The PIE Ratio and The Price of Freedom

The Price of Freedom

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The formula for calculating the price of freedom varies from person to person.

The amount of money you need to earn to be free to make all of your own decisions will depend on your obligations and responsibilities and where you live, etc.

But I read a great quote today that pretty much sums up what that price is…

It was framed in terms of the “definition of rich” in a tweet by Michael Batnick referencing an article by Scott Galloway called “Happiness and The Gorilla“.

Basically the price of freedom is the what it takes you to generate

passive income that is greater than your burn.

To calculate your own “price of freedom” you can use the “PIE Ratio”, which is your passive income over your expenses. If your PIE Ratio is greater than one (PIE Ratio > 1) you are “free”.

PIE Ratio calculate Price of Freedom

The article that inspired the “PIE Ratio” is a great read and includes other great nuggets that hit the nail on the head nicely regarding the arc of happiness throughout life and potentially the greatest thief of human happiness…

Alcohol.

Check out the excellent article by Scott Galloway here.