How can you tell if you’re Financially Independent? There are a lot of misconceptions about this subject. Your 21-year-old who left the house for good is nowhere near F.I.— He simply transferred his dependence from you to his employer.
Being a multi-millionaire won’t necessarily make you financially independent either. Financially independent people have assets that generate cash flow that is at least equal to their expenses. Being F-I is a much better state to be in!
If there’s a mathematical formula, it can be summed up as follows:
F. I. = Passive Income >= Expenses
The key is to generate enough passive income that meets your expenses. An active income stream from self-employment won’t do here. You may be independent of an employer, but you’d still be dependent on your job.
It doesn’t take a rocket scientist to determine the relationship between Passive Income and Expenses. If you analyze the above equation carefully, you should be able to infer the following:
The fastest way to Financial Independence is to increase your passive income AND lower your expenses!
And nothing is more passive than an army of dollars generating $$$ income while you’re asleep. A $1,000,000 portfolio invested in 75-25 stocks and bonds mix can provide a $40,000 income that can last 30 years or longer!
So, do you want to retire early and enjoy life without worrying about money? Do you want to know how much you need to save and invest to achieve your dream? If you answered yes, then you need to use my financial independence calculator. It’s a simple tool that will tell you what age you can quit your job and live off your passive income.
All you need to do is enter your current retirement savings, monthly contributions, expenses, expected rate of return, and others. You can adjust the parameters to see how different scenarios affect your outcome.
For example, you can see how much faster you can reach your goal if you cut down your latte spending or increase your income by selling your kidney. Just kidding, don’t do that.
But seriously, try my calculator today and see how close you are to living your best life!
Feel free to comment below if you have questions about my calculator.