The dream is simple: work hard now, retire by 55, and finally have the freedom to do whatever we want. But how much do we actually need to save? What about emergencies? And is the F.I.R.E. lifestyle even realistic for most of us?
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00:00like if it's fire okay maybe i can just be five even for people who don't want to retire early
00:05even if let's say you're gonna work until you're 55 right you still need to have this same rule
00:09you are like oh no i have six months left to survive i better get something done i didn't
00:13have any deals i was very paranoid only when you have 1.2 million do you start putting into epf
00:21once you feel a lot more comfortable a lot more stable then you start thinking about okay epf
00:26okay honestly okay for me right yeah i don't like being bored so i don't think i actually
00:30want to like stop working but i want money
00:39what's up guys my name is emir and this is the money goal podcast today i have cat who like
00:45many of us millennials has the dream that dream of financial independence and retiring early fire
00:51the fire movement right okay so what specifically do you want to know first what should we talk
00:55about okay so fire how much is required for financial independence straight to it like straight
01:02how much money do i need and then i'm going okay so there's a very easy calculation for this it's
01:08called the four percent rule four percent rule okay okay so how much money do you spend a month
01:12just give me an estimate estimate estimate it's fine i feel shame okay how much probably like
01:19four thousand four thousand a month okay including like rental okay so this you think utility let's
01:23let's let's assume this will be enough for you uh when you retire la four thousand a month right
01:28so i think i think we we bump it up a bit i want a more comfortable okay a more comfortable okay let's
01:34say let's say ten thousand okay let's do ten thousand then okay i think ten thousand is actually
01:39honestly if you ask me i would say ten thousand okay if i don't get ten thousand a month then i
01:43wouldn't consider myself like retiring level right i would consider myself like you know okay but i still
01:48need to work okay but let's just do ten thousand a month right yeah okay so this is how we're gonna
01:52calculate it you need ten thousand a month to retire to consider yourself financially independent
01:57so ten thousand a month we're gonna multiply it by 12 first because that's what you need a year
02:00so annual expenses will be 120k okay okay so we're gonna take the four percent rule and we're gonna
02:06slap it on to 120k which means we're gonna take 120k divided by four percent so that's how you
02:10calculate it the four percent rule this is generally speaking what people all over the world use to
02:15determine whether they're ready to retire or what is that financial independence number okay so
02:20with 10k a month we calculated it 120k a year three million you get to retire three million in my
02:25savings account cash per year or for a lifetime for a lifetime okay so let me explain how this works
02:31so this is the cool part right why the four percent rule so three million ringgit if you have this now
02:36in cash if you put it into something like fixed deposit you can easily get four percent a year okay and
02:42four percent a year of three million ringgit will be 120k which means that every single year you're
02:47gonna get 120k ringgit in returns from your three million and you can take this cash spend it
02:53however you like and the most important part is you're not even touching your three million
02:57that's your three million is there forever i see i see the vision exactly so that is basically how
03:02you calculate i guess the goal is there yes how are we gonna get there right
03:08yeah i think i think that's all about the journey it's all about the climb exactly it's a climb it's my
03:13favorite song recently yeah i love it but yeah so okay are you there are you i don't maybe like if
03:21it's fire okay maybe i can just be five you want to retire early actually yeah even even for people
03:27who don't want to retire early even if let's say you're gonna work until you're 55 right you still
03:31need to have this same rule honestly 55 still seems quite young for retirement oh what age are you planning
03:36to retire i don't know i think okay honestly okay for me right yeah i don't like being bored so i don't
03:44think i actually want to like stop working but i want that's what everyone wants this is a really
03:52good concept i think okay when i was 18 years old when i was just about the graduate i was thinking
03:58i was reading about all this fire stuff you know i was reading about how people retire early and stuff
04:02and i was thinking that's what i want i want to retire at 25 years old i'm gonna spend the next 40
04:06years like you know on the beach right uh but then i also had the same realization what am i going
04:11to do if i retire i like you don't like to be bored i like to work i like to work which is it sounds so
