Know Your Freedom Figure
Work out your freedom figure – that’s the amount you need to get your ‘Certificate of Freedom from the Master’.
If you had this money, you wouldn’t be rich, but you would never need to work again.
Here’s a very quick way to calculate it – it’s not super accurate, but it’s good enough.
First, work out the gross salary you need to live on (that may be your current salary if you’re living okay on that, if not, choose a salary you could live on).
If there are two of you, add the salaries together.
What we’re aiming for is a yearly gross salary that you could live on comfortably (but not excessively). Enough to pay all the bills, run a car, have the odd meal out, buy birthday presents, new clothes now and then, etc.
Let’s say it’s £50k.
Now multiply this by 20 – and that’s your Freedom Figure.
So in this case, you would need a million pounds ‘in the bank’.
Why multiply by 20?
Because if you put one million ‘in the bank’ at 5% interest (100/5 = 20), you’d get an unearned salary of £50,000 a year.
Simple. Yes, I know about inflation, tax, varying interest rates and so on, but we’re after a quick and dirty figure here so let’s not nit-pick.
Please do this exercise now, for yourself—that’s how much you’re aiming for before you can consider yourself a free man or woman.
Don’t be daunted, millions of people have achieved this amount – and more.