FINANCIAL FREEDOM

Financial freedom is one of the concerns of many people, especially those who are on the path to personal finance. Today, we would like to provide some useful information about financial freedom!

“Financial freedom” is the ability to own and be independent of one’s finances, helping us to live our own way without being limited by money problems. This is also the goal that young people are aiming for today.

So how much money does it take to achieve “financial freedom”? In fact, there is no specific number that indicates whether a person has achieved financial freedom or not, because each individual has different needs and expenses.

Therefore, several formulas have been devised to determine this number. One of them is 𝘁𝗵𝗲 𝟰% 𝗿𝘂𝗹𝗲.

According to the above rule, you achieve financial freedom when you own 25 times the total cost of living in a year, or if each year an individual has to spend 4% of their money on living expenses. the amount of money needed to achieve financial freedom. The formula would be:

𝗛𝗼𝘄 𝗺𝘂𝗰𝗵 𝗺𝗼𝗻𝗲𝘆 𝘆𝗼𝘂 𝗻𝗲𝗲𝗱 𝘁𝗼 𝗯𝗲 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹𝗹𝘆 𝗳𝗿𝗲𝗲 = 𝗔𝘃𝗲𝗿𝗮𝗴𝗲 𝗰𝗼𝘀𝘁 𝗽𝗲𝗿 𝘆𝗲𝗮𝗿 : 𝟰%

or

𝗛𝗼𝘄 𝗺𝘂𝗰𝗵 𝗺𝗼𝗻𝗲𝘆 𝘆𝗼𝘂 𝗻𝗲𝗲𝗱 𝘁𝗼 𝗯𝗲 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹𝗹𝘆 𝗳𝗿𝗲𝗲 = 𝗔𝘃𝗲𝗿𝗮𝗴𝗲 𝗰𝗼𝘀𝘁 𝗽𝗲𝗿 𝘆𝗲𝗮𝗿 𝘅 𝟮𝟱

More specifically, if a person has a living cost of about $40,000/year, he or she needs $1,000,000 to be financially free. However, 𝘁𝗵𝗲 𝟰% 𝗿𝘂𝗹𝗲 still has many minus points because it does not take into account other external factors such as inflation or economic recession.

So we’ve gone through the definition as well as understanding how to calculate the amount of money needed to have financial freedom. In the next article, we will learn about trends, benefits, and how to achieve financial freedom.