FIRE and FI are acronyms that means Financial Independent / Retire Early.

It’s hard to define FI because it’s not a concrete point. 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 agreed-upon rule of thumb definitions is net worth that is 25 times your annual spending.

Don’t Worry If The Math Is Not Clear Right Now

If your DrSpouse is still in training, it can feel like FI is impossible:

You don’t have a crystal ball telling you where you’ll live, how much you’ll make, or how happy he will be at his job.

No prob, you’re just starting out!

Good news is you don’t need to figure out the numbers behind this FI stuff right away. The beauty of FI is that you can reassess your situation along the way.

For example, if your goal is to reach FI by 50 but you find out that you don’t feel comfortable to do so until you’re 53, then you can put in three more years.

Or the opposite, you can find out that you really overshot your goals and you can semi-retire or fully retire earlier.

Your Job As A Resident Or Fellow

Your job is really simple:

#1. Do not get into credit card debt!!!

#2. After that, come up with a financial plan for that first year of attendinghood.

#3. Then, plan to spend like a “resident” for 2-5 years after training is over.

The details of FI will come later.

I’m hugging and supporting you ❤️

To strong medical families,

Your Turn

Do you plan to reach FI or FIRE?