Early Retirement Planning: If you are tired of your daily job or your own business and the thought comes to your mind that you should leave everything and live a peaceful life. So the answer should not be found only on the basis of emotions. You can prepare for it by properly assessing your financial situation and understanding future expenses.
To a large extent this formula is hidden in mathematics. Which is called Financial Independence Number (FIN). Financial Independence Number is that amount with the help of which you can live your life easily even without job or business. You should have this amount before leaving your job or business. So that you don’t have any regrets on your decision…
What is Financial Independence Number?
Financial Independence Number is the amount that can cover all your expenses for a long time even without earning. This includes your monthly expenses, rising inflation, medical expenses and all the expenses related to your lifestyle.
For example, if your monthly expenditure is Rs 1,00,000, that is Rs 12 lakh in a year. If you want to meet these expenses comfortably for the next 25 years, then you must have a fund of around Rs 3 crore.
How to calculate it,
To calculate your financial independence number, it is most important to first estimate your monthly expenses. Understand the expenses like rent, EMI, children’s education, medical expenses and your daily lifestyle. After this add the inflation factor to it. Because if inflation is on an average 6 percent, then your expenses will naturally increase in the coming years.
Also get information about the average return of your investment. If your returns are higher than the inflation rate, you can comfortably handle your expenses. By keeping these three important things in mind, you can calculate your financial independence number.
Read also: Thinking of closing your bank account? Avoid these 3 mistakes, otherwise you will have to give and take.
