Rethinking the FI Budget – What Do We Really Need to Include?

It may have taken its time to arrive, but the weather is finally Spring-like in the UK. Every morning, I take the dog for a walk around the the nearby lake before most of the city is awake. When the weather is good, it’s my favourite time of day. No people around except for the occasional other dog walker or early morning runner. No traffic noise. The sky this morning was a beautiful pale blue; sunlight sparkled on the water and the sight of my dog galloping through the shallows chasing her ball was an advert for pure joy.

This. Just this.

If life was as simple as this, who would need an escape?

Time Limitations of Working Life

I live my life by the calendar. Working in finance, I am governed by the quarterly reporting cycle of the company. And then there is the school calendar with all the weeks the children will be out of school. Throw in a smattering of long weekends for UK bank holidays and that sums up my year. I work in stretches and sprints, with the countdown to the next holiday forever in my mind. I have to co-ordinate when I can take time out according to the company calendar and the school holidays and the intersection of the two allows for around 4 weeks a year for family holiday time together.

Four weeks. In a whole year. Is it any wonder we are driven to make those weeks as beneficial as they can be? And for us that means guaranteed warmth and sunshine. So we spend a disproportionate amount of money each year taking holidays to far away places and a disproportionate amount of time wishing our lives away just to get to those precious few weeks.

Sliding Doors

In a Sliding Doors scenario I return from walking the dog in the morning and see the children off to school. I sit quietly with a coffee for an hour of quiet reading time, maybe more, maybe less. Catch up with my favourite blogs, read a little news, take a leisurely shower and decide what to do with the day. If the weather is good, no doubt a chunk of the day will be spent outdoors.

Compare that to sitting in an office staring at a computer screen, wrapped in a cardigan because the air-conditioning is too cold