If you’re on a financial independence journey, then these three numbers are non-negotiable:
- Net Worth – This is your financial snapshot.
Formula: Add up all your assets (cash, investments, property) and subtract your liabilities (loans, debts).
Example: If your assets total £200,000 and your liabilities are £50,000, your net worth is £150,000. - Savings Rate – This shows how much of your income you’re setting aside.
Formula: (Savings ÷ Income) × 100. Include retirement savings, investments, and any other contributions toward your future.
Example: If you save £10,000 out of an annual income of £40,000, your savings rate is 25%. - FI Number – The amount needed to achieve independence.
Formula: Annual expenses × 25 (based on the 4% withdrawal rule).
Example: If your annual expenses are £30,000, your FI number is £750,000.
These numbers won’t achieve FI for you, but they’ll guide your journey. Track them regularly and adjust your strategy as needed.