You can add tremendous meaning to each workday by having a 10 year plan for financial independence. Knowing that after each day, week and month of work you are that much closer to being a truly free man will add a significant layer of peace of mind and enjoyment to your life. It will provide you with the additional motivation and direction to go full throttle as a professional and create a new resilience in your bearing as you go about your business.

Definition Of Financial Independence

As you will see, this is a goal that is achievable by every man that is gainfully employed earning a middle, to upper middle class paycheck. Financial Independence, however, is not to be confused with being rich. It is a financial state of achievement that will allow you to cover your bills indefinitely at a defined annual budget, without having to go to work for pay.

For the purposes of our discussion we will assume a debt free budget of $40,000 per year for a couple and $25,000 for a single man. With no mortgage, no car payments and no consumer debt these numbers will allow for a fine standard of living in my neck of the woods in upstate New York. Adjust as necessary for your own locale.

The 4% Rule

The first metric to understand is the 4% Rule. Four percent is the divisor you will apply to your target budget number. The resultant total is a very reliable estimate of the savings that will set you free from having to sell your time and labor for a paycheck. For example, dividing $40,000 by 4% equals $1,000.000. And dividing $25,000 by 4% equals $625,000. These are the magic numbers to strive for in your quest for financial Independence.

Thus we have the 4% Rule as a guideline for our purposes. It is certainly not a guarantee, but does provide us with an intelligent total to shoot for. Personally, I will continue with some form of earned income once my target number has been reached so that I can blow by my minimum needs and never have to worry about running out of funds; but to each his own.

Work only when it pleases you

Work only when it pleases you

The Monthly Savings Multiplier

So how much money does one need to save on a monthly basis over the span of 10 years to get to the lofty totals of $625K or $1000K? To answer this question we have our second metric called the Savings Multiplier. This number is the factor with which you will multiply a monthly investment contribution at an expected average rate of return that will add up to $625K or $1000K in 10 years.

The key assumption here is the expected rate of return. I am going to use 8%. This is a straight rate of return not adjusted for inflation. In the twentieth century the United States stock market returned an average of 10.4%. From 1975 to 2015 the market retuned 11.9%. And apparently, Warren Buffet expects an inflation adjusted return of 7% over the long term.

The Savings Multiplier for 8% is 183 and for 7% it is 173. If you want to be optimistic 10% is 205.  Doing some grade 6 arithmetic and dividing $1,000,000 by 183 equals $5465. The monthly figure for $625,000 is $3415. These are the monthly contributions necessary to attain financial Independence in 10 years at an average rate of return of 8%.

Own every Morning

Own every morning

How To Achieve The Desired Monthly Savings

Now it’s time to consider our Western mode of thinking regarding status and lifestyle. There is no doubt we live in an age unparalleled in history. We are indeed rich beyond measure in historical terms. The shelter, education, food and medical care available to the average citizen are a miracle, even compared to 100 years ago.

With this in mind and assuming your household income is at the middle to upper middle class level, it is time to consider the steps necessary to live off of 50% or less of your income. Putting off the mechanics here for a minute, let’s discuss what’s at stake.


We are talking about becoming free from the need to work for pay in the reasonable time period of 10 years. Imagine yourself back 10 years ago from today and consider whether it would have been worth it to permanently walk away from your job tomorrow. And if you think about it, the only real skill required for an eventual life of financial freedom is spending less money.

Live each day as a free man

Live each day as a free man

Core Living Expenses

The two major expenses to consider in your quest for financial independence are home and automobile. Get serious right out of the gate and if you own a home consider selling and renting instead. Put an absolute cap on your monthly costs for shelter and move into a modern construction apartment or condominium. Rent for less, eliminate all maintenance costs and pay less for utilities and insurance. And then take whatever equity you have in your home and invest it in a total market index fund. Making this change can easily add up to $1000-$2000 per month in savings. Multiplying $1500 times our 10 year factor of 183 equals $274,500.

According to AAA here in the United States, the average cost per mile to drive a car this past year was about 57 cents per mile or $8600 per year. Consider moving as close as possible to your place of employment to cut down on mileage or even eliminate the need for 1 car in a two car household. If you cut back from 30,000 household miles a year to 15,000 miles, the per mile calculation produces a monthly savings of $712.50. Our Savings Multiplier of 183 applied to the monthly figure of $712.50 equals a 10 year result of $130,387.

Other Lifestyle Expenses

The same basic math applies to many other common expenses. Consider areas such as clothing, vacation, recreational vehicles, cable, grocery, restaurants, alcohol and the petty cash burned day to day through sheer carelessness. For a professional couple living the good life this can easily add up to $1,500-$3,000 per month. The product of $2,250 times 183 is $411,750.

The bottom line is that as a household earning $120,000 per year or a bachelor earning $60,000, if you sell out to the desire for financial Independence you can certainly live off of half your pay and invest the rest. Consider your bank account and a future of freedom your new status symbols instead the standard path of material possession. With some intelligent application, living more modestly can certainly be done with class and enjoyment.

Be a man with a plan

Be a man with a plan

The Panzer Model

The example figures outlined above basically parallel the Panzer household. We have cut our breakeven point from $90,000 to $45,000 per year following the above model. We live in a luxurious 1700 square foot brand new condominium (with a 3 mile commute to work) and want for nothing. Our current yearly take home pay is about 90K and the difference in cash flow is now being invested on a monthly basis.

Our business also realizes gains of about $3K per month through debt service and additional cash flow. In combining our personal and business interests, we realize a steady gain of about 6K per month. Doing some quick math using the Savings Multiplier, added to our current investment totals, leads to an excellent financial future for the Panzers.

Was moving out of our beautiful home and downsizing our lifestyle a big hassle? To be honest, it did wound the pride a little bit. But working 60 hours per week with limited financial progress was much more of a hassle. Working that much without steady monthly gains over the long term was not smart.

Perhaps this is the question you need to ask yourself. Is having to work to survive for the next 25-35 years a bigger hassle than bearing down for a decade to become financially independent for the rest of your life? If yes, then pull the trigger and get started. A life of financial control, freedom and prosperity awaits you.

Read More: The Quest For Financial Independence In A Welfare State

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