Having enough income to survive is great, but wanting more than that is what will make you happy. The better you feel about yourself, the happier you will be.
This isn’t saying much when we are talking about having lots of money, but instead thinking about how many thousands or even millions there is in the world for people like you.
There are two very important things to consider with this topic. First, how long it takes to reach your goal, and second, how to achieve your goal without doing too much (or anything at all!)
I mentioned before that being rich comes down to having a good savings rate, but one thing most wealthy individuals don’t talk about is whether they needed to work longer hours to make as much money as they did.
Many successful businessmen and women say that they made their money by investing time in activities that they enjoyed, so they spent their free time working on projects that would pay off later.
In this article, I’ll discuss some numbers related to how much passive income you need to satisfy your financial needs.
Even if you have no money to spend, you can still make important progress towards your goal of passive income. You just need to find a way to reduce your spending in order to save more!
There are two ways to do this.
The first is to focus only on buying things that are necessary – food, shelter, clothing, etc. - products that we all require to survive.
The second is to look for ways to improve our daily lives through education or by changing how we manage our time.
Both of these will help you conserve money because you will not be buying unnecessary junk nor will you be seeking out expensive experiences.
By practicing such strategies, you will also realize that it is possible to live a modest lifestyle while still leaving yourself with enough money to enjoy life.”
Increase your savings by looking into ways to reduce your personal spending.
Start with limiting your basic needs like eating a nutritious diet, having adequate shelter, and wearing appropriate clothes to limit additional expenses.
Next, evaluate whether other areas of your spending are excessive. For example, do you pay too much for groceries due to expensive snacks and drinks? Or could you get similar results shopping at discount stores?
And finally, consider whether you need every item displayed here in this article- check out my list of must haves to know what goods really satisfy.
A good way to determine how much income you need is to calculate what it costs to live each year as a producer of content you’re trying to grow.
Most people start producing content by creating blogs or businesses with their own website and then begin sharing lessons they learned through social media, speaking engagements, and more.
By adding these other revenue streams to your business model, you can produce content full-time and still have enough money left over to enjoy your days.
You will probably find that most of our best tips are not necessarily paid products or services, so instead of investing in those, we can learn something else that works well for us.
The next step in determining how much passive income you need is to calculate how much money you will have after all costs are paid. You will want to include both monthly payments and yearly payment amounts when calculating this.
The monthly payments should be for things like mortgage, utilities, car loan, etc. While the yearly payments can be set up as an investment or retirement fund. Either one of these are good enough!
If you’re already paying down debt, great! Keep doing that! It really does make a difference in your financial situation. But don’t stop there- keep spending less money!
By having more money left over at the end of each month or year, you can invest it or retire with it.
Many people get hung up on how much passive income they need to be happy and successful. They feel that since they have a decent amount of savings, they cannot reach this goal.
This thinking is very misguided!
By adding “passive” income into your income stream, you are actually reducing the amount of money you have left for other things such as saving for retirement or buying a house.
It can also negatively impact your savings because part of your income goes down. For example, if you are paid $5,000 per month but only have enough saved money to live on $2,500, then you will have to make decisions about whether to keep working so you do not go hungry or save more aggressively.
The average person needs around ten times their monthly living expenses in savings to retire early. If you don't have at least six months' worth of spending money, it's time to consider ways to increase your savings.
Fortunately, there are many strategies you can use to earn additional income without too much work. Here are some good ones that don't require any special skills or training.
I've listed them by cost, starting with the most expensive and moving towards the less expensive. Try one out for just 1 week to see what effect it has on your savings and lifestyle and decide from there whether it is worthwhile for you.
So how much money do I need to be wealthy?
Well, it depends what kind of wealth you are looking for. If you are trying to achieve financial freedom, which is spending no more than you make and having enough left over to live on, then you don’t necessarily NEED A LARGE INCOME.
You can easily spend less than $20,000 a year and feel rich if you own a house, have health insurance, and enjoy giving back to other people.
But most people desire MORE than that. They would like to be wealthier than they are now, or at least not too far from where they are currently situated.
So let us look at some numbers.
After that, multiply your current monthly income by the amount of time you want to spend saving in retirement. This will give you how much you need to increase your savings for every year you want to keep working.
The average person needs an incredible 150-250 more dollars per month in order to retire early!
Most people never get there because they don’t understand their spending habits.
By actively noticing what things cost and whether or not they are necessary, you can start to put some extra money aside.
Many people get stuck in a state of mind where they think that if they can’t make as much money as their colleagues then there is something wrong with them or they are not working hard enough.
This mental block comes from feeling insecure about your job and/or career, which eventually leads to insecurity about yourself as an individual and as a professional.
If this sounds familiar, you may be able to earn more than you believe by changing how you look at your own salary.
The easiest way to do this is to subtract your current monthly income from your dreams for what you want to earn.
Then see who has access to those funds!
By creating different lifestyle budgets, you will know whether you are overpaying now but still wanting more, underpaying now but wishing you were earning more, or maybe even living beyond your means.
None of these situations are healthy so it’s important to be aware of them. If you find that you’re closer to reaching your dream income than you thought, don’t give up!
Instead, figure out ways to improve your skill set or change careers to achieve your financial goals. You might also need to consider re-evaluating your life commitments, like your relationship or family, to make sure they are worth the extra money they cost you.
I have read some stories where very successful people broke up because they could no longer afford to live together.
Now, how much passive income do you need?
Well, it depends on what you want your life to look like. If you want to relax and spend your time reading books and traveling, then you don’t need very much more money. You can achieve that in five years!
If you have kids and a job now, though, investing is not for you unless you are willing to put in some effort.
You will need to actively manage your investments instead of leaving them to someone else. Plus you will be paying higher fees for services.
On the other hand, if you don’t expect to retire soon, you can focuson return-focused investment strategies with lower risk. These include things like dividend stocks or real estate investing.
I recommend keeping your spending below $1000 per month to ensure you won’t run out of cash even after investing. (Note that this goes beyond your basic living expenses.) This way you’ll still have enough left over to enjoy yourself.