The FI number (25× expenses)
Understand why the math behind 25×: if your portfolio = 25× annual expenses, then 4% of portfolio = 100% of expenses.
In this lesson
The FI number (25× expenses) is part of Financial Independence Basics. This preview shows how financial-independence connects to everyday family decisions such as earning, saving, spending choices, goals, approvals, or parent-guided money conversations inside Progress Penguin.
Think about this money choice
Imagine this situation: Your current monthly expenses: 200000 in local currency. Annual expenses: 2400000 in local currency.
How it works
The math behind 25×: if your portfolio = 25× annual expenses, then 4% of portfolio = 100% of expenses. The Trinity Study (1998) showed portfolios withdrew at 4% historically survived 30+ years with high probability. 25 is simply 1÷0.04. In Nigeria's higher-inflation environment, some experts suggest 30-33× to provide additional buffer.
Apply it to a real decision
Real-life money moment: Your current expenses are 100000 in local currency/month. If you achieve FI at these expenses, your FI number is 30000000 in local currency. But by the time you reach FI (say, age 40), inflation has raised your expenses to 300000 in local currency/month.
Activity preview
Apply the idea
Use the lesson to complete this short practice activity.
Quiz preview
If annual expenses are 5000000 in local currency, the FI number is approximately:
Your current monthly expenses: 200000 in local currency. Annual expenses: 2400000 in local currency. Using the 25× rule, what is your FI number?