What Does It Take To Be Financially Independent?

By | June 29, 2020

You can be financially independent if you like. That may seem like a pretty big elephant at this point, but it is certainly possible.

Now, you could be financially independent by owning rental units and bringing in more than you spend. You could sell your time or effort for money, similar to a job, but you would be working for yourself. That’s what I do as a technology consultant.

My favorite way to be financially independent, though, is by earning money with your money. That way you can work today or not and still be fine.

How Is It Possible To Be Financially Independent With Investments?

First you need your number. For instance, you want to make $50K per year (that’s 50,000 dollars). Then you need a rate of return you think you can consistently get, like 4%. Divide $50K by .04 and you get $1.2 million or so.

$1.2 million in principle is doable. It’s just a factor of your current principle, your contribution, your rate of return, and the amount of time. Or you can turn to your handy-dandy spreadsheet and calculate a future value of investment (it’s a formula in excel) and see have you can generate this money. Play with the numbers until you are comfortable.

Couldn’t I Just Rob A Bank?

No, illegal. I guess you would be kind of financially independent in federal prison. Just saying.

Here’s the thing: A journey of a thousand miles starts with a single step. Get moving!

And no, you can’t just start a ponzi scheme.

It’s Going To Be A While For Me Too

I am actually hoping to have enough to retire at some point. Maybe mid-60’s with any luck. I might wait until I’m 70.

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