How much money is needed to stop working

Financial independence is a goal that many people aim to achieve. It means having enough money saved and invested to support your lifestyle without having to rely on a traditional job or employment income. This can provide a great sense of freedom and flexibility, allowing you to pursue your passions, travel, or simply enjoy more leisure time.

Defining financial independence

Financial independence is a state where an individual or household has enough financial resources to cover their living expenses without the need for traditional employment or relying on others for financial support. It is achieved by having enough savings, investments, and passive income streams to cover all necessary expenses, including housing, food, transportation, healthcare, and other necessities.

Financial independence is not the same as retirement, although the two concepts are often closely related. Retirement typically refers to the decision to stop working altogether and focus on leisure activities, whereas financial independence allows for greater flexibility in how an individual chooses to spend their time, whether that involves continuing to work on a part-time basis, pursuing entrepreneurial ventures, or pursuing creative interests.

The benefits of financial independence are many, including greater freedom and flexibility in how one spends their time, reduced stress and worry about financial security, and the ability to pursue passions and interests without being constrained by financial limitations. Additionally, achieving financial independence can provide a sense of pride and accomplishment, as well as the peace of mind that comes from knowing that you are in control of your financial future.

Determining your financial independence number

Determining your financial independence number involves calculating how much money you need to save and invest to cover all your living expenses without relying on traditional employment income. To determine your financial independence number, you should consider the following factors:

Lifestyle expenses: Determine your current monthly and annual expenses, including housing costs, food, transportation, healthcare, entertainment, and any other necessary expenses. This will help you determine the minimum amount of income you need to cover your current lifestyle.

Inflation: Consider the impact of inflation on your expenses over time. As the cost of living increases, so will your expenses. It’s important to factor in a reasonable rate of inflation when calculating your financial independence number.

Investment returns: Determine how much you can reasonably expect to earn on your investments. Consider the rate of return on various types of investments, such as stocks, bonds, and real estate.

Once you have considered these factors, you can calculate your financial independence number using a simple formula:

Financial independence number = annual expenses / withdrawal rate

The withdrawal rate is the percentage of your total savings that you can withdraw each year without depleting your savings. The generally accepted safe withdrawal rate is around 4%, which means that you can withdraw 4% of your total savings each year without depleting your savings over time.

By calculating your financial independence number, you can determine how much money you need to save and invest to achieve your desired level of financial independence. It’s important to note that this number may change over time as your expenses, investment returns, and other factors change, so it’s important to regularly review and update your financial independence plan.

Strategies for achieving financial independence

Achieving financial independence requires a combination of saving, investing, and creating passive income streams. Here are some strategies you can use to work towards your financial independence goals:

  1. Saving and investing: One of the most important strategies for achieving financial independence is to save and invest as much as possible. This means setting aside a portion of your income each month and investing it in a variety of assets, such as stocks, bonds, and real estate. It’s important to maintain a high savings rate, ideally 30% or more, to build up your savings quickly.
  1. Creating passive income streams: Passive income streams are sources of income that require little or no ongoing effort to maintain. Examples include rental properties, dividend stocks, and creating and selling a product or service. Creating passive income streams can help you build wealth over time and reduce your reliance on traditional employment income.
  1. Reducing expenses: Another way to work towards financial independence is to reduce your expenses. This means evaluating your current expenses and finding ways to cut back on unnecessary spending. Some strategies for reducing expenses include downsizing your home, using public transportation instead of owning a car, and cutting back on discretionary expenses like eating out and entertainment.
  1. Investing in tax-advantaged accounts: Investing in tax-advantaged accounts, such as a 401(k) or IRA, can help you save money on taxes and build wealth over time. These accounts offer tax-deferred or tax-free growth, which can help you maximize your investment returns.
  1. Starting a side hustle: Starting a side business or freelancing can provide an additional source of income and help you build skills and experience outside of your regular job. This can be a valuable way to build up your savings and increase your earning potential.

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Challenges to achieving financial independence

While achieving financial independence is a worthwhile goal, there are several challenges that can arise along the way. Here are some common challenges to be aware of:

Impulse spending and lack of discipline: One of the biggest challenges to achieving financial independence is maintaining the discipline to stick to a savings and investment plan. Impulse spending and lack of discipline can lead to overspending and prevent you from building up your savings as quickly as you would like.

Unexpected expenses: unexpected expenses, such as a medical emergency or car repair, can quickly derail your financial independence plans. It’s important to have an emergency fund set aside to cover unexpected expenses and avoid having to dip into your savings or investments.

Changes in the economy or job market: Economic downturns and changes in the job market can have a significant impact on your financial independence plans. For example, a job loss or market downturn can reduce your income and make it more difficult to save and invest as much as you need to.

Market volatility: Investing always carries some degree of risk, and market volatility can lead to fluctuations in the value of your investments. This can make it difficult to accurately predict when you will reach your financial independence goals and require you to adjust your investment strategy accordingly.

To overcome these challenges, it’s important to stay focused on your long-term goals and maintain a flexible mindset. This may involve adjusting your investment strategy or finding ways to cut back on expenses during difficult times. By staying disciplined and adapting to changing circumstances, you can continue to work towards achieving financial independence over the long term.


Achieving financial independence is a worthwhile goal that can provide a sense of freedom and flexibility in how you spend your time and money. To achieve financial independence, it’s important to determine your financial independence number and develop a plan to save, invest, and create passive income streams to reach that goal.


What is a reasonable amount to save each month to achieve financial independence?

The amount you should aim to save each month depends on your current income, expenses, and financial goals. However, a general guideline is to aim for a savings rate of at least 30% of your income. For example, if you earn a monthly income of R30,000, aim to save at least R9,000 per month.

How can I create passive income streams to help achieve financial independence?

There are many ways to create passive income streams, such as investing in dividend-paying stocks or real estate, creating, and selling a product or service online, or starting a rental property business. It’s important to choose a passive income stream that aligns with your skills, interests, and financial goals.

How can I stay motivated to achieve financial independence in the long-term?

To stay motivated, it’s important to have a clear vision of what financial independence means to you and why it’s important. It can also help to track your progress towards your financial goals, celebrate small milestones along the way, and surround yourself with supportive friends and family members who share your values and goals.

Should I prioritize paying off debt or saving for financial independence?

It depends on your specific situation. If you have high-interest debt, such as credit card debt, it may be more beneficial to prioritize paying off that debt first before focusing on saving for financial independence. However, if you have low-interest debt, such as a mortgage or student loan, it may make sense to focus on both paying off debt and saving for financial independence simultaneously.

Is it possible to achieve financial independence without a high income?

Yes, it’s possible to achieve financial independence on a moderate or even low income by being disciplined with your spending, saving, and investment strategies. It may take longer to reach your financial independence goals, but by being strategic and consistent in your approach, you can still achieve financial independence over time.

How much do you need?
*Representative example: Estimated repayments of a loan of R30,000 over 36 months at a maximum interest rate including fees of 27,5% APR would be R1,232.82 per month. Arcadia Finance is an online loan broker and not a lender. Our service is free, and we work with NCR licensed lenders in South Africa. Interest rates charged by lenders can start as low as 20% APR, including an initiation and service fee determined by the lender. The interest rate offered depends on the applicants' credit score and other factors at the lender's discretion.

Loan amount R100 - R250,000. Repayment terms can range from 3 - 72 months. Minimum APR is 5% and maximum APR is 60%.