04:16sad right workaholic yeah i know like workaholics anonymous right here yeah some people say some
04:22people say oh i will travel the world but after one year it's like so boring right but yeah that's
04:27exactly it i think it's having that money saved up it's not about retiring early quitting your job and uh
04:34i think it's like the comfort of knowing that you'll be fine no matter what exactly exactly yeah
04:39i think that's what a lot of people are trying to safety net if you want that right honestly i don't
04:43think you need like three million now we don't have to use the four percent rule we don't have to use
04:47the four percent rule because you want to continue working so uh four percent is a very conservative
04:52sort of number that people use assuming that you're really going to retire lah right if you still
04:56expect an income then you can use even ten percent let's say so let's say if you need 120k a year
05:01even having 1.2 million honestly it's not that bad casual 1.2 million is a casual i mean i'm sure
05:06everyone has that line but how do i start to even achieve that i mean you know salaries in malaysia
05:18have been not really it hasn't kept up with inflation yeah yeah so how do you even begin to so you go
05:26go back in time 10 years ago and you buy bitcoin and then you're settled i didn't buy some bitcoin
05:31that's a 1.2 million okay but but i didn't have that much lah yeah yeah okay so in all honesty uh it
05:38all just comes down to saving okay but number one rule to me the most important thing in personal
05:44finance okay so personal finance to me there is saving there is investing but then there is the most
05:49important one which is earning your income yeah all right so you have to have a high income uh if you're
05:54on two thousand a month it's gonna be extremely hard for you to hit your so someone send this to
06:00my boss you need to have a high income you do need a high income if you guys are listening to
06:07this if you guys are on a low salary you've been in a job for a long time consider changing jobs
06:12because boss i i've i've had a lot of friends who change jobs and got like 30 percent 50 percent
06:17yeah in a year which is you're not gonna get that thing in the same company it is a shame that you
06:21have to go outwards exactly exactly yeah right so that is one option another option is you can
06:27freelance um if you want to consider freelancing that is an option as well to add on to your main
06:31income and onto your main income right okay so that is number one high income but obviously you
06:36cannot have a high income and then spend everything and then like oh where's my financial independence so
06:40you have to save it as well right so you have to save that money whatever you earn you save it
06:44if you can have a high savings rate you get that quicker so this all comes to like sacrifices and
06:50personal beliefs right okay so let's say you earn ten thousand a month now if you can save sixty
06:55percent of the income you'll get there very fast right okay but the downside is of course you're
06:59sacrificing now because you're saving a lot of money so to me i thought i wanted to get to that
07:05fire number as soon as possible but then i realized that is it worth sacrificing the now to get there so
07:12quickly so what is the sweet spot oh this one depends on individual some people they love saving they're
07:17weird they're weird yeah they love saving money and i wish i was some people i know i wish i was some
07:23people too but we are on the other end of the spectrum we love spending and i just want to be a pilates
07:28girly you can but if you save a lot now you can get there quicker if you save only five percent ten
07:36percent then it's gonna take you very long the difficult part is like you said finding that sweet spot which
07:41it will differ from person to person if you have a two thousand ringgit salary there's no way you're
07:46saving fifty percent yeah if you have a fifty thousand ringgit salary fifty percent easy easy right yeah
07:52exactly that's why i say it always comes back to income right that's one okay so realistically yeah
07:56obviously i don't have that high income and i'm sure a lot of people don't either yep so what are other
08:02passive ways that one could like supplement their income okay so one thing i have a hot take a lot of
08:09people say they want passive income to me there's no there's no there's only active there's no
08:13passive the only passive income to me is investing okay yeah so because like i said you can put it into
08:19fixed deposit you get returns totally passive i'm not doing anything at all right epf pays me a dividend
08:24every year totally passive some people say you can create a youtube channel and that's passive income
08:32who's making the video then something takes time exactly and then some people say oh rental income is
08:38passive they've obviously never had a tenant because i always call my tenant like uh excuse
08:42me uncle my shower is broken i need you to fix it not passive so i think i would look away from the
08:48passive income if you want to build it quicker we'll look at we call it side income okay income
