Your Financial Independence Fund delivers your first taste of financial liberty. Warren Buffett always looks for a moat around a business to protect it from competition, you should look for the Financial Independence Fund to be your moat protecting you from financial stress.
The amount to keep as a minimum in your Financial Independence Fund will differ by person. I recommend considering what amount of expenses you would have if you had zero income. I call that your minimum mandatory expenses. Usually that includes housing, utilities, food, transportation, essential insurances, etc. Just imagine you have a job, they fire you, and you start looking for a new job tomorrow. What would you have to pay for then? Take that monthly total times the longest amount of time you think it would take you to find another job that at least covers your minimum mandatory expenses. That amount is what I would recommend as a goal. For some people that’s a few months but for some it’s maybe a year. If you’re commission based or a business owner it may be more to ride out any economic cycles. On that note, if you own a business you need a Financial Independence Fund for minimum mandatory expenses for it too. No matter what, you should feel really good once you have it saved because the Financial Independence Find is your first taste of financial liberty.