I know for a fact that we a good goal, we can easily reach our financial independence and decide to stop working after that particular point. But even though we can imagine something like that, there are still many people who feel like they want more and they keep increasing their assets instead of enjoying what they already have. There is nothing wrong with that because it acts as a great motivation for living. I was also thinking on these lines and wanted to analyze how much I would need for my financial independence.
The reason why I wanted to say that financial independence is not easy to achieve is that initially I was having a value in my mind and wanted to achieve that particular value. Then later I found out that it is not going to be enough to live the current lifestyle that I live. The next hurdle that I got was my marriage life which increased the requirement a little more. My life will again demand more after I get my kids and make further plans. That is why I think it is a little hard to reach financial independence.
How much do I need for financial independence?
I was thinking it is going to be sufficient if I make plans with just keeping my needs in mind. But later I found out that it is not going to be like that. There will be demands from our life and also needs for our dependents as well. Fulfilling everyone's needs can give real happiness and that is when we can aim to be financially free.
I had a rough value in my mind. I thought I have to cover my basic needs as follows that will keep things going without any extra need.
A good house to live
A decent bank balance that will give me some passive income every month to do the living.
Some funds now and then which I want to keep aside for traveling or visiting places I like the most.
Provide basic needs to the family members, dependents, and even children.
A separate fund for emergency needs in the family
So these are some of the basic things that one can think about before looking for financial independence. I would say that the needs can differ from one person to another person. But most likely it can be a little similar and along with these above things. Though these are variable for every individual, I personally think that these can fulfill my needs and should be enough for me to say that I'm financially independent.
Challenges in attaining financial independence
There can be a few challenges in reaching financial independence. The first and foremost thing is that our needs keep changing as we grow up. Two years back I was thinking that just half of what I earn today should be sufficient to live a decent life. But after getting married the requirements have changed. We almost decided that we should be living together whatever happens, so in that case I should also respect the needs of my wife. I cannot leave my parents too and have to support them when needed. I still don't have kids but when they start coming, I'm sure the requirements can be totally different.
All these above parameters are the things that I feel can be the challenges. I have some calculations in mind for financial independence and I have doubled those needs now and I'm guessing that should be sufficient and sooner I reach it, it will be a lot better. I'm guessing I will not stop working even after my Financial independence so my life will not be fully dependent on passive income alone. Let's see how it goes.
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The thing about achieving financial independence is indeed part of what you said. As you advance in life, and life situations and needs change, the goal post moves. BUT, the thing is not focus on where the goal post is, because the one thing that should NEVER change is the commitment that you make to getting there.
In other words, if the number you choose to chuck aside is 10%—doing whatever you do with it, but mostly hopefully tied to investments that include ones that provide passive income—no matter what changes in life so long as you keep the 10% in place, and adjust the income side to better reflect what has changed in your life to require more income, then all should fall into line and the goal should not necessarily take longer to achieve.