In today’s post, I shot to answer the question: how much cash circulation do you need to change your life?

Every couple of months i publish an edition of Anno Darwinii, the report top top my actual estate empire. In the critical edition, i announced the we’d got to a projected $29,000 the cash flow from our portfolio for 2021.

You are watching: Cash flow for life

As ns crunched mine numbers and also published the post, i felt a feeling of pride and also momentum from that number. “Finally, the numbers are starting to include up,” I thought to myself.

But as I often do, I considered how several of my greater income readers might think about that number: “Twenty nine thousand dollars? it is cute, but it’s not sufficient to move the needle. It’s no worth the hassle.”

This imagine conversation in my head percolated for a while as I taken into consideration the an ext general question: How lot cash flow do you require to adjust your life?

When ns say “cash flow” here, I’m talking around income indigenous something external of your day job. Preferably passive in nature, this is the type of money the can adjust your life trajectory.

I believe there are two levels of cash flow that have the right to be life changing:

$1 that cash flowCash flow equal to 20% of your yearly income

Please enable me to explain!

Cash flow is a gateway drug

There’s a reason why Nancy Regan famously said, “Just speak no” to drugs in 1982. Sometimes, the first taste of a drug is all it take away to reason addiction.

My an initial taste the cash circulation was choose a drug. Indigenous the very very first dollar of cash flow from mine rental real estate, I just wanted to grow the cash flow an ext and more. This resulted in a rapidly increasing rate of legacy acquisition.

This cash flow increased my setup for financial independence, and recently reduced an incredible 5 years off of my 15 year setup to FIRE. All of a sudden, i’m considering a type of life that is wholly various from the plain life i imagined before.

So if you’re prefer me, any amount of passive cash circulation can it is in life changing. Even $1 that cash circulation can readjust your attitude to know that true liberty comes as soon as your earnings is not tied straight to the variety of hours you are working.

This present can conveniently lead you under a slippery slope the ends in the blue lagoon of jae won independence.

But let’s talk about a more concrete lot that i feel need to be everyone’s beginning cash circulation goal.

The 20% rule

If you’re like many people, you work 5 days a week. (If you’re a physician, you might work more than this!)

If you can generate cash circulation equal to 20% the your revenue from one more business or next gig, a couple of things have actually happened.

You’ve generated the ability to job-related only 4 days a weekYou’ve obtained “the gap” to execute some severe compoundingYou’ve obtained the know-how to save going

A 4 day work week?

Imagine what you can do with one full day turn off every week. Might you:

Focus much more on her health?See your youngsters more?Work on her passion projects or side gigs?All the the above?

Would you contact that life-changing? I certainly would.

Of course, no all jobs will enable for a diminished schedule, but the financial flexibility to even take into consideration this is pretty revolutionary.It opens up your world to all sorts the possibilities.

Buying more life

Even if your job doesn’t allow part time work, the 20% extra income deserve to be put to job-related to significantly accelerate your route to gaue won independence.

Here’s a simplified instance to show you the power of the extra 20%:

Income the $100,000Annual expenditures per year: $80,000Regular savings every year: $20,0008% absorption return ~ above savings$ needed for financial independence by the 25x rule: $2 million

Without extra cash flow, it’ll take it at the very least 29 year to save enough to retire.


With one extra $20,000 the cash circulation every year, it’ll just take 21 years. The extra cash flow shaved off practically a 3rd of the time required to reach financial independence!


I know, ns know, this isn’t revolutionary. It’s simply math. Conserve more, pensioner faster. But there’s more.

It’s an ext than money, it’s knowledge

If you’ve successfully been able to create 20% the your yearly income in cash flow, you know what you doing. You’ve more than likely been through sufficient trial and also error to have actually a road map to proceed the growth.

So the sky’s the limit! You have the devices to walk for complete replacement of your income, if desired.

Do friend think the Dr-ess and also I room going to stop when we’ve struggle the 20% mark?

How has cash flow changed my life?

Let’s placed this question into perspective in my own life. The $29,000 of yearly cash flow from my existing stabilized investment portfolio is just under 10% of my yearly base salary.

While ns agree the this quantity doesn’t yes, really dent our significant spending, it already has make a big difference in mine day to day.

I feel more freedom come take care of my health and also well-being, which help to combat the an adverse effects of over-work. Ns feel less pressure to work overtime, and also have much more confidence to continue my investing.

And I’m absolutely not done. As I’ll rundown in the upcoming Anno Darwinii, in the very first half the 2021 alone, us tripled the dimension of our genuine estate empire. When that all comes on-line… well, i can’t wait to see what happens.

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So how much cash flow do you require to readjust your life?

To answer the inquiry again, i feel that also $1 the cash flow can be life changing. That solitary dollar can change your entirety mindset and break the connection in between hours worked and also income earned.

But in mine opinion, the first time that cash flow starts to readjust your day come day life is once it replace instead instead 20% that your annual income.

This isn’t a hard and also fast rule, though. This answer will certainly really be different for everyone.


How much cash flow would you need to adjust your life? Comment below!

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