Your financial freedom number: How to calculate it and why it matters

PL

Paula Luckhoff

20 January 2026 | 20:14

'Often if people feel out of control and a bit aimless about their money, it's because they have no goal - they don't know what their number is' - Warren Ingram

Your financial freedom number: How to calculate it and why it matters

Investment, man in suit holding golden eggs, money. i123rf.com

The concept or ideal of financial freedom is of course a much-discussed topic on The Money Show's Personal Finance slot.

Isn't that what we all dream about?

Taking the steps to achieve financial independence can depend on knowing, and achieving, your financial freedom number.

And it's not as complicated as it might sound, is the assurance from personal finance guru Warren Ingram (Galileo Capital).

"The start of the year is a good time to have this conversation because it's not just about housekeeping, it's also I would hope motivating to figure out where we are  comp to where we were a year ago whether we've made some progress."

"Calculating your number is very simple, and something we can all do for ourselves once a year without launching big AI apps or Excel spreadsheets". 

THE BASIC CALCULATION

Start with your annual spending, not your income. This is crucial says Ingram – most people overestimate what they'll need because they focus on their current income rather than their actual spending. 

Track your actual spending for at least three months. Include everything: rates, groceries, insurance, holidays, gifts, and car maintenance. 

Say you spend R40,000 per month, or R480,000 per year. Multiply that by 25:  That's R12 million. 
THAT is your financial freedom number using the 4% rule – the idea that you can safely withdraw 4% of your investment portfolio annually without running out of money.
Why multiply by 25? Because if you have R12 million invested and withdraw R480,000 per year, that's 4%. 
If your investments earn more than 4% after inflation, your capital keeps growing. If they earn exactly 4%, your capital stays level. 
YOUR SPENDING HAS THE BIGGEST IMPACT ON YOUR FREEDOM
  • Spend R15,000 per month - you need R4.5 million of investments
  • Spend R50,000 per month - you need R15m of investments
  • Spend R120,000 per month - you need R36m of investments
The decisions we make about our spending determine how long it will take for us to achieve financial freedom.
If freedom is most important to you, Ingram emphasizes, then your spending needs to be limited so that you can achieve freedom as quickly as possible.
If you are happy working and are not as concerned with financial freedom, you can spend a bit more and reach freedom later in life.

Scroll up to the audio player to listen to Ingram's detailed advice

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