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How much should I save to achieve financial freedom?

Imagine waking up on a Monday morning and realising that the clock no longer dictates your life. You work if you want to, travel when you feel like it, and never worry about paying bills at the end of the month. This dream, which may seem distant for many, has a name: financial freedom.

However, achieving financial freedom does not happen by chance. It requires a clear vision of where you are and where you want to be. And in this case, the big question is: how much money do you really need to live with this freedom?

In this article, you will learn how to calculate the amount necessary to achieve financial freedom and discover practical steps to turn this goal into reality.

What is Financial Freedom?


Financial freedom is the point at which your passive income — money generated with little or no effort — is sufficient to cover your living expenses. In other words, you no longer depend on a job to sustain your lifestyle.

This concept is deeply personal, as what is considered “enough” varies depending on factors such as the cost of living, family size, and future aspirations. For example, living in Paris will likely require a higher amount than living in a small town in rural Europe.

A study by the European Commission revealed that only 18% of Europeans possess financial literacy — meaning an understanding of basic financial concepts such as budgeting or interest rates — necessary to effectively manage their finances, which highlights how crucial financial education is for understanding and planning for financial freedom.

How to calculate your "Financial Freedom Number"?

The foundation for calculating your number is simple: understanding how much money you need to cover your annual expenses sustainably. Two common approaches are:

The 4% rule

This widely used method suggests that to withdraw 4% annually from your investment portfolio without depleting it, your portfolio should be equivalent to your annual expenses multiplied by 25.

It was based on the Trinity Study , conducted in the 1990s by three finance professors in the United States. They analysed historical market data to determine a sustainable withdrawal rate for retirees.

Why does it work?

The rule assumes that if you invest your portfolio in a balanced mix of 50-75% stocks and the rest in bonds, you can withdraw 4% annually, adjusted for inflation, without a significant risk of running out of funds over 30 years.

Multiplying by 25

The idea of multiplying your annual expenses by 25 comes from the fact that 1 divided by 4% (0.04) equals 25. This means that for every euro you need annually, you should have 25 euros invested.

Practical example

If your annual expenses are €40,000:

  • €40,000 × 25 = €1,000,000 invested.
  • This amount will allow you to withdraw €40,000 annually sustainably.

Limitations of the 4% Rule

  • It was developed based on US financial markets, which historically have had higher returns than other markets, such as in Europe.
  • It does not account for variations in expenses, such as medical costs or large travel plans.
  • It may not be suitable for time horizons exceeding 30 years.

Personal budget with future adjustments

Alternatively, this method is more personalized and considers your current expenses, future goals, and inflation. It provides a dynamic approach, ideal for those seeking a more precise calculation.

Why does it work?

This method works because it is based on your actual financial situation and life goals. It considers:

  • Lifestyle changes: You may want to travel more, live in a more expensive area, or reduce your expenses in the future.
  • Personalised planning: You can adjust the calculation based on your family situation, such as having children or caring for relatives.

How to calculate:

  1. List your current monthly expenses (rent, food, transport, leisure, etc.).
  2. Project future costs based on long-term goals (children’s education, retirement, etc.).
  3. Adjust the values considering an average inflation rate, such as 2% per year.

Practical example:

If your current monthly expenses are €2,500 (€30,000 annually) and you plan for a 2% annual increase over 20 years, your future annual expenses will be approximately €45,000. This is the value you should use as the basis for calculating your financial freedom number.

Strategies to achieve Financial Freedom

Calculating the amount required to achieve financial freedom is just the first step. The next involves creating a practical plan to reach that goal, which requires a combination of well-defined strategies, from increasing your income to investing wisely. Here is a detailed analysis of these approaches:

Increase your income

Increasing your income is essential for accelerating financial independence, as it allows you to save and invest more consistently and in larger amounts. Investing in education is one of the safest ways to achieve this. Studies show that individuals with higher education in the European Union earn, on average, 50% more than those with secondary education . Additionally, professionals with advanced qualifications enjoy greater job stability and access to high-demand sectors, such as technology and finance, where salaries are more competitive.

The rise of the freelancing market also offers valuable opportunities. It is estimated that the revenue of freelancing platforms will exceed $3 billion by 2030 . These side jobs allow you to diversify your income while monetising specific skills, such as design, programming, or consultancy. Even small increases in monthly income, when invested regularly, can have a transformative long-term impact.

By combining education and freelancing, you can create a more robust income stream, enabling you to reach your financial goals more quickly and securely.

Reduce your expenses

Reducing expenses does not mean giving up what you love but rather identifying wasteful areas and making smarter financial decisions. Small savings in recurring expenses often have a significant long-term impact, especially when redirected towards investments or savings goals.

For instance, reviewing fixed costs such as internet contracts or streaming services can lead to savings. Many consumers overspend on subscriptions due to a lack of monitoring. Additionally, small behavioral changes, like cooking at home instead of eating out, can help save money. Spending €50 weekly on dining out equates to €2,600 annually. Cutting this by half frees up €1,300, which can be invested and grow over time.

Finally, revising your monthly budget and setting clear limits for spending categories is an effective way to maintain financial control. Digital tools, like financial management apps or spreadsheets, help identify wasteful patterns and enable more efficient planning.


Invest wisely

Investing wisely is crucial for protecting your money from inflation and allowing it to grow over the long term. Simply saving is not enough, you have to diversify your portfolio with assets such as stocks, bonds, real estate, and cryptocurrencies is key to balancing risk and return.

For example, real estate in the European Union, a traditional and stable investment, saw average price increases of 48% between 2015 and 2023 . Meanwhile, cryptocurrencies have emerged as a modern and promising alternative. Bitcoin, the most established asset in the sector, delivered annualised average returns of 67.7% over the past five years.

Platforms like SwissBorg have made investing in cryptocurrencies accessible to everyone, offering tools to manage risks and maximise returns. We also provide opportunities for passive income through tools like SwissBorg Earn , which has offered annual returns of up to 13% on staking Polkadot ($DOT) and up to 8% on Solana ($SOL). These options make investing dynamic and consistently grow wealth.

Financial Freedom is within your reach

Achieving financial freedom is a personal goal but entirely achievable. You don’t need to be a millionaire or inherit a fortune to reach this dream — the key is to start now. Small steps, such as saving more or investing consistently, can yield great results over time.

Remember, as previously mentioned, only 18% of Europeans actively plan for their financial future. By taking control today, you are already ahead of most. So why wait? Your future self will thank you for the smart decisions you make now.

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