April 25th is International Financial Independence Awareness Day
Introducing International Financial Independence Awareness Day

Introducing International Financial Independence Awareness Day

Today is the first ever International Financial Independence Awareness Day!

We’ve got big plans for #425Day, but we’re kicking things off today with a humble beginning. For now our only goal is to drive awareness of the growing Financial Independence movement and how it improves lives. We’ll continue to grow this site with the intention of making it a trusted resource for anyone seeking financial information.

But let’s start off with a few questions.

What is Financial Independence?

Financial independence occurs when income generated from assets is enough to cover your expenses. At that point working for a paycheck is optional and you’re financially independent.  That’s a confusing way of just “money is no longer a concern” once you’ve reached financial independence.

When we speak of Financial Independence, or FI, on this website we’re referring to a number that can be calculated by combining the Rule of 25 and the 4% Rule.

What is the 4% Rule?

The 4% Rule is a financial rule of thumb that helps you determine how much of your retirement portfolio you can spend each year without ever running out of money. Spoiler alert, that amount is 4%.

What is the Rule of 25?

The Rule of 25 is the other financial rule of thumb used to help you calculate your financial independence numbers.  This rule says that you need to save 25 times you annual expenses, not income, to be financially independent. At that point, according to the 4% Rule, you can spend 4% of that portfolio and never run out of money.

How much money does it take to become financially independent?

That depends on how much money you need to support your lifestyle.  If you want to live the lifestyle of the rich and famous, then you’re going to need many millions of dollars.  However, if you’re happy and content living on rice and beans, then a few hundred thousand is all you’ll need.

Most of us land somewhere in-between those two extreme examples. The point is further illustrated in the parable parable of The Monk and the Minister:

Two close boyhood friends grow up and go their separate ways. One becomes a humble monk, the other a rich and powerful minister to the king.

Years later they meet up again.

As they catch up, the minister, dressed in his fine robes, takes pity on the thin, shabby monk. Seeking to help, he says: “You know, if you could learn to cater to the king you wouldn’t have to live on rice and beans.”

To which the monk replies: “If you could learn to live on rice and beans you wouldn’t have to cater to the king!”

Credit: JL Collins for bringing this parable to my attention

Using the Rule of 25 and the 4% Rule, we can see that a person or family that needs $40,000 per year to meet their needs would require a portfolio of $1,000,000.

  • $40,000 in expenses x 25 = $1,000,000

4% of that $1 million dollar portfolio is $40,000.  You can read more about how and why these rules work in this article, The FIRE Movement

Can anyone achieve Financial Independence?

The stone cold reality is that life can be brutal and unfair to some of us, and there are many situations where financial independence isn’t possible. If you’re here reading this post, I’m pretty sure that’s not you; most people that see this will be very capable of reaching FI.

So the answer is no, not everyone can achieve financial independence, but that shouldn’t stop you from trying because even if you come up short, you’d still be better off for trying.

Why April 25 for International Financial Independence Awareness Day?

We chose 4/25 as the official date for Financial Independence Day because of these two financial rules of thumb:

  • The 4 Percent Rule
  • The Rule of 25

When combined, these rules can help you establish a financial plan that results in financial independence, thus 4/25 is the perfect date for International Financial Independence Awareness Day.

 

425 Day - International Financial Independence Awareness Day

 

Who are we?

We’re just a website. Nothing more. There aren’t even ads on this site, so we’re not trying to earn money from this, we’re simply trying to spread awareness of financial independence.

What’s next for #425Day and this site?

That’s a great question.  This site will continue to grow and evolve in the coming weeks and months.  Eventually we’d like to become a trusted resource for anyone seeking information about Financial Independence. We’ll continue to provide information, tools and recommendations that anyone can use to improve their financial situation.

425Day - International Financial Independence Awareness Day

Show Your Support for #425Day

You can support this site and #425Day by spreading the word about financial independence. Check out some of these articles and blog posts written by personal finance bloggers from around the globe.

Please read, then share these posts on whatever social media sites you use. Thank you and Happy 425 Day!

This Post Has One Comment

Leave a Reply

Close Menu