Tuesday, 9 February 2016

The maths behind the healthy weight and our financial independence

I am into analogies nowadays, so i will talk a bit about the similarities between how to get a perfect healthy weight and how to reach financial independence, as you will like to be healthy when you got enough money to stop doing that menial job and instead to start doing whatever you really dreamed to do.

We all know that being overweight is not a good thing, for multiple reasons like increased risk in developing angina, heart diseases, diabetes, some types of cancer or joint/lower back pain. In order to not go there you need to tweak with your energy requirement (how many calories you need to survive and do you stuff). Energy requirement (ER) is equal with Basal Metabolic Rate (BMR) multiply by Physical activity levels (PAL).


Physical activity levels (PAL) are:
Level 1: Sedentary
This level of activity is described as little or no exercise. The PAL factor is 1.2.
Level 2: Light exercise
This level of activity includes frequent walking in a job / daily activity or 60mins of intense activity in one week. The PAL factor is 1.375.
Level 3: Moderate exercise
This level of activity could be a job that is quite physical throughout the day e.g. shop work or intense physical activity 30 – 60 minutes three or four times a week. The PAL factor is 1.55.
Level 4: Very active
This level of activity could include a highly physical job such as brick laying or farming or intense exercise for 60 minutes five to seven days per week. The PAL factor is 1.725.
Level 5: Extreme
This level of activity could include full time training for a sporting event; this level of activity is usually only reached by elite athletes. The PAL factor is 1.9.

BMR calculating formula is:

Male = 66 + (6.23 x weight in pounds) + (12.7 x height in inches) – (6.8 x age in years)

Female = 655 + (4.35 x weight in pounds) + (4.7 x height in inches ) – (4.7 x age in years)

Now, if you are aiming to keep your weight in check, you need to avoid to consume more energy that what you use. This can be done in two ways:

1. Decrease calorie intake (Eating less)
2. Increasing energy requirements (Exercise more)

This is also the way to lose weight safely, do your math and see where you are now. Using both methods will get you there twice faster.

That was the biology part. Now, researching and writing this for my future book, i could not notice the similarities with the financial independence plan. There are also two ways to go there faster, to the ideal position where you reach the right amount of money to provide enough passive income to cover your monthly expenses.

When you start to build your financial independence portfolio, you will see that  you need a sum to reach (see Tony Robbins - The Money or other sources on how you calculate this sum). Let's say mine is 240.000. There are two ways to do it.

1. Start save more and more from your monthly income (also known as savings rate - 10% to start, 50% is awesome, more than 70% is mythical).
2. Start to earn more. This will help you save more in result, as you will still spend the same amount of money as monthly expenses (already calculated in your F.I.R.E. planning).

Doing both of them simultaneously will get you there twice faster too. 

I hope you enjoyed my daily thoughts.

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