What level of income would you need to achieve financial security?
DIWIDA's Global Financial Security Survey: Your Money conducted by SurveyMonkey Recently posed this very question globally, and here's what was shared: disclosed insights into how individuals across various nations view their financial situations .
Ask the same to Steve Adcock , and he might dispute the assumption.
"The concept of financial security isn’t tied to how much you earn,” explains the 42-year-old to DIWIDAMake It. “For me, financial security means having enough time.”
Adcock states that he achieved financial stability in 2016 at the age of 35 after retiring from his corporate position with approximately $900,000. Subsequent growth in the stock market increased this amount to more than $1 million.
He explains that security wasn’t derived from how much money was saved, but rather from the liberty it provided—being able to lead his life as desired without depending on a regular income. After his spouse retired the next year, they embarked on an adventure, spending three years traversing the nation in their Airstream trailer.
I definitely experienced a more modest lifestyle back then. Our expenses were significantly lower compared to what they are today," explains Adcock. "It was actually the initial period during which I felt truly economically stable, implying that we didn’t need to continue working indefinitely.
Securing your building by saving and investing
To be precise, a better salary certainly aids in attaining financial stability—but it isn’t everything, according to Adcock.
He states, 'Even with an annual income of $200,000, if your expenses amount to $180,000 per year, financial security remains elusive.'
Back in 2014, when Adcock along with his spouse was earning an aggregate yearly salary of $220,000, he mentions that they managed to save approximately 70% of their total earnings. They then channeled these savings into robust investment strategies for both retirement funds and brokerage accounts.
He remarks, “I’d say our savings rate bordered on being extremely high.” Nevertheless, he adds, “I despised what I was doing. I just wanted to get out of there as quickly as I could.”
If your goal is to achieve financial security, you don’t necessarily have to reach such an elevated savings target. At the very least, begin by building an emergency fund A significant portion of Americans — 44%, according to Bankrate —they mentioned they were unable to cover a $1,000 emergency using their savings.
As Adcock points out, this is exactly what financial insecurity looks like.
Money experts typically suggest setting aside funds enough to cover three to six months of living costs for unexpected situations. After achieving this, consider increasing the duration for which your savings could support you.
"As you reach the point where you can envision living for one year, then five years, and eventually ten years — that’s when the real excitement begins," according to Adcock.
Viewing financial stability in this manner enables you to see money not merely as something to amass, but rather as a resource for supporting the aspects of your life that matter most to you. An individual who has saved up funds equivalent to one year’s living costs might choose to embark on a break from their regular routine to work on a personal endeavor they're passionate about. Conversely, someone who has amassed savings covering ten years’ expenditures may feel empowered to venture into launching the entrepreneurial venture they have long envisioned.
For individuals aiming for early retirement, the main objective is to create an investment portfolio substantial enough to sustain withdrawals indefinitely.
Even for someone like Adcock, who continues to earn an income from ventures such as his website , newsletter and latest book suggest that attaining the highest tier of financial stability typically involves having the option to choose when and how one works, instead of ceasing work altogether.
At present, I’d apply the term 'retired' somewhat flexibly. While we may not fully align with traditional retirement, we undeniably enjoy financial independence. Our finances are completely secured," he explains. "There’s no pressure for us to engage in specific activities. However, it feels great to pursue ventures that appear intriguing and observe where they lead.
Correction: An earlier iteration of this story incorrectly stated the name of Adcock's Airstream trailer.
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