Module 10 · Lesson 2

Your FI Budget

10 min read

The Problem

The FI formula needs one input you do not have yet: what you will spend per year after you stop working. It is not this year's budget. The mortgage may be gone. The commute is gone. Healthcare and travel may cost more. Guess it and your FI Number is a guess. Build it from your real budget and it is a plan.

Now and Future

The FI Budget has two columns. Now is your current monthly income and expenses. Future is what you expect once you reach FI. Income lines are positive amounts. Expense lines are negative.

By default the app fills Future by applying the Future Budget Multiplier from your settings to each expense, for example 80% of today's spending, because most people spend less once work-related costs go away. Income defaults to the same as Now. You can override any Future amount by hand. "Apply %" resets every Future value back to the computed default.

The sum of your negative Future amounts, times 12, is your annual future expenses. Divide by your safe withdrawal rate and you have your auto-computed FI Number. Lower future expenses, lower target, sooner FI.

Try It: Build the FI Budget

  1. Navigate: Goals
  2. Verify: a Financial Independence Budget section is shown with Now and Future columns
  3. Click: "Add Line"
  4. Type: Category — Housing
  5. Type: Amount — -1800
  6. Click: "Add Line"
  7. Type: Category — Groceries
  8. Type: Amount — -600
  9. Click: "Add Line"
  10. Type: Category — Healthcare
  11. Type: Amount — -500
  12. Click: "Add Line"
  13. Type: Category — Social Security
  14. Type: Amount — 1500
  15. Verify: each expense line shows a Future value computed from the multiplier
  16. Click: "Settings"
  17. Click: "Compute from budget"
  18. Click: "Save"
  19. Verify: the Target Financial Independence Number (FIN) shows a value marked as auto-computed from your FI Budget

Building the FI Budget and computing your FIN

Add a line for every category in your real budget, then be honest about what disappears (mortgage, commute, childcare) and what grows (healthcare, travel, hobbies). Click any Future amount to override it. Revisit this quarterly. Your Now column drifts as your real budget changes, and Future should follow.

Aside: Add Goals From Your Investment Accounts

Goals are the other half of the page: what you have invested, what you add monthly, and what it grows to. If you flagged investment accounts in the last lesson, the goal form does most of the typing for you.

When you open the Add Goal form, the name field suggests your investment accounts that do not have a goal yet, then common names like Index Fund, 401k, IRA, and Roth IRA. Type a name that matches an investment account and the app pre-fills:

  • Current Balance from the account's balance
  • Monthly Contribution from any scheduled deposit into that account
  • Annual Rate from the account's expected return rate

The pre-fill only touches fields you have not changed, so your edits stick.

Try It: Add a Goal

  1. Navigate: Goals
  2. Verify: the Goal Name field suggests "Index Fund," the investment account you created in the last lesson
  3. Type: Goal Name — Index Fund
  4. Verify: Current Balance and Annual Rate are pre-filled from the Index Fund account
  5. Type: Monthly Contribution — 500
  6. Click: "Add Goal"
  7. Verify: Index Fund appears in the goals list with a Future Value, and the progress chart compares your projected portfolio to your target

Adding a savings goal from an investment account

Every field in the goals list is editable in place. Update balances as your accounts grow and the projection updates with them.

Reading the Chart

The progress chart shows where your goals land against your target on your timeline. "On Track" means the contributions you make now get you there. "Behind Target" tells you the gap, in dollars per month. That gap is a budget decision, and you know exactly how to make one.

Key Takeaway: Build the FI Budget from your real numbers, set Future to what life will actually cost, and let the app compute your target. Then add a goal per investment account and watch the projection against it. The budget you built in Module 5 is what makes this number real.

Check Your Understanding

  1. What is the difference between the Now and Future columns?

    Answer: Now is your current monthly income and expenses. Future is what you expect after reaching FI. Future expenses default to a percentage of Now, set by the Future Budget Multiplier.

  2. How does the FI Budget produce your FI Number?

    Answer: The app adds up the negative Future amounts, multiplies by 12 for annual expenses, and divides by your safe withdrawal rate.

  3. What does the app pre-fill when you add a goal named after an investment account?

    Answer: Current Balance from the account, Monthly Contribution from any scheduled deposit into it, and Annual Rate from the account's expected return rate.

  4. The chart says you are behind target by $300 a month. Where does that decision go?

    Answer: Into your monthly budget. Raise the contribution line by $300 and lower another line to keep the budget at zero, or extend the timeline.