Imagine one day you wake up and you don’t have to work any more.
Your investments are generating so much money that your money is actually producing more money than your salary.
In plain english, your money is making enough money to cover your expenses. This is also known as financial independence.
Can everyone get there? YUP!
You’re never too young to start, or too old to start.
First you need to know your rough FI number which is about 25x your annual expenses.
If you’re in my ‘Money, baby!’ program, you already know what your annual expenses look like.
So if your annual expenses are $40,000, 25x that is 1 million dollars.
That means you need 1 million invested in order for your investments to cover your basic needs.
Already investing? Great! You’re ahead of the game!
Want to have an idea of how long it will take?
Using the rule of 72 and an average annual return rate of 8%, your money will double every 9 years.
If you are starting with $100,000, in 9 years you’ll have roughly $200,000. In 18 years, $400,000, 27 years $800,000 and 36 years you’ll cross the million dollar threshold at $1.6million.
What if you don’t have 36 years to wait? Or do you want to get there sooner?
Here are a few ways you can:
Cut monthly expenses.
Make more money.
Combination of both.
This will shorten the amount of time it takes you to get to your crossover point, but remember, you also want to enjoy the life you have. The great thing about all this is its your life and you get to decide how you want it to go and what goals you’re working towards.
At bare minimum - I want to help you be able to retire successfully when you want to retire and make sure you have enough invested to do so.
Most people believe hitting some mythical number in their spreadsheet will ultimately = happiness. If you’re 100% clear on your values and what you’re working towards and also how you want to enjoy life today you’ll be all set!
We don't go around asking each other what our net worth is BUT it's one of the best financial tools you can keep in your tool box. And the earlier you start tracking it, the better it will serve you. Watch this video below or read about the 9 reasons why you want to be tracking your net worth:
A good indication of your overall financial health - the 30,000 foot view.
The amount of income you make is part of your overall picture but it’s not the end all be all.
It is a source of motivation as it tracks your progress
You have an easy place to track all of your investments.
It helps you ditch debt!
You'll make better use of your money.
It will help you start thinking about how your financial decisions impact your net worth.
It may help you get approved for a loan or other financial decisions.
It makes it easy to track progress over a period of time.
So there you have it. I like to track my net worth on personalcapital.com because it's easy to use and easy to set up.