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When Calculating Financial Independence, Focus on Outcome Not Amount

| August 22, 2018
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“How much money do we need to retire?” “How much is enough to achieve financial independence?” I hear these questions quite a bit, and it was something I struggled with myself for a long time. The answer is super simple but also maddening for some: It depends. Before calculating how much money you need to become financially independent, it’s important to consider what outcome you want in life—and alternative ways to pursue it.   

The Easiest Way to Calculate Financial Independence

Financial independence means having enough money so that you no longer have to worry about money. In other words, how much do you need to make work optional? The easiest thing do is to just look at how you are living now and add up how much that costs. Then you can run calculators or get help from a financial planner to determine how much savings and passive income you will need to maintain the same lifestyle without having to work.

The Problem with the “Easy” Way

What’s wrong with using the method above to come up with your financial independence goal? That amount may be big, scary, and beyond what you and your spouse are able to save. That can be terribly depressing. And even if you don’t find that particular number to be daunting or depressing, it still leaves out a major component. It does not account for how much you would need to live the lifestyle you want vs. maintaining your current standard of living. That is huge.

Re-Calculating Your Goal Based on Outcome

The more difficult exercise is to figure out what outcome you want in life, and then calculate what that costs. This requires some serious thought, soul searching, and creativity—especially if money is a limiting factor. The good news? Often, what you think you want and “need” aren’t really the things that will make you happy. That was certainly the case for me. 

For years I felt pulled between wanting a place in the city and a big place in the country with woods and fields. I stressed about the thought of how to save enough money to buy a big piece of land that I could drive to on weekends to sit under trees and walk through fields. One day I realized what I really wanted was a combination of city life and access to green space. I didn’t necessarily need to own the green space. In fact, it would be better not to own it, because then I wouldn’t have to take care of it! 

So, I found a condo in St. Louis City next to one of my favorite parks in the world: Tower Grove Park. One of my favorite things is to go for walks in the park after a storm and see the small creeks flowing. Or after a big snow and see how the park has transformed. I now have all this for $0. (Well, it was $0 for the first several years I lived here, but last year I became of “Friend of the Park” and made a donation to help keep this treasure here for years to come.) 

Once I dug into the heart of what I really wanted—and identified my desired outcome—I was able to create an affordable solution. Now I’m one step closer to living my ideal life. 

So, how much is enough? It still depends. But the more time you can spend really drilling into the outcome you want, the more likely you are to build the life you want.

Need help determining your financial independence goal? Want to brainstorm ways to pursue your desired outcome? Contact me online or email

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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