Most workers dream of the day when they no longer have to work, either by striking it rich or retiring with a hefty amount of money in their accounts. As it turns out, you can live without a job and be ok! In fact, many people do it! It’s just a matter of putting the right plan in place.
Keep reading to learn more about how to live without a traditional 9 to 5 job.
How to Make a Living Without a Job
The only way to make a living without a job is to generate passive income. Passive income is money you generate without having to consistently work for it. It typically involves making an upfront investment in the form of time or labor.
After that initial investment, you should continue to produce income on a steady basis, enabling you to take a hands-off approach and focus on other things. Generating money from e-commerce sales is an example of passive income that for many people is increasingly becoming a regular job.
1. Calculate your total expenses.
Determining a rough estimation of the funds you will require each month to maintain yourself without a job is the initial step.
If you don’t plan on having a job in the future, the recommended amount you should have saved or invested is a minimum of 25 times your yearly expenses. The 4% rule is used to calculate the amount you should draw from your investments every year so your funds will be sufficient for your whole retirement.
The amount of money you require to not return to work is based on how much you anticipate spending annually.
An illustration of this would be if you imagine that $40,000 is what you require annually to cover your outsets. If you multiply 25 with this, it results in needing $1,000,000 in your retirement account for sustenance.
But if you drop this to $30,000? Suddenly it is only necessary to have $750,000 before one can comfortably live without having to work, meaning that retirement is possible much sooner.
It is evident that managing your expenses will play a huge role in deciding how soon you can quit working.
2. Determine how you can reduce your spending.
The best way for anyone to do this is to start a budget. Then, you’ll be able to see exactly where your money is going and figure out where you can begin to make cuts to increase your savings rate.
A good area to focus on at first is cutting your expenses in the areas where you find yourself spending the most money.
It can also be a good idea to create a personal financial plan to set some financial goals and work out exactly how you can use the coming years to achieve them.
3. Pay off your debt.
Your approach at this point is going to depend on whether you’ve lost your job and are looking for a new one or whether you’re planning to never work again.
If you’re trying to survive without a job until you’re able to secure a new one, paying off debt beyond your minimum payments may not be feasible right now. And this is one situation where it’s fine to not focus on getting out of debt. Instead, your absolute focus has to be on cutting your expenses.
Keep making your debt repayments at the same time, but paying off debt beyond the minimum payments won’t be your goal now – simply making it to the next pay check has to take priority.
And if you’re struggling to make your minimum repayments from your existing savings, even after having done everything you can to reduce your spending , a good strategy can be to look into other ways you can earn money.
4. Establish an emergency fund.
An emergency fund basically serves as a financial parachute if you have a situation where:
- You suddenly have to pay for something that’s either completely unexpected or much higher than expected.
- Your income is suddenly cut and you’re not able to cover your normal expenses, like if you lose your job.
So if you’re considering stopping work to live off your savings and investments, you can probably see why having an emergency fund is critical given your lack of income.
It’s best to keep this money in a high interest savings account – preferably one that’s fee-free, so you’re earning as much money on your savings as you can.
But if you’re looking into how to live without a job, it’s a good idea to increase this to twelve months of expenses. This will also help if the stock market dives and your investments suddenly lose a lot of value for a period of time. In those cases, you’re meant to also reduce the amount you’re withdrawing until the market recovers, meaning the savings in your emergency fund could be used to cover the difference in your expenses.
5. Create other income sources.
It’s only with passive income that you’ll be able to continue to earn money to live off.
One of your biggest passive income sources is going to be any investments you hold, including your retirement accounts. As they (ideally) continue to grow in value and pay you dividends, you’ll be withdrawing from an ever-increasing amount that will ensure you don’t run out.
However, there are a number of other passive income sources that you could rely on. And with some creativity, hard work and a bit of luck, these could definitely be built up so that you can make a living without a job. In particular, the goal here is for them to continue to generate income for you, even when you’re not actively working on them.
6. Stick to a budget.
By this point, you should have started making some really positive financial moves to prepare yourself for retirement – whenever you plan for that to be. However, with a bit of lifestyle creep and not watching your money closely enough, your financial plans can quickly be derailed.
Keeping a close eye on your spending is one of the most important things you can do when working towards a financial goal, like being able to retire.
