Wealth Building/Personal Finance

How Long Can You Survive Without Working?

“Wealth is NOT a measurement of how much money you have but how long you can live without working.” Robert Kiyosaki

It was Robert Kiyosaki, the popular author of Rich Dad, Poor Dad who in the quote above said the measure of wealth is a measure of time, not money. He explained that financial freedom is being able to live comfortably without working. Are you able to do this now? If not, then you have not yet attained your financial freedom.

We can compress two ways to build wealth into financial freedom:

Earned Income and Passive Income. You can make a lot of money from your earned income and accumulate the excess (over expenses) over the years that the excess will suffice to carry you through should you stop working. The question of how much is enough becomes a subject matter here. What work is that that can comfortably see you build up so much wealth, how about your expenses, and how much effort can you place on working without compromising your health and relationship matters?

The second is earning passive income from your investments. The passive income covers your expenses and much more too. If you are lucky to have no major outgoings, say paid your mortgages, and perhaps your car credit, then your expenses should be reasonable and could be easily covered by your passive income.

Another issue to consider is that your passive income may diminish during periods of economic crisis. A good example is if you invest heavily in stocks and bonds, your income from them will fluctuate, whereas your expenses are not likely to go down.

Passive income does not necessarily mean NO WORK. There is a general term that people use these days for passive income, and that is side hustle. It is something you do on the side to bring you money without having to work your ass off a programme like a 9–5 job. The secret is to build up your investment portfolio as you earn your income. One is at least 10% of net pay should be towards your investment, while 5% should be in cash savings. with your savings. Having savings in cash is not profitable, but it is only for cash emergency expenditure cover.

The advice is to build your passive income around what you enjoy, thoroughly understand (you can learn the nitty-gritty if you don’t), and limit or minimise your loss. Get a diversified portfolio of investments. The proverbial advice of NOT PUTTING YOUR EGGS IN ONE BASKET’ still holds.

Then work towards your expenses, ensure you keep expenses low, look for bargains, and keep your equipment if they are still working. I usually buy top-of-the-range white goods, simply because I am not ready to replace them within a short time. That is another way to keep expenses low. Things like fashion goods and items of clothing can be compromised. And definitely, your health takes top priority too. Health is the greatest wealth.

Take out appropriate insurance covers, so that you are fully protected should a loss occur.

The Takeaways

• ‘’Wealth is violent and uneasy to acquire, don’t blow yourself by rushing. You won’t find it, you will only get lost on your way. ….Reserve yourself, and wealth will find you.’’ Oscar Auliq-Ice.
• The road to wealth creation or building starts early in life when you are working.
• ‘’It's important to know what you want to accomplish with your investments before you invest.’’ Oscar Auliq-Ice.
• ‘’Entrepreneurs should always aim to play the long game. Instant gratification cannot build a legacy ‘’ Andrena Sawyer.
• ‘’A modest rate of return can accumulate a fortune over time, You don’t need to beat the market, do over-leveraging, or pick the best stock to be rich. You just need a decent rate of return and let your money compound over time’’ Naved Abdali

About The Author

Lanu Pitan is a Nigerian ex-pat living in the United Kingdom. She was a Chartered Accountant for many years before she retired as a Group Head of Finance of a Publicly quoted Insurance Company. She now manages her small operation.