Financial Independence through Savings


Financial Independence through Savings

If you have a large savings account and live off the interest then you could be financially independent.

For example, if you have 1 million dollars in the bank, with 6% interest, your yearly income would be $60,000.

If you have 10 million dollars in the bank, with 6% interest, your yearly income would be $600,000.

Having $100,000 in the bank probably would not allow you to be financially independent since the yearly income would only be $6,000.

The primary benefit to having so much money in the bank is not having to work for money. You are free to spend your time in any way you see fit.

You would be classified as the idle rich and you would only be required to figure out how to use your time contructively or in other positive modes. Not easy if you are both young and financially free.

However if you make frequent withdrawals from your savings account, nest egg, then you are like the farmer eating his own seed corn. Spending frivolously (instead of saving money) is a negative financial situation that will not result in a prosperous future.

Consider taking on a financial planning mindset for both your future and the future of your family.

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