Money Tracker
Following more than a decade of saving more than half my income, my personal finances are in a good place. And while I’m certainly not rich by any stretch of the imagination, I am financially free.
Financial freedom means that you no longer need to work to sustain a lifestyle you genuinely enjoy. This milestone can be achieved either by becoming very rich or by building an enjoyable lifestyle that is very cheap.
My financial freedom comes largely from the second option, enabled by a simple life philosophy:
Sustainable happiness comes from the freedom to create what you want, not the freedom to consume what you want.
In line with the well-known 4% rule, I achieved financial freedom at the start of this month when my net-worth exceeded 25 years of my annual living expenses for the first time (see below).
From this starting point, I have resolved to put the 4% rule to the test in the real world.
So, starting on July, 1st 2019, my personal finances are split into two parts:
- Daily living. This includes my current net-worth with the breakdown shown below. Hopefully, this wealth can sustain my lifestyle indefinitely.
- Research fund. All my future income will go into a separate account for funding research on sustainable development. When this fund reaches a meaningful size in a couple of years, it will be tracked on a separate page together with the research it is financing.
Over the next decade, I’ll live from increases in my home loan, leaving my stock portfolio to grow. This will gradually shift my overall asset allocation towards stocks to make it easier to achieve a long-term average return of 4%.
Cutting off all my income is pretty scary, particularly at this time when most assets look rather overvalued. But I’m very interested to see if I can manage my wealth to prove that the 4% rule works.
I’m also highly motivated to get to a position where I can fund promising sustainability research. This will be a very direct commitment to my life philosophy mentioned above.
I’ll keep a monthly tab on the developments in this interesting experiment. Let’s see how it turns out…