What is the meaning of financial independence?
Financial independence can be defined as the status of having enough income to pay one’s living expenses for the rest of one’s life without having to be employed or dependent on others.
What is required for financial independence?
The general rule of thumb is that, to be considered independently wealthy, you need to have at least 25 times your annual expenses in savings. For instance, if your monthly expenses are about $4,000, then you’ll need $48,000 per year to break even.
How is Coast FI calculated?
Your financial independence number can be calculated by multiplying your annual expenses by 25. Then, you can find your coast FI number by taking your financial independence number and dividing it by (1+ expected growth rate) ^ number of years until retirement.
What is Slowfi?
Slow FI: When someone utilizes the incremental financial freedom they gain along the journey to financial independence to live happier and healthier lives, do better work, and build strong relationships. People pursuing Slow FI could retire early or could retire at the traditional retirement age.
What is a financial independence Number?
Financial Independence Number = Yearly Spending / Safe Withdrawal Rate. Your FI number will help you with a target amount to achieve financial independence sooner.
What is the difference between financial freedom and financial independence?
Financial independence allows you to be self-insured against a financial catastrophe in the case of death or disability, saving you those monthly premiums. Financial Freedom allows you to be self-insured against the cost of unexpected expenses and lifestyle upgrades.
How do you know if you are financially independent?
The most widely accepted definition of financial independence is when you saved roughly 25 times your annual spending. At this point, your finances are independent of your paycheck.
How is FIRE number calculated?
To find your FIRE number, multiply your expected annual expenses in retirement by 25. So if you expect to spend $50,000 a year in retirement, you could call it quits when your investment and savings accounts total $1.25 million.
What is your Coast FIRE number?
To determine what your Coast FIRE number is, you’ll need to use a simple compound interest formula, which many of us likely learned in school long ago and then promptly forgot when we became adults. The compound interest formula we’ll need to use here is: Coast FIRE Number = FIRE Number / (1 + Rate of Return)^(Time)
What is slow financial independence?
Slow financial independence aims to strike a balance between enjoying the process as much as the destination. If you’re on the Slow FIRE path, you’re not in a rush. You care most about being happy and fiscally responsible at the same time.
What is Slow Fire retirement?
Slow FIRE, put simply, is the opposite of FIRE in two key areas. It’s the acknowledgement that you don’t want to take extreme measures to hit your ideal retirement number but that you do want to enjoy certain aspects of FIRE life now.