In my last post I talked about having passive income equally your living expenses as a way to measure financial freedom. In this post I want to talk about what is known as the financial lifeline and how to measure it.
Simply stated, your financial lifeline is a measurement of how long you can last if you stop working. Say you have $10,000 in the bank and you lose your job tomorrow. How long will you last if you have no passive income? That is your financial lifeline. If your cost of living is $1,000 a month then your financial lifeline is 10 months. If need $2,000 a month, the lifeline is 5 months. If you have enough cash saved up that the interest from it can pay your living expenses than your lifeline is infinite. An infinite financial lifeline means you are financially free.
Now for the scary part; the average person has a financial lifeline of 3 months.