Is Financial Independence The Same As Rich?

How much money do you think you will need for financial Independence? One million? Two million? Many people are under the illusion that it would take many millions to achieve financial independence, but examine the figures and it can be seen that this is not the case, and in fact the amount needed is surprisingly less than you would think.

It all depends on your lifestyle choice of course. Rich idiots like Michael Winner have been quoted even recently declaring that £1 million or even £10 million is hardly worth having, and that to be truly rich one would need to be in the billionaire league. Utter nonsense! Unlike Mr. Winner, we don’t all need original Van Goghs hanging on our walls or yachts in the Med to impress slobbering cronies and bolster our self esteem.

In this day and age, when so many people are living from month to month making mortgage payments and seeing climbing credit card debts as they struggle to get by, I’ll bet that most would be happy to be debt free, live in a nice home and take a couple of good holidays each year. The added bonus of not having to work for it would seem like paradise – truly ‘rich’ indeed!

Anyway, just how much will you need for a financially independent lifestyle? The figure to start with is your current yearly income. For example, let’s set this figure at £25,000 for the sake of calculation. If you had just £527,000 in a savings account paying 4.75% interest, your income would be £25,032 per year, i.e. you would not have to work to collect your current salary!

Ok, I know this is a simplistic calculation and it is still a heck of a lump sum to acquire, but bear in mind that the current average house price in the UK is £194,589 and it starts to look attainable. Naturally, for long term financial independence you would have to take into account interest rates and inflation, so it isn’t really a figure to bank on for the rest of your life. However, it does put the whole financial independence thing into some sort of perspective and debase the myth of needing many millions. (If you're interested you can read some tips for financial independence here)

But perhaps the greatest luxury that can be had from financial independence is time. Time to do with as you please without worrying about getting to work each morning or spending 40 hours each week toiling just to get by. Now imagine how much more money you could make with your own Internet business if you had all of this time to devote to it.....