What is your FI (Financial independence) number? – Is a question I find hard to answer as I don’t believe that there is any one number to FI but more levels of FI progression that is subjective to each individual.
I break my FI number down into 3 goals;
- FU Money first
This is the minimum amount of money that you should survive should you no longer have a job, but to be able to provide for your basic (Maslow’s) hierarchy of needs. Food, shelter, heath etc.I use ~$15,000pa as my estimate – This is the current payout by the NZ govt for superannuation, if people can live on this then surely so could I. - Expenses x1
Be able to cover your decided level of expense costs – we all have different goals, options, decision, quality of life to take into consideration the number is different for everyone especially when you take into account single, couples and families. Or the expenses that could sustain your current level of living.Obviously you can aim for more/less based on your future goals.The key here is to understand your likely expenses the more accurate you know what your future expenses will be the more confident you will become about meeting your goals.Test it out
Those on the path to FIER are flexible you don’t have to chuck in the job on day one! Test it out for 6-12 months while you still have job security or take a staged approach and move to part time work.
- Excess >1
To be able to meet your decided level of expenses plus some or living in relative exceeded comfortate. Again subjective to as all on how we all define ‘excess’ for some this could be the ability to go on a overseas holiday as an excess for other fancy hotels and holidays once a month.
Do you have FI levels too? What are yours?