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16 Oct 2012

WHAT A HIGH NET WORTH CAN BUY

Where do I even begin on what a high net worth can buy you? I can perhaps sum it up in one word - FREEDOM. That's what your net worth ultimately adds up to. A negative net worth simply means that you are doomed (pun intended). But if time is on your side, you can easily turn that around. Easily meaning "taking tough decisions" in this case. The two things you need are a plan and discipline. And they are both at your disposal for FREE.

What a high net worth can buy - image via

Continuing on my conversation with my cousin from the financial independence post I added yesterday. We are closer than siblings with my cousin and we want the best for each other. She loves her executive job and naturally wishes I can be "up there" with her too. So she asks, trying hard not to sound pushy "So are you looking for a new job, or going back to your old job?" (To those who are not aware, I may be going back to work next year after a long break). I know what my cousin means... She is begging me to look for a "better" job. And my response "No, I will go back to the same job, same level. I am not even looking for a promotion. I dont want added responsibility. I want time for myself without worrying about meetings, management issues, paperwork. I want to write more and spend time with my kids. I want to have my weekends and evenings." Its the truth. I would even change jobs for a lower salary, part time gig, freelance writing or even for blogging.

My cousin could be thinking I lack ambition. She loves her hectic lifestyle. At least I think she does. She is always sneaking my calls in between meetings and flights. She is OK with that and wishes the same for me. And I am so different. Whilst I love leisure travel, I cant stand as much business travel anymore. It seems to always be at awkward times, to awkward places. I also tend to lose track of my thinking in long meetings. I draw on my note pad more than I take important notes. From there follows an analysis of attendants and their tastes in clothes, make up, etc. A productive meeting should last for less than an hour for someone with such a short concentration span. But with executive jobs its 2 hour meetings at a time. Are they that slow really? I would rather work harder on my side income than grow my salary. This is the reason I keep track of my net worth, spending and income every month.

This morning, whilst blog hopping I came across an article on retirement by TIME (Moneyland). This is what they think is appropriate savings level by age:
  • At age 35, you should have saved an amount equal to your annual salary.
  • At age 45, you should have saved three times your annual salary.
  • At 55, you should have five times your salary.
  • When you retire at age 67, you should have eight times your annual pay.
I get that this is just a guide, but simple enough for us to relate to. I am in my late 30s and our savings/investments are closer to the 67 years (retirement age) than most couples in their 50s. And I calculated using the gross income of the Mr doubled. In a likely case that I really go back to work. What makes this even more interesting is that, most people spend 100% of their income, and our target is saving 50% of our net income. We manage just fine living on 50%. And even more interesting is that, our side income (rental property, interest & dividends, blogging) is close to replacing my last salary. Meaning that, by growing our side income and having two salaries we could just do fine with 33% of our income whilst we save the rest. Why on earth would I need a job that will keep me away from my family for longer? Why would I need a job PERIOD? It would be different if I loved working outside of my home. I would then happily spend 2 hours in traffic everyday, pushing my passion with a smile. I loved my job but not the traffic bit.

Anyone can buy that freedom. Start living far below your means, paying up debt, saving as much as you can, growing your net worth and passive income and discover what a high net worth can buy you. Not having to work for money but having your money work for you. You don't need a huge home, better car, new closet. You need financial independence more than you probably think. A job is not a bad thing, but having to have one forever is what is problematic.

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