08:52active income sources so there are these days many things you can do you can traditional business
08:58sell stuff products and stuff but to me that's boring i think for people our age i'm sure you use
09:04what are exciting side gigs tiktok you use tiktok right yes yeah you can be a content creator
09:11i think i think a lot of a lot of people make a lot of money from content creation this year okay
09:17i i in 2020 decided to start a youtube channel and i quit my job after that in 2023 yeah so well done
09:27i know it's it's really it's really uh there are ups and downs maybe we should talk about um
09:34freelancing as another topic one day but but yeah but okay so there is an option and then there is
09:39stuff like uh affiliate marketing you can even do things like video editing on the site you can do
09:44things like teaching there's this website where you can actually find students and let's say you can
09:47speak english well or mandarin anyone who can just you know look at your rates sign up and you can just
09:52just teach them english and just earn some extra money there yeah so a lot of a lot of options these
09:56days so they say you should have at any time like six months salary right yeah as savings yeah for
10:03freelancing yeah how many months do you think it's like a safe amount okay to have i think bare minimum
10:11one year okay i would say bare minimum one year okay for me i had two years right oh yeah so the reason
10:17why i wanted the extra sort of leeway right is if you start out with just six months worth of your
10:23expenses right from month one you're under immediate pressure you are like oh no i have six months left
10:30to survive i better get something done and i noticed that for me if i'm under that kind of pressure it's
10:35very hard to focus on actually making money right whereas if you had that two years saved up um then
10:41you're like okay you know i can take my time think about this more seriously you know be more picky with
10:45who i'm working with what i'm going to do and then from there you can actually start a proper
10:49business that's actually how it helped me yeah but it's actually we went a bit off topic but it's
10:54actually one reason why you want that financial independence not necessarily to retire but so you
10:59can pursue things that you want to do did um law of attraction come in at any point do you manifest
11:09freelance jobs is that how it works no okay i obviously there was a lot of honestly no honestly no it was
11:15just a lot of um getting things done and like i said early on i didn't have any deals um and it
11:22was very i was very paranoid so i had like i said two years worth of expenses saved up but every month
11:27i had to withdraw from my savings i was like oh no don't have enough don't have enough don't have enough
11:31so it is very burdensome to you mentally but i would say all these things yeah tricky not stable income
11:39very stressful but i would say um quitting my job was the best decision of my life so last year was
11:47the first year that i was fully freelance or self-employed right and i managed to three x my
11:53income from when i was fully employed yeah and again it goes back to the only reason i was able to take
11:59this risk to do this is because i had that money saved up i had that not four percent of my income i
12:06didn't have three million but i had some money at least to do this i think that's what a lot of
12:10people are working towards right okay so you've started freelancing let's say you're like steady
12:15in freelancing right what are certain like financial steps that you should take so like
12:20as employed people me i have insurance i have epf yeah if i were to freelance what are like some
12:30steps that i should take to like protect myself okay so insurance i think you should continue because
12:35when you go freelance so this is personal insurance personal insurance medical insurance
12:39at least yeah medical insurance so i have that and i was continuing i continued to pay even after i quit
12:43my job right um epf so i have a hot thing here i think the guys at epf won't like me for saying this
12:50but when i was just starting out i would not put any money into epf or prs the reason for that is
12:56because we are struggling to stay afloat we need to make sure that our income can at least pay off our
13:01expenses right and we want to have liquidity which means that cash available to us if i put money into
13:06epf uh and then six months down the line i need that you can't take it i can't take it out it is
13:12locked i'm 55 years old and i'm only 29 that's like another lifetime for me to get there saving for
13:18retirement is important but if i got to that stage i would rather put it somewhere where you know i can
13:24withdraw if i needed it so i think as someone who are you saying never put into epf no no no i'm not saying
13:29that no those guys will call me out don't say that everyone's like no don't listen to this guy
13:34so i'll say when you're still unstable when you're still starting out things are a bit shaky
13:38prioritize liquidity which means having cash available once things are more settled down
13:44once you have 1.2 million ringgit in your bank account sitting around then you can start considering
13:48only when you have 1.2 million only when you have 1.2 million do you start putting into epf guys
13:55no that was just a little example but basically once you're once you feel a lot more comfortable
14:00a lot more stable then you start thinking about okay epf and how much as a freelancer
14:06would you recommend putting into epf of your like how much percentage of your salary
14:11you can match what you were doing as an employee so 12 yeah if you have is not the only option to
14:16invest by the way you guys can invest in a stock market you guys invest in anywhere yes it doesn't have
14:20to be epf epf is just it forces you to be disciplined because it doesn't allow you to
14:26withdraw that money but if you are financially disciplined you don't have to put it into epf
14:29you can put it anywhere else what is discipline she don't i don't know her who that
14:38yeah but that is one way for you to get to financial independence quicker but you know i think a lot of
14:43people think you have to start a business you have to be a businessman to hit financial independence
14:49early but i think you can do it with a full-time job a lot of people do it with just a normal job
14:54you know not everyone is built for going out there starting a business you can do it just continuously
14:59save like i said if you can sacrifice or if you want to sacrifice at least and save up a lot of your
15:04salary then you can get to the financial independence number quite quickly yeah but currently we're only
15:10looking at it like in terms of like content creation how about like the non-creatives the
15:16non-creative what they can do yeah there's so many opportunities out there honestly i don't have
15:20like experience all there but like i said there are things you can do like software development
15:24i know a lot of friends who got into coding by themselves yeah not my interest the tech space yeah
15:31the tech space huge huge as well i know someone as well who sold uh two dong so she got to don't i
15:37guess she sourced it from china or something like that bundle it up package it nicely selling on
15:43shopee made a lot of money so there are a lot of opportunities as well if you're not
15:46into the creative side if you're not into the technology side there's still a lot of chances
15:50for you there personally i am creative side so anybody uh considering me for freelancing please
15:57reach out there's no cut that part
16:03but yeah are you thinking about that are you thinking about getting to that number or you just
16:07yeah i think i mean one must always keep their eyes open for opportunities yeah and definitely i
16:14would like to achieve some financial independence um to not have to worry about if anything were to
16:20rent paying for my car yeah that would be that would be fantastic oh if i had extra money to go pilates
16:27every week the goal the dream exactly yeah i think that's what i think that's what a lot of people
16:33um want to achieve this is my last take right this is my hot take as well another hot take
16:39i think that the number one reason rich people get richer is because they have that financial
16:45independence already they can take risks if someone say hey i have a really or let's say 10 years ago
16:49right someone say hey look i found out about this thing called bitcoin if you're someone who doesn't
16:53have savings you're like i can't put my money there i need this money to you know buy a meal but if
16:58you're someone who is rich you're financially independent you're like bitcoin i don't know what it is let
17:02me just put a thousand dollars here and look where it is now yeah so i really think that is the number
17:06one reason rich people get richer because they have money in the first place so generational wealth
17:11is the answer exactly and you can be the pioneer of the generational wealth you can exactly you can
17:18be the first of your generation yeah exactly so i guess to wrap this up if you're someone who is
17:24pursuing financial independence which hopefully everyone is whether you want to retire early or not
17:27that's completely up to you but steps that you have to take think one look at your income
17:32if you're not earning enough it's going to be very hard for you to get there especially early
17:36and even with your income you need to look at your savings as well you still need to save money
17:40hopefully invest as well and if you guys want to know takeaway if you guys want to know how much
17:45money do you need so that you can retire and never work another day of your life if you wanted to
17:49use the four percent rule your monthly expense multiply it by 12 so you get your annual expense and
17:54divide that by four percent you will get that magic number that would mean that
17:58sit back relax you can be a pilates teacher you can watch tv all day if you wanted to
18:02that's right all right that's a wrap for today's money gold episode thank you so much
18:07kat it was nice talking to you see you guys in the next one thank you