Fire Numbers You Should Know

Last Updated: 17 Jul 2022

Financial Independence, Retire Early (FIRE) is a financial movement defined by the focus on saving and investing with the goal to be, like the name suggests, financially independent and have the ability to retire early. Here are 4 key numbers you should know before calculating how long you will need to keep working before you can retire early.

Once you know these numbers plug them into this calculator built by playingwithfire and work out how far you are off retiring early!

1. Annual expenditure

Add up the money you spend across rent/mortgage, food, bills and going out to figure out every year how much do you spend. Spending will change month on month due to special events like Christmas/Birthdays so it’s important to see the value across the year instead of one specific month

2. Net Income

Only money that actually enters your pocket counts for this number. Add up income across your job, dividends and side hustles

3. Current net worth

Add up the value of all your assets (stocks, cash in the bank) and subtract your liabilities (loans). I would not include your primary house, cars and mortgage in this figure as while they are your assets you won’t be able to sell them to use for your daily expenditure once you retire as you always need a home to live in!

4. Savings Rate

What % of your net income (see point 2 do you actually save)? This can be calculated by (Net Income - Annual Expenditure) / Net Income