Everyone seems to be talking about this Financial Independence (FI) number. Many people don’t even know what it means let alone what their FI number is. Yet this is a crucial number we should all be thinking about and truly understand. To me, the FI number is a beacon of light that I have my eyes set on on a dark stormy night. This number can be straight out terrifying as well. Maybe even scarier than staying up late watching horror flicks at midnight alone on a Saturday!

Yes, I was scared at first to calculate my FI number. Because I knew It would be this big number and I knew I had so little saved. I did not want to come to the reality of how much I would need to stop working. At the same time, I can’t wait to be able to stop my current career and move on to bigger and better things. No, really It’s all I think about lately. The FI number was the big scary monster in the closet.

So what is FI? To me, it’s when I have enough wealth to cover all my expenses and some extra for fun. It’s the amount of money I need to give my current employer the middle finger! Maybe even give them it twice.

I can already bet people’s ears starting to perk up and wanting to know more. It’s a pretty sweet thing to be able to quit whenever you want to and not have to work unless you desire to. Just how do you calculate this FI number you might be asking right about now.

Take your monthly expenses with a little extra for fun. Then times that number by 25. Wait why am I timesing this number by 25? Because that is the formula to use the 4% withdrawal rate. Not going to go into detail about it. In a nutshell, it’s a theory that you can withdraw 4% of your investments every year to live on forever. Back to calculating that FI number. Pretty easy that even a kid can do the math on this one. For your viewing pleasure, I will put an example below.

• Yearly Expenses (with that extra fun money) – \$40K
• FI Number – \$40K x 25 =  \$1,000,000

Now I am no engineer. Actually, the woman I am dating is an engineering technologist and actually had to tutor me in math so I could get an A in my algebra class. The numbers show us if my budget of expenses is \$40K a year I would need to save up \$1 million dollars. A pretty big number to swallow.  Are we ready to go back to the job we despise yet? Or are we ready to get on the path to reach this number and tell your boss to go pound sand?

I know what choice I made and can’t reach FI soon enough. Just how do you get there? Well, there are many parts to it and many ways. Yet I encourage everyone to follow my journey and bring the popcorn and candy because It’s going to be a wild ride to watch. You’ll see all my mess ups, all my successes, my hard times and my good times. I hope everyone takes something away from my posts. Maybe it’s what to do or what not to do. Either way, it will put you in a better position in life.

So what is your FI number? I’d love to hear your take on FI and what it means to you.

## 3 Replies to “What’s Your FI Number”

1. Steveark says:

Mine was \$100k per year. And it’s proved to be pretty accurate after two years of early retirement. Except I’m earning that much working a few hours a week so I’m not taking anything from my investments at all. Which means I could spend twice that much? But that would feel crazy, even if I tried I don’t think I could spend that much or would ever want to. Right now I’m sitting in my backyard patio looking out onto 800 acres of woods and wetlands, resting after some great tennis with my wife and another couple, sipping a beer and reading blogs. Life is good.

1. You are crushing it! What do you do that you earn so much for so little time? You are living the dream, and I am jealous of your current view. I can’t wait till I am in a position like you are.

2. Jeff says:

Nice article David, keep up the great work. P.S. Your girlfriend did a great job tutoring you.