How Do You Know When You’re Actually Financially Independent?

FIRE and FI are acronyms that mean Financial Independent / Retire Early. It signals a point in life where work becomes optional. But it’s hard to define because it’s not a concrete point.

For instance, the bank does not issue a letter that says:

“Congratulations, you have reached FI!”

Instead, FI is an art that each person determines for him or herself. But there are some numbers behind it.

Here’s how most people in personal finance circles have defined FI.

Different Stages Of FI

FU money(In my house with small kids, we call it Freedom Money!) This is 1-2 years of yearly expenses saved. It allows you to quit the job you hate without living on the streets. Is your job killing you and you need time off to find a better job? Have you used up all your maternity/paternity leave and need more time with your growing family? You can, and you can still afford to live while doing so!

LeanFI – You have just enough money to stop working forever if you cut discretionary items out of your budget. Typically this is for somebody who wants to go in and out of the workforce and take several sabbaticals throughout life. Want to spend a year in New Zealand? Why not.

FatFI – You reach this if your net worth is at least 30 times your annual spending, if not more. This is for people who are anxious whether “enough is enough” or are not very frugal. There is a fatFIRE group devoted to people in this category by Physician On FIRE that both you and your DrSpouse can join.

FI – This is a general term that includes FU Money, LeanFI, or FatFI. FI’s most commonly agreed-upon rule of thumb definitions is net worth that is 25 times your annual spending.

I’m a hugger. I’m hugging and supporting you, friend ❤️

To your strong medical family,





Your Turn

Do you plan to reach FI or FIRE?