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.
Today’s money mission
Imagine this situation: Your current monthly expenses: 200000 in local currency. Annual expenses: 2400000 in local currency.
What you need to know
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.
Real-life example
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.
Progress Penguin connection
In Progress Penguin, the FI calculator is built around the 25× rule. Enter your annual expenses, and the calculator derives your FI number and the 4% withdrawal rate it implies. Try changing your expenses and watch the FI number move — this lesson explains why the multiplier is 25 and not an arbitrary round number.
Activity preview
Try the money challenge
Compare the two options from this lesson and verify: the math behind 25×: if your portfolio = 25× annual expenses, then 4% of portfolio = 100%. Which demonstrates it most clearly over ten years, and why?
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?