Financial Independence

Financial independence — FI — is the point where your savings can cover your life without a paycheck. It sounds far off and abstract; Thrift’s job is to make it a concrete number and a concrete date, both drawn from your own ledger rather than a rule of thumb.

The idea in one line

Once your investments are large enough that their expected returns cover your spending, work becomes optional. Everything below is just how to find how large that is, and when you’ll get there.

Your FI number

Your FI number is the size of portfolio that can fund a year of your spending indefinitely. It comes from two things:

• What you spend in a year — Thrift already knows this from what you log.
• A safe withdrawal rate — the share of a portfolio you can draw each year without running it down over a long retirement. The common figure is 4%.

At a 4% withdrawal rate, the FI number is your annual spending times 25 (since 1 ÷ 0.04 = 25). Spend $40,000 a year and your FI number is about $1,000,000. Because it’s built from your spending rather than a generic income, the target is honest — and it moves as your life does.

Why spending counts twice

Spending is the lever with the most force, because it pulls the date in from both ends at once:

• Spend less and your FI number falls — there’s less to cover.
• Spend less and your savings rate rises — there’s more left to invest.

A dollar you stop spending is worth more than a dollar you earn: it shrinks the goal and speeds you toward it. That’s why Thrift keeps FI right next to your actual spending instead of in a separate calculator.

Coast-FI

Coast-FI is the gentler milestone that usually arrives years earlier. It’s the point where what you’ve already invested will grow into your full FI number by a target age — with no further contributions — on compounding alone.

Reaching Coast-FI means the hard saving is done: you still cover today’s costs, but you no longer have to save for retirement — time finishes the job. It’s often the more motivating number, which is why Thrift surfaces it alongside full FI.

The projection

From your savings rate (what you keep, drawn from your recurring income and logged spending) and an expected return, Thrift projects the date your portfolio reaches your FI number — a real month and year, not “someday.” As your spending, income, or the markets change, the date moves with them, so it stays truthful rather than aspirational.

Moving the date closer

Three levers, in rough order of power:

1. Spend less — the double effect above; the strongest and the one you control.
2. Earn and invest more — a higher savings rate.
3. Returns — real, but the lever you control least; don’t bank the date on it.

Change a number in your budget and watch the date respond — that feedback loop is the whole point of keeping FI in the same place as the day-to-day.

Keeping it accurate

The projection is only as good as what it reads. Set your fixed income and bills as recurring rules, keep logging, and the FI picture largely maintains itself — every entry makes the date a little truer.