How much money should be in the account so that you don't have to work for someone else or worry about the future? understand in simple language

According to the 25x rule, if you save 25 times the amount of your annual expenses and deposit it in the account, then you can call yourself financially free.

How to get financial freedom?

Everyone dreams of living a life one day where there is no tension of money, work according to your wish and do not have to depend on any salary or business to run the expenses. This is called financial freedom and today we are going to tell you its very easy and effective formula, which is called 25x rule or 4 percent rule.

What is the 25x rule?

According to the 25x rule, if you save or invest 25 times your annual expenses, then you can call yourself financially free. Meaning, your savings should be such that you can meet your expenses by withdrawing just 4 percent of it every year and your capital should not be exhausted for many decades.

Understand this math with an example

Suppose your annual needs, bills, travel and other expenses together amount to Rs 10 lakh. Then to get financial freedom, you will have to create a fund of Rs 10 lakh × 25 = Rs 2.5 crore. Now if you withdraw just 4 percent i.e. Rs 10 lakh from this fund every year, then your life can go on comfortably and your investment will also last for a long time.

Correct assessment of expenses is the real key

The most important thing in this formula is the correct calculation of your actual annual expenses. This should include not only food and accommodation, but also every need like travel, children's education, medical, car expenses, entertainment. The more honestly you estimate the expenses, the more accurate your goal of financial freedom will be.

Before starting the journey of financial freedom, you should also keep an emergency fund of 3 to 6 months ready. This will help in situations when you suddenly lose your job, have a big expense or a health emergency.

Create this fund and keep it safe like this

Financial freedom is not just achieved by saving money, but by investing it in the right place. Therefore, invest this fund in the stock market, mutual funds, real estate and other income generating assets. Also, take the necessary insurance to protect your health and property.

In simple words, there is no restriction that financial freedom can be achieved only after retirement. If you make the right plan and invest in a disciplined manner, then you can become financially independent even at the age of 40.