For a long time, if someone asked how much money I needed to feel at ease, I gave the same answer almost everyone gives: “more.” More than now, more than last year. It was a goal that moved every time I got closer, and that wears you out.
What changed it for me was a single multiplication.
The math
Here’s the idea: as a rule of thumb, your FIRE number is what you spend in a year multiplied by twenty-five. It comes from a widely quoted guideline about withdrawing roughly 4% of your portfolio each year (twenty-five times your spending is the same as that 4%). It isn’t an exact law, and I’ll give it its own post, but as a starting point it works.
An illustrative example: if your life costs $30,000 a year, your number would be around $750,000. A portfolio that size, withdrawing 4%, would produce about $30,000 a year.
What I didn’t expect
The first thing I found out is that the figure that matters isn’t how much I earn, but how much I spend. And there I got a surprise: I didn’t actually know what I spent. I had to track it for three months to get a real number instead of the one I imagined.
The second thing hit harder: every fixed expense I cut worked twice. If I stop spending $200 a month, that’s $2,400 a year I no longer need to cover, which takes about $60,000 off my number ($2,400 × 25). At the same time, that $200 now goes into savings. Saving stopped feeling like giving things up and started feeling like shortening the road.
A number, not a sentence
My number has changed several times, because my life has changed. That’s fine. It isn’t a verdict; it’s a compass. What it did for me was turn an endless “more” into a goal with a shape, one I can look at, revisit and slowly bring closer.
If I could give you just one exercise today, it would be this: work out what you truly spend in a year. Everything else starts there.
We work through this calculation step by step, with a full case study, in the course FIRE Math.
Educational content. Not financial advice.