7. Look for ways to supplement your passive income (if needed).
Quitting your job to retire doesn’t mean you have to stop working altogether. Earning even a small amount of money on the side can go a long way to making sure you can afford to survive without a job.
8. Set yourself some goals or life purposes.
This is the final stage of working towards living without a job. And it’s true that the idea of not having to get up for work every day is definitely a good one.
At this point, it’s just you and whatever it is you want to do with your time. The key part there is finding something to do with that time. No one wants to spend their retirement sitting on the couch in front of a TV.
Ways to Keep Your Costs Down
1. Cut back on entertainment costs.
Take a look at your monthly budget and figure out how much is being allocated towards entertainment costs.
You probably won’t want to cut out all entertainment expenses. That wouldn’t be fun or healthy. But you can probably shave a few dollars off your monthly budget.
Consider using a service which can scan your monthly statements and identify areas of waste.
2. Stop eating out so much.
It’s also easy to waste money frequently dining out or ordering takeout.
Restaurants typically overcharge for food, and that doesn’t include tipping and paying for transportation or parking. In some cases, you can wind up dropping $100 or more on meals you could easily make at home for much less.
If you’re going to live without working a regular job, get used to going to the grocery store and cooking for yourself.
3. Source your own food if possible.
You can start a garden to grow your own vegetables. And if you quit work to take up new hobbies, consider fishing or hunting as fulfilling hobbies that put food on the table.
4. Sell your car.
Cars can cost hundreds or thousands of dollars per month in payments, repairs, parking, taxes, gas, and insurance. It’s worth considering whether you still need your car or whether it’s a convenience or status item.
If you own a car for convenience, it may be a good idea to get rid of it to save money. Just think of all the extra cash you can put towards saving, investing, and other needs every month.
5. Relocate
Consider if it makes sense to relocate to reduce living costs. If you work remotely, you may be able to leave the expensive city where you live and find a cheaper place out in the country. You may also want to consider downsizing to a smaller place to cut costs.
Do You Need A Job To Live A Happy Life?
Not working can be a blessing and a curse. At first, it can seem like an incredibly liberating experience. But for many newly retired people, total freedom isn’t all it’s cracked up to be.
Oftentimes, retired people or jobless individuals go through a period of liberation. They travel, spend time at the beach, or take up a new hobby. But at a certain point, feelings of liberation can turn to feelings of boredom, leading to a general lack of purpose and despair.
Of course, everyone is different. For some people, the idea of never returning to work is enough to keep them occupied and fulfilled. But many people need to work and have a higher purpose (not to mention a reason to get out of bed in the morning).
Roman emperor Marcus Aurelius once famously explained that human beings have to go to work to do the things they were brought into the world to do. He argued that the nature of humans is to live a life of service.
With that in mind, everyone should work. Living without a job to do can be a terrible waste of time and talent. It can also be incredibly dull… even if you have multiple passive sources of income.
How to Think About Work
Aim to get to the point where you can avoid working because you have to and instead work because you want to. This is the basic idea behind financial freedom.
Try and get to a point where you don’t have to get up and go to a full-time job every day or night to survive. Rather, keep working until the point when you can work on projects because you like and enjoy them.
For some people that means starting a nonprofit. For others, it may be playing or teaching music full-time. Or, it may involve traveling and blogging about your experiences.
Go from Employee to Investor
Author Robert Kiyosaki talks about the Cashflow Quadrant, a model that offers four ways of making money: as an employee, as a self-employed individual, as a business owner, and as an investor.
The great thing about this model is that you don’t have to be exclusive to any one particular category. It’s possible to be an employee who is also self-employed with a side hustle.
Some people can even juggle owning a business and investing as well. However, it’s a good idea to try and steadily advance yourself from employee to investor.
Final Thoughts
Stop and think about your personal finance journey and where you want it to take you over the course of your lifetime. If you’ve been thinking about a life that doesn’t involve traditional work, then it may be a good time to take the leap.
Leaving your job and starting on your own can be a big step towards financial independence. At the same time, it can also be a big risk.
Think the situation through and look for ways to bring in extra money through passive income. With the right approach, you might find that you don’t need a full-time job at all to achieve financial freedom and live the life of your dreams.
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