Jach's reply explains some of the logic. Basically if you can live on $X per year, then once you have $X * 25 invested, you can most likely live on the interes

Jach's reply explains some of the logic. Basically if you can live on $X per year, then once you have $X * 25 invested, you can most likely live on the interest from that investment for the rest of your life without using it up. Here's an article shows the math: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim... In my case I'm saving between 80-85% of my after-tax income, which is how I can "retire" after between 4-5.5 years of work. Two ways to achieve this are to increase your income or to reduce your spending. Ideally both. Reducing spending generally means your life has less impact on the environment, you'll be happier. It's key to realize that money you save and invest earns more money for you, forever. A useful heuristic here is that if you can save $X per month, after 10 years of doing that you'll have $X * 173 in the bank. So suppose I currently buy lunch every work day for average of $10, if I instead pack a lunch that costs me $1, I'll save $200 / month. Over 10 years this adds up to $34000. Once you start thinking this way, it's easier to be excited about cutting your spending. And then you find that you can live and be happy on a much smaller amount of money than you thought. So not only do you build up your savings a lot faster, you actually need a lot less savings to be financially independent.