‘I need 10 crore… then life is set!’ You must have heard this many times or maybe you have said it yourself. But is a huge amount like Rs 10 crore or Rs 50 crore really necessary to achieve financial freedom?

This debate has been going on for decades and will continue in the future as to how much capital a person needs for real ‘financial freedom’. That is, if you are in a job and want to retire early and maintain the same standard of living as you have today, then how much should you save? Or suppose you want to retire at the age of 50 and are expected to live till the average age of 75, then how much money will you need for the next 25 years?

Not just savings, smart investment is important

Whatever you are saving today, the real power of that money keeps on decreasing with time, and the biggest reason for this is inflation. If we look at the data of the last 20 years, the inflation rate in India has been around 5-6% on an average. This means that the purchasing power of Rs 1 lakh today will reduce significantly after 10-15 years.

In such a situation, it is important that you invest your savings in an instrument that can at least beat inflation or give returns equal to it. Whether it is a fixed deposit, government guaranteed schemes or any safe investment instrument – a return of 6-7% can be expected to offset losses due to inflation if the investment is done smartly.

But how much money is needed for real freedom?

The answer comes from this brilliant analysis by a personal finance expert Neeraj Chauhan, CEO, The Financial Mall.

“Financial freedom is not about how much you have. It’s about how much you need to live life on your terms peacefully, comfortably, aur bina kisi tension ke,” he believes.

“A lot of us believe financial freedom means having huge amounts of money — Rs 10 crore, Rs 50 crore, even more. But have you ever stopped and asked… Kitna paisa actually chahiye (How much you really need)?” Chauhan says.

He explains how the concept of a financial freedom number works.

Financial Freedom Number

Your Financial Freedom Number = Your annual expenses × 25

This formula is based on the 4% rule — a simple thumb rule that says if your capital is invested wisely, you can withdraw 4% of it every year and not run out of money.

For example:

If your monthly expenses are Rs 1 lakh

Annual expenses = Rs 12 lakh

Financial freedom number = Rs 12 lakh × 25 = Rs 3 crore

That is, if you have well-planned investments of Rs 3 crore, you can withdraw Rs 12 lakh every year (Rs 1 lakh per month) and still your capital will be safe.

So why Rs 10 crore?

It is not bad to want a big amount. If your expenses are high or you want a luxury lifestyle, your freedom number could be Rs 10 crore, Rs 20 crore or even Rs 50 crore. But everyone’s needs are different. It is important to plan according to your actual expenses and needs, without showing off.

Summing up…

Financial freedom is not just about money, it is a state of mind — where you want to work, not necessarily have to.

So the next time someone asks “Kitna paisa chahiye zindagi set karne ke liye?”

So think about it – answer according to your expenses, your priorities and your lifestyle.

You don’t need Rs 10 crore, you need the right plan.