How much money is ENOUGH MONEY?

Ever since this thought-provoking question hit me, I have been extensively researching and formulating my own theories. This article is a percept from my previous one, and I will be delving on many topics from my post - Life - A well crafted Enterprise? in the days to come.

One can only eat as much as their stomach can take in, and not an ounce more. Do you think the same analogy applies to everything in our life? Well, I certainly believe so. But hey, what about Money!? One can never have enough of it right?? The more I have, the better I can spend to make my life comfortable. This is exactly what almost everyone thinks. Sadly, the race never ends and we often get into a rut.

Knowing how much is "enough" money is a superpower one can have. Once you get clarity, you can start focusing on things that matter to you, work on what you are passionate about and create an impact around! Once we know our nest figure, we can truly isolate from the so-called "race" and enjoy every little thing in life. So how can one define this nest amount? Many influencers define their own formula for this, and learning from all, I have derived a formula of my own.

Nest Amount = ( Monthly Expense × 300 ) + (Financial Knowledge + Mindset)

Saving 300 times your monthly expense (25 times your annual expense) might seem an uphill task, but it's the latter that's the hardest. You have to constantly delve into economics, comprehend how the world is designed to make you spend more, and more importantly build a mindset to clearly differentiate between needs and wants. That's tough, because we are constantly exposed to consumerist materialism, easily get into the traps of EMIs, and also indulge in a superficial urge to impress others with materialistic things. It takes years of practice to finally get into the zone of minimalism and concentrate on things that matter.

Over the years, I have realized that it was never a race against money, but with time! In Mathematics, it's a thumb rule to always ensure the variables in an expression have the same measuring unit (cm, m, inch, km, etc.) before calculation. Despite learning it from childhood, I wonder how irrational and unreasonable our expectations and greed are! We equate our finite time with the infinite money in the world!! Is it worth it?

One might ask, what is the rationale behind (Monthly Expense × 300)? Is it sufficient to buy a villa in a metropolitan city, drive a Merc S-Class and go on 2 luxury international travels planned every year? The answer is No. What 'nest amount' empowers you with is, an ability to perceive & choose things beyond what is fundamentally set & defined by the society. It helps you seek peaceful, satisfactory, stress-free job that you enjoy doing for 15-16 hrs a day! The figure is derived under the assumption that one gains enough financial knowledge to grow money at at-least 12% per annum, spend money intelligently on necessities/experiences and also reinvests a part of it. Further assumption is, you are able to use 4% of this returns for your expenses (4% Rule in Finance), 6% owing to inflation, and reinvesting 2% back into the nest fund. Let's talk numbers now.

If my monthly expense is Rs 50,000/- , then according to the formula the Nest Amount turns out to be just Rs 1.5 Cr!

It might be shocking to many that how would this figure suffice to call oneself financially free** for the rest of your life. Infact it is, but we don't understand the power of 'enough' and 'compounding'. You can do wonders when you are able to constantly reduce and have control on your monthly expense.

Once we are financially free, does that mean we sit at home and enjoy the rest of our time? Technically yes, but we are all humans, and want to keep ourselves engaged. Why not follow something that we were always zealous about since childhood? and monetizing our passion might even be a cherry on top! There won't be much pressure to constantly trade time and generate money, as the nest fund will be generating cashflow, like how the cashflow of an organization keeps it functional. We can focus well to build our life enterprise once the finances are in place.

Now that we know, nest amount is all that we need - to lead a decent, peaceful living, is it worth sacrificing everything and run behind endless money throughout our life? It is definitely subjective and takes quality time to process and put things into action. All said and done, but how can I save such a huge amount in a consumeristic world where saving what I earn is difficult? We will talk more on how to achieve this "Nest Amount" in our next post. Thanks for reading until here!

** - you no longer need to work just to take care of your financial needs, but rather start working because you love doing it.