Skip to main content

The Financial Freedom Equation (FFE)

You become financially independent once the Financial Freedom Equation (FFE) is satisfied.

Calculation​

Financial freedom equation: passive cash flow exceeds lifestyle cost

Once the Financial Freedom Equation is satisfied you no longer need to trade time for money.

Note that this point at which the Financial Freedom Equation is satisfied is a moving target. However the concept is what matters.

How many years does it take to solve the Financial Freedom Equation?​

How fast the Financial Freedom Equation is satisfied is determined by how high of a Savings Rate you can sustain.

The relationship between Savings Rate and the Financial Freedom Equation​

Examples:

  • A Savings Rate of 25% will solve the FFE in 31.9 years.
  • A Savings Rate of 40% will solve the FFE in 21.6 years.
  • A Savings Rate of 55% will solve the FFE in 14.4 years.
  • A Savings Rate of 70% will solve the FFE in 8.8 years.
  • A Savings Rate of 85% will solve the FFE in 4.1 years.

Savings Rate is all that matters.

Increase your Savings Rate