Financial Independence — The crossover point

Financial independence is the point where income from your investments covers your expenses. After that, work becomes a choice, not a requirement. The variable is not how much you earn. It is the gap between what you earn and what you spend. A wider gap reaches the crossover point faster.

• The rule of thumb: save 25 times your annual expenses. The returns on that amount can cover your costs indefinitely.
• Starting early matters more than earning more. Time and compound interest do the work. (See Card 0006.)