Your investment income is enough to support your current standard of living, and that's great, but what if something goes wrong? Or what if you decide that you want more? More than 99.9% of the human population has less money…and more worries.Įven at the fifth stage of financial freedom - financial independence - you probably worry a little about money. At this stage, your passive income from all sources grants you the freedom to do anything you want for the rest of your life. And people tend to worry about their financial futures even when they have plenty of money.Īccording to my six stages of financial freedom, the only point at which money is never an issue is after you've achieved abundance - when you have “enough and then some”. Instead, there's a constant balancing act between today and tomorrow. With that single piece of knowledge, we could make much better decisions with our money.
Of course, the converse isn't true…if you work too much, you can never get the time you wasted in the cubicle back.Īs I always say, this financial stuff would be so much easier if we just knew the exact date we were going to die. If you quit your job at $2 million, and find in ten years you need more money, you can always go back to work. The nice thing is, jobs aren't going anywhere. I think a lot of people “over-insure” in the sense that they work too long. That extra million is effectively insurance, and the “premium” you're paying for the insurance is years of your life spent at work to earn money you may not ultimately need. You can work extra years to earn that extra million or risk it and try for $2 million. Let's say you have a family of five, and you think $2 million will probably be enough to retire on, but feel really confident that $3 million will definitely be enough. It's easy to never run out of money - work until you drop dead!! It's also easy to “retire” early if you accept a really high probability of running out of cash. I look at retirement this way: It's a balancing act between not working too long on one hand but not running out of money on the other hand. In another recent email conversation, MB reader Travis wrote:
Plus, there are different degrees of worry. Others have millions in the bank but worry that won't be enough for the future. There are folks who have maybe $100,000 saved and feel completely at ease. You can see this division on early retirement blogs and forums. Others never worry, even if they have nothing. Some people worry about money no matter how much they have.
I'm generalizing, I know, and really there's more of a continuum than two binary opposites, but roughly speaking this tends to be true. You see, I find that folks tend to fall into one of two camps: people who worry about money and people who don't. But I think there's a lot of depth beneath the surface here.
All it requires is a basic “yes” or “no” answer. If you had $10,000,000 (in cash) at the age of 60, would you say that you would never have to worry about money again?Īt first glance, there's no much to this question. Recently, though, a Money Boss reader named Mark sent me a simple hypothetical question. “What should I do about my ailing parents?” “Should I fund my kids' college first or put money aside for retirement?” “How should I save for a down payment?” When people send me email, they usually have very specific questions about their very specific circumstances.
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