In particular, you may have greater health insurance costs and greater travel expenses. Once you know how much you are currently spending each year, you can make a projection about how much you will spend once you are no longer working. There are several important things to consider when you are financially independent and no longer beholden to a full-time job. Step 3: Determine your projected yearly spending Instead, I recommend using a credit card to make all of your purchases (paying it off each month of course), and then use a program such as Mint to automatically track your expenses. In order to figure out how much income you will need when you no longer need to work, you need to know your current level of spending. One way to do this is simply to write down everything you spend money on, and then enter it into a spreadsheet. The goal is NOT to be idle, but to do worthwhile things that you can’t do with the inflexibility, stress, and demands of a full-time job. Maybe you want to spend more time with your kids, start a business, write a book, volunteer as an avalanche forecaster, or be a professional (but unpaid) athlete for a year. Sitting on a beach for years is generally not enough motivation for most people. You need to have goals and aspirations that you want to accomplish when you no longer need to work. To make this work, you have to really want it. Step 1: Decide that you really want to earn your freedom The first step is the most important, because like with most goals in life, if you aren’t motivated, you won’t actually accomplish anything. You may still want to work in some capacity, but it will be entirely on your own terms. There are basically 6 steps to earning your freedom. At that point, your investments make enough money to support your lifestyle without a separate source of income. However, if you are looking for more security, options, and flexibility in your life – if you want the ability to fully pursue your dreams and passions outside of formal work – then you may want to earn your freedom sooner.Įarning your freedom means accumulating enough invested assets that you no longer need to work. Save a little bit each year, grind away, and hopefully when Social Security kicks in, you will have enough to retire. If you enjoy your job and are content to continue working into your 60s and 70s, then by all means stay the course.
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