Money is always a fascinating thing and most of the times it makes us run behind it again and again. One good thing about money is that it adds sophistication to our life but at the same time too much can also be a trouble.
Many people might have a dream to get a financial independence and chase their dreams. How much money do you think you will need to attain financial independence?
With all due respect to every other reply, I here would like to differ with any of the outside opinion to this question.
The idea of financial security arise from our fear to lose out in life in the absence of money. Security of certain kind is needed, but it is totally on self how much is enough.
There was a very rich man who died with astonishing 3 billion dollars to his name. He died with unfulfilled desire to acquire more because he thought 10 billion dollars would justify his life.
I doubt if he had 10 billion dollar to his name, his hunger would have been 100.. .. ..
I do not doubt that we require certain amount, but an inception of the idea of financial freedom is absolutely dangerous and irrational.
Quite a big question to answer.
I don't think there is 1 fixed number for everybody. But my general rule of thumb is that if you have enough money to generate passive income which more than covers you expenses, then you are financially independent.
So to calculate that, you have to ask yourself how much are your expenses annually. Then you estimate how much returns you can reasonably make from your existing savings/investments.
Say if you spend $30,000 per year based on your current lifestyle and you have $800,000 which you are relatively sure that you can get a 5% ROI from, then you are financially independent. Because, a 5% ROI from $800,000 means you have $40,000 per year but you are only spending $30,000. You are still growing your wealth by $10,000 every year.
In my opinion, the best answer is in Rich dad poor dad, and it goes like this.
First, figure out your expenses.
Then earn money, and your income has to be greater than your expenses. Save and invest as much as you can.
Your investments should provide you some income, rent from your real estate acquisitions, stock dividends, bond yields etc. Once this income is greater than your expenses, you become wealthy.
After that point, NEVER spend more than your "passive" earnings, and keep increasing your investments with the extra money.
I believe, there is no bullet proof answer for this question. It depents generaly on your own definition of independence. And there is a huge difference between your feeling to be independend and a real independency.
This is always a tricky question because there is absolutely no one answer for this. As a general rule, you could say that if you know what your expenses will be including everything leisure, travel etc, and if you have enough to keep you going after the 4% rule, that should be the money you will need for financial independance. Read more about the 4% rule here https://www.investopedia.com/terms/f/four-percent-rule.asp