It sounds simple right… work to save, save to invest, and eventually stop working, or choose your own working terms, because your money is working for you.

But how much exactly do you need to be financially independent? I’ve been reading a lot about the “4% rule”. And recently I decided to crunch the numbers with my financial planner, and to see if this approach was feasible, and here’s what I found:

In a nutshell, how much you spend, determines how much you need to save through investments such as property, shares and superannuation. As an example, if you want to spend $80,000 per annum you need $2 million. If you want to spend $120,000 you need $3 million.

So depending on where you live, how expensive your lifestyles is, becoming financially independent isn’t so much about how much money you have, it’s about how much you intend on spending.

The first thing I encourage you to do is to actually figure out how much money is enough for you to feel financially free, with the type of life you wish to live in mind. Remember that over time your level of spend changes. If you have kids for instance, once they have left home and are more financially independent, then this will likely change your financial situation.

In understanding what this figure actually is for you, think of it as though you are calculating a simple goal. This goal is to calculate the amount of money that would help you maximise your happiness and do the things you love with the people you love. Tally it up. Calculate the total of holidays, gifts, medical, entertainment, eating out, clothes, gas, electricity, phone, beauty, hobbies. There are retirement calculators online you can use that will help you. In any calculation ensure that you take into account who you truly are, what you care about, what you love – your financial freedom figure must be customised for your lifestyle needs.

One person I spoke with recently calculated their Financial Freedom Number as $1,250,000, as their annual expenses were around $50,000. They achieved this number through positive investing in 5 years.

When you understand what your Financial Freedom Number is, set your mind to pursuing your goal. Then put a plan in place to accelerate your wealth creation and to achieve your Financial Freedom Number.

You’ve heard these phrases dozens times – “A Goal without a Plan is Just a Wish” and you really do need to “Start with the End in Mind” – but they are true.

When you reach your number, you’ll then be able to do what you love and work on only what your passionate about. In reality, I think most people feel that they will always want to work, but it’s more about having baseline wealth, and the ability to have a choice in being able to work doing something that they’re incredibly passionate about.

So get to it….what’s your Financial Freedom Number?

Lesley Gregg is a property investor and developer. Lesley works in partnership with TLK Partners to provide comprehensive wealth, financial and property advice. Together they have developed a 5 Step Plan to Accelerate Wealth Creation.

The contents of this article are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs.