examine how you can write down your purpose and scope statements as well as adding your objectives to your financial freedom project.

1.1 State Purpose and Scope

Do you have pen and paper ready or your notepad/word/open office writer available? Good. Now in 30 words or less, write a project scope statement that includes:

[i] a purpose (WHY)

[ii] Deliverable (WHAT)

[iii] Time (HOW LONG)

[iv] Cost (HOW MUCH EFFORT)

Try to be specific and don’t be afraid to dream big. It’s meant to push to you start living the financially free life.

E.g. To spend more time with my family and to travel, I aim to generate $xx,xxx in passive income by dd/mm/yyyy by saving xx% of my monthly income.

1.2 Set Objectives

You can elaborate what your financial freedom project is about by setting objectives. Objectives can be framed from results (outcomes), resources (time, cost, skills) and restrictions (what you won’t do e.g. rob a bank, operate a ponzi scheme).

Set SMART objectives – Specific, Measurable, Achievable/Realistic and Time-oriented goals.

E.g. Objective #1: To generate $50,000 annually in passive income

Objective #2: In ten years’ time

Objective #3: Saving up investible capital of $500,000 (generating 10% per annum)

Objective #4: While still spending time with family on weekends and evenings.

That’s all you need to get started.

The main motivating factor really lies in your purpose. If your purpose is POWERFUL, it serves to drive you towards your project.

Next up, developing work breakdown structures and organisational breakdown structures and identifying resources.

Be well and prosper.