#Define financial freedom free

This figure assumes regular annual expenses.Unless you plan to stay on rent, the cost of purchasing a house is not considered in this figure.

You need to save separately for your children’s future (education and marriage).

(Reminder: If you want to reverse-apply the 30-40x rule on this figure, then use inflation-adjusted annual expenses at retirement and not today’s figure). Yes, that is your financial life equation.Īssuming variables such as 6 percent inflation, 7 percent post-retirement returns, and a 60-40 percent equity-debt portfolio during accumulation, you would need close to Rs 6 crore at 50 to say that you are financially free.

You have 20 years to save money that will then be enough for the remaining 35 years of your life. Your annual expenses are Rs 6 lakh and you expect to live till 85.

#Define financial freedom free

Suppose you are a 30-year-old with a young family who wants to become financially free by the age of 50. If I delve into the deep mathematics and scenario analysis of financial freedom, it will scare away half of the financial freedom enthusiasts. So, if your annual expenses (not income) are about Rs 10 lakh, then, using the 30-40x norm, a corpus of Rs 3-4 crore is what you need. Some say that a corpus of 30-40 times of your current annual expenses is good for achieving financial freedom today. And that is at the centre of the financial freedom discussion. Some of you may have noticed that I have used the word ‘enough’ a few times already. While early retirement is about retiring with ‘enough’ money. Financial freedom is about having enough money to have the option to retire early. That’s a nice place to be in, isn’t it?īut be reminded that financial freedom and early retirement are two different things. For someone young, it might mean having enough money to leave a job and travel for some time.īut in its truest sense, financial freedom means having enough money to never have to work for money again. For women, it might mean being able to handle their finances their own way. That is what true financial freedom is, though it may still mean different things to different people. A stage where whatever you have accumulated to date will start generating growing income that will be enough for the rest of your days. But in its truest sense, it has a very simple meaning at its core – it is about reaching a stage where you have enough money to take care of your expenses for the rest of your life without needing to work again. Financial freedom is a term that is used loosely by most people.