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The Financial Independence (FI) movement was made popular in no small part by the (slightly famous) US by blogger Mr Money Moustache.
His philosophy is that you can determine when you can retire based on the percentage of your take-home income that you save.
This is explained in his exceptional blog post 'The Shockingly Simple Math Behind Early Retirement'.
He states that your savings rate is determined by these two things: How much you take home each year and how much you can live on.
His calculations are based on a (much debated) 4% rule, where once you’ve amassed your lump sum, you draw down 4% a year and you should never run out (based on an assumption of earning 5% return from your investment).
A quick way to work out what your lump sum needs to be is to multiple your cost of living x 25.
For example, if you can live off £2,500 per month (£30,000 per year), you’ll need a lump sum of 25 x £30,000 = £750,000.
Now, before you throw in the towel wondering how on earth you’ll ever get to that amount, hang in there, don’t go yet!
The whole FIRE movement is based on the philosophy of:
Even if you just do a few things to improve each of the above, you're likely to be way ahead of the average Brit in saving for retirement (although sadly, that's not much of a claim) and will improve your financial understanding and situation.
Throughout this website I hope to build on all these FI principals to help my family – and yours – achieve FI sooner than we ever imagined possible.
Will you join me on this exciting journey?
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