- All monetary requirements, including day to day expenses for present and for future till our life.
- All capital requirements; college fee, purchase of a house, purchase of a car, etc., to be required presently or/and future till our life.
Tuesday, July 5, 2016
How Much Money Do You Need to Be Financially Independent?
One of the very important question, that is relevant to all classes of persons of a society is ‘how much money do you need to be financially independent?’ If we do have the answer of this question, then we will have an easy life, without any financial distress. Let’s have a discussion on this issue. But before that, we should have a very clear concept of what the financially independent means. Here, how we define the financial independence is of a great concern. This article can provide help with finance assignment.
We are financially independent means we do not rely on others’ wealth or others’ goodwill to satisfy our needs and wishes, which require money. For example, if I want to have my own house, then I should have my own sufficient money to buy a house, without asking money for this to others. This scenario justifies that I am financially independent. Let’s have another example. Suppose, Mr X has the living expense of $30,000 per year and he is earning $75,000 per year, then we can say Mr X is financially independent as he does not have to be dependent on others for his expenses. Financially dependent means you are dependent on others for money. For instance, when we are school going students, we financially depend on our parents or guardians for all kinds of expenses, whether it is school fee or whether it is for fulfilling our day to day basic expenses or whether it is for satisfying our wishes. We need to ask money for these expenses with our parents or guardians.
Financial independence is not related with the amount of wealth a person has. In other word, it is not like that all rich persons are financially independent and it is also not like that all poor persons are financially dependent. Financial independence is the function of the people’s expenses, monetary requirements and the available their own money. If the person has sufficient money to fulfill his expenses and monetary requirements he can be considered as the financially independent person, no matter whether he is rich or not. For example, suppose a person earns $30,000 per year, while his annual monetary requirement is not more than $19,000. In this case, this person is considered as financially independent. Let’s take another example. Assume a person earns $100,000 per year, but his annual monetary requirement is $101,000. In this case, he can be considered as financially dependent as he has to rely on other persons for additional $1,000 per annum, which is not covered by his earnings. So, financially independence is basically reflected through the balance between one’s monetary requirement and his/her own money/wealth. In case anyone would like to know more about this This article can be useful for essay writer.
Now, we understood what the financially independent means. The next question that comes in our mind is how much money is required to make us financially independent. If we know the answer of this question, then we never face any type of financial distress in any phase of our life, while fulfilling our monetary requirements. But, unfortunately, we can’t say a specific and single answer to it. The answer can’t be generalized. Each person has his/her own situations and conditions. Each one has his/her own lifestyle dictating his/her living costs, has own specific desires, etc. Apart from them, the age of the person or phase of his life also dictates the monetary requirements of present and future. So, these all, in together define one’s monetary requirements. Based on that, the exact amount can be calculated, which make a person financially independent. If one wonders how to do that now this article content can provide the financial management assignment help too. As explained earlier, in order to be financially independent, one should have full and complete information about the following two things in advance.
If we do have these two information, then we can easily determine the exact amount, which is required to make us financially independent. But getting this information in advance is not an easy thing. In fact, it is not possible. Our future is quite uncertain. We can’t predict our future monetary requirements in exact figure. Some urgency or emergency could suddenly come up and we need to spend the unexpected amount. This, in turn, could make us financially dependent by increasing the expenses in relation to the savings. Though, we can try to be financially independent to some extent through proper financial planning. We can plan and invest our savings in such a way that it, along with our regular income if we do have, will take care of all our expenses; present and future.
Hence, the answer of the above mentioned question is not easy. For this, a lot of analysis has to be done on the individual basis. Estimation of the future expenses has to be done. Some assumptions have to be made. After doing all these, we can come up with a figure that can make a person financially independent. But even after putting so much effort, no one can give guarantee about the financial independence of a person. This is due to the uncertainty of the future, as explained earlier. The information provided here can be used to provide the finance assignment help.