Formula for calculating how much you need to never have to earn a salary again
A “financial freedom number” refers to the amount of money you need to never have to work for a salary or a wage again.
To be financially free you need:
An emergency fund (large enough to cover three months’ expenses)
Investments that generate enough to cover your monthly expenses
Ingram spoke about how to determine what amount of money you will need to be financially free.
He suggested starting with your expenses (monthly, annual and periodic), not your income.
Ingram also discussed the “5% rule” and a simple, quick way of determining a rough number - you’ll need about 20 times your annual expenses.
Alternatively, multiply your monthly expenses by 12 and divide it by 0.08.
For more detail, listen to the interview in the audio below.
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