How to Calculate Your Financial Independence Number in 5 Minutes

The 5-Minute Formula

Your financial independence number — what we call your Quit Number — is the total amount of money you need invested so that your portfolio generates enough passive income to cover all your expenses. Forever.

Here's exactly how to calculate it, step by step.

Step 1: Know Your Monthly Expenses

This is the foundation of everything. Pull up your bank statements from the last 3 months and add up everything: rent or mortgage, food, insurance, subscriptions, transportation, entertainment — all of it.

Don't guess. The difference between spending $4,000 and $5,000 per month is a $300,000 difference in your Quit Number.

Example: Sarah spends $4,500 per month ($54,000 per year).

Step 2: Multiply by 25

Take your annual expenses and multiply by 25. This is the 4% rule in action: you need 25 times your annual spending invested to live off your portfolio forever.

Example: $54,000 × 25 = $1,350,000. That's Sarah's Quit Number.

Step 3: Check Your Current Score

Your Quit Score tells you how close you are, as a simple percentage. Divide your current net worth by your Quit Number and multiply by 100.

Example: Sarah has $405,000 saved. Her Quit Score: $405,000 / $1,350,000 × 100 = 30. She's 30% of the way to financial independence.

Step 4: Project Your Quit Date

This is where it gets exciting. Based on how much you save each month and assumed investment growth (historically around 7% per year), you can project when you'll hit your number.

The math gets complex here because of compound growth — your investments earn returns, and those returns earn returns. This is where a calculator becomes essential.

Example: Sarah earns $95,000 per year. She saves about $3,400 per month. With 7% average annual returns, she'll hit $1,350,000 in approximately 12.5 years.

Step 5: Find Your Levers

Now comes the strategy. There are three ways to accelerate your Quit Date:

Cut Expenses

Every dollar you cut from monthly spending has a double effect: it reduces your Quit Number AND increases your monthly savings. Cutting $500/month from expenses moves most people's Quit Date forward by 2-4 years.

Increase Income

Earning more doesn't change your Quit Number, but it dramatically increases how fast you fill the gap. A $10,000 raise invested entirely accelerates most timelines by 1-2 years.

Start Earlier

Compound growth is exponential. Money invested at 25 has twice as much time to grow as money invested at 35. Even small amounts early on create an enormous head start.

A Common Mistake

Many people calculate their FI number using their current salary instead of their expenses. Your salary is irrelevant to how much you need — only your spending matters. A person earning $200,000 who spends $100,000/year needs the same Quit Number as someone earning $100,000 who spends $100,000/year.

The difference is that the higher earner will get there faster because they have more to save.

Get Your Exact Numbers

The formula is simple but the projections involve compound growth calculations that are tedious by hand. Our calculator does it in 60 seconds — you'll get your Quit Number, Quit Score, and projected Quit Date instantly.

The hardest part isn't the math. It's opening your bank statement and being honest about what you spend. Do that, and the rest takes care of itself.