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Financial Independence. The crossover point.
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Skills for LifeGL-00099
Financial Independence
The crossover point
The point where investments cover living costs, so work becomes a choice.
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Financial independence is the point where income from your investments covers your expenses. After that, work becomes a choice, not a requirement. The variable is not how much you earn. It is the gap between what you earn and what you spend. A wider gap reaches the crossover point faster.
- The rule of thumb: save 25 times your annual expenses. The returns on that amount can cover your costs indefinitely.
- Starting early matters more than earning more. Time and compound interest do the work. (See Card 0006.)
SourceVicki Robin, Your Money or Your Life (1992)
Standard financial planning
Standard financial planning
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