Financial freedom in Belgium

The financial freedom and early retirement journey is a personal journey. Each person will have his own definition of what financial freedom means to him, the amount he needs and how he wants to achieve it. So the below will be my view on it, but I believe that most people in Belgium will be able to agree with most of it.

First thing we need to determine is how much money does a person in Belgium need to life a comfortable, albeit somewhat frugal life. This means you have enough to pay for your basic needs for food, housing, clothing, transportation and social contact. Driving a Porsche or frequent dining at a Michelin star restaurant will not be part of the package (if you do want those things I am afraid you have come to the wrong site, this site is about freedom to do whatever you want with your time, not the freedom to buy whatever you want).

Again, this number will be different for every person but I believe most people will agree that life can be pretty sweet in Belgium on budget of 1.500 euro per month, especially if you do not have to go work for it 40 hours a week.

The average after tax wage is 2.100 euro and our national lottery has a popular scratch ticket (aptly named ‘win for life’) promising a monthly sum of 2.000 euro a month. Their Deluxe version of it is 3.000 euro. So basic living for 1.500 euro a month? Seems like a safe assumption to me.

In my last post I mentioned this rule of thumb that 25x your annual expenses means you are financially independent.

So 1.500 x 12 = 18.000 a year.

18.000 x 25 = 450.000 euro

So 450.000 euro of investments (let’s call it The stash, because it does have a nice ring to it and thanks to this guy most people in the personal finance community know what is meant by The Stash) will buy you your freedom of work in Belgium. Personally I exclude the house as in most cases this does not provide you with any income to live off. A house is definitely worth something. And once it is paid off that will definitely have an impact on your annual budget (see that this stuff is personal and different for everybody?) and thus on the amount you need to accumulate. But to keep things simple we will ignore it for the time being.

What we will not ignore is the Belgian social system.

Just as taxes will play a big (negative) role in the accumulation of the Stash, the Belgian social system also plays a big (positive) role in the size of The Stash you need.

Our health system is pretty cheap and a reason why I think you can live a comfortable life with 1.500 euro a month.

But we also have unemployment benefits. If you have worked, you qualify and since everybody will have needed to have worked to get a sizeable stash (lottery winnings and inheritance aside) everybody reading this will qualify. And the thing with the Belgian unemployment benefits is that it is not means tested. So you can be a billionaire and still qualify for it. Dividend income, capital gains or option premium income are all compatible with receiving unemployment income. Extra special: there is no time limit on it. You can have it for decades upon decades. It does decrease over time but the bare minimum for a person living together with another person (single people get more) is around 500 euro/month. And although the government is now more persistent in activating the unemployed (a.k.a. getting your lazy ass back to work), 500 euro/month is something you can count on (worst case scenario is you have to go back to work for a few months to avoid losing this benefit: this basically means more money for you). Receiving unemployment benefits does prevent you from going to live abroad but the unemployed also qualify for vacation days. Stretch the rules a little bit, and there is nothing standing in your way to take a month or even two-month travel holiday (basically you have 20 official holidays and officially you need to declare to the government when you ‘take a holiday’, but everything is done on line now and you only need to declare these holidays at the end of a calendar month). It may not be complete freedom, but it is pretty close!

Since the government will give you 500 euro/month for not working, 1.000 euro income from the stash is enough to get to 1.500 euro/month income in total.

1.000 x 12 = 12.000

12.000 x 25 = 300.000 euro

Lets play it on the safe side and add in 25.000 in cash (to cover 2 years of living expenses) and the basic amount needed in Belgium to declare yourself financially independent is: 325.000 euro.

425.000 euro will make life a bit more comfortable (or assure you live on 3% return of your stash, plenty of companies paying out a 3% net dividend).

At 525.000 euro you no longer need to care about unemployment benefits or whatever. Total and complete freedom.


So there we have it. Financial freedom in Belgium is having a passive income between 1.000 euro or 1.500 euro a month from investments (depending on how you feel about pocketing unemployment benefits). This means a Stash between 300.000 euro to 500.000 euro.  Add 2 years of expenses in cash as a buffer and you need 325.000 to 536.000 euro.

What’s up with this financial freedom nonsense?

Changes are you have stumbled upon this blog via other personal finance sites and already known the concepts of financial freedom and early retirement. If this is the case, you can skip this post. For those few who are not familiar with this little sub section of the personal finance space, I will cover the basics below.

Financial independence (I chose to go with financial freedom because financial freedom sloth had a nicer ring to it, it just sounded a little bit better 😉 is the point where your passive income covers your normal expenses. Basically you do no longer need to work. To some this is also the point that some do in fact decide to stop working altogether and decide to retire. Hence the early retirement part of it. Since a lot of people who are drawn to this concept appear to be engineers and they love abbreviations, FI and FIRE where born. With FIRE being Financial Independent Retire Early.

financial freedom sign

So one can say that financial freedom has two parts:

Generating passive income.

Of course passive income is never 100% passive. Even the most passive investment needs you to log in to your investment account now and then and transfer some money around (perhaps even sell or buy something – gasp, the horror!). Some people achieve financial freedom via real estate which does involve some (or even a lot) of work.

But the general consensus here is that you get most or all your income from other sources than having to work full time for somebody else or in your own business. In most cases the passive income comes from investments (either stocks, bonds, real estate) but we live in a strange world and other possibilities are possible (perhaps you own a patent that pays regular royalties, a company pays you well to put some windmills on a plot of land, your grumpy cat achieved internet stardom and brings in the money …). Point is, you are no longer under any obligation to get up early in the morning and go to work every day of the week, for most weeks of the year.

Covering your normal expenses

The more you spend each month, the more passive income you are going to need. Sounds simple enough but you would be surprised how many people are not aware of the link between their day to day spending and their ability to save …

How much do you need to cover your expenses? Well, this guy has a pretty good answer to it. The basis is the trinity study.

Now, if you go poking around on the internet you can find posts on forums where intense debate rages about this study. And as a non USA person you could say: does it apply to my country? But I had never heard about the trinity study and also came more or less to the same conclusions just by observing that even in Belgium we had a handful of companies paying out a net dividend (after taxes) of 3% to 4%. They even continued to pay their dividend during the biggest market storms (anybody remember 2008, or before that 2001?) and in most cases are able to increase their dividends over the years, thus giving some inflation protection. The 25x annual expenses in investments (whatever form those investments may take) is a pretty practical rule of thumb. We’ll go with it for the time being. Once you are close to that number you may want to examine more closely your assumptions, expenses, rates of return and all that stuff.

The same guy also has a pretty good post on how to get there.

Basically: the less you spend, the more you save AND the less you actually need to achieve financial independence. Being frugal is the name of the game (being smart helps).

Two other sites also cover the basics (and much more) of this whole FIRE thingy pretty well

Any questions? Google is your friend (I am the lazy one here, so go click, click the links and read, read …)

In the next post, I will go into the details of how I view what financial freedom in Belgium specifically means.

Luckily for us, achieving freedom no longer involves painting our faces blue, having to listen to Mel Gibson going on and on about something or another and then ride into battle and die horribly. So we have that going for us!

Mission statement

Hello and welcome to yet another personal finance blog dedicated to financial freedom and early retirement.

I am a 42 years old guy living in Belgium (the country with the highest tax rate in the world), making an average wage, who would like to achieve financial freedom by 45. And I hope this blog will help me stay the course.

The ‘living in Belgium’ part is also the reason why I am doing this blog. The personal finance community might have grown quite a bit in the last years in the USA but in Belgium Europe even) personal finance blogs are pretty spars. I also think my perspective will be different than most. And who knows, we might be able to learn a bit from each other!

So goal number one is achieving financial freedom before I turn 46. I will go more in depth in a follow up post what financial freedom means exactly for me. But my investments will have to go up.

Goal number two, but equally important is getting back into shape. Young mr financial freedom sloth was a dashing young man 😉 in excellent shape. Current mr FFsloth is an overweight slob (1m78 height and 105 kilograms, not good by any metric). So the weight will have to go down. Achieving financial freedom without good health would be a shallow victory. Also, getting in shape might actually help becoming financially free as it will give me more energy to explore new money making side hustles.

Goal number three of the blog is to keep me on course. As you will discover in the following posts, I am a bit (ok, a lot) of a slacker: hence the average wage, hence the being fat (I am also brutally honest ;-). Being disciplined over a longer time period isn’t exactly my strongest point. My style is more that of a sloth for long periods, intersected with short bursts of intense activity and then retreat back to sloth. (Little side note: by typing the last sentence I stumbled upon the name for my blog! I was going to go for financialfreedomat45 but financialfreedomsloth is so much better. As a bonus, sloths are cool animals!!)

Being a sloth isn’t necessarily bad as it did get me a university degree. With honors even!! How I loved the old annual university system in Belgium: muck about till the first of May, then one month of intense studying, another month of exams and 1st of July I could be full on sloth till 1st of October. Sigh, the good old days.

It also got me an investment account approaching 240.000 euro. A sloth does not spend much. And value investing can be very sloth like, even Buffett loves a sloth : Lethargy bordering on sloth remains the cornerstone of our investment style.

And I am the proud owner of a charming old farm house approaching a value of 300.000 euro where the mortgage is currently around 130.000 (having a partner helped here, so only half of that is mine).

Yes, this sloth has done a few things right. But it could have been so much more had I been a bit more disciplined and focused!

So this sloth is counting on you dear readers to keep me disciplined and honest. In exchange you will get a brutally honest report on how a lazy, overweight (no it is not the waffles or the beer that got me fat), middle aged Belgian guy goes about achieving financial freedom in a country with one of the highest tax rates in the world. Trust me, it’s going to be a crazy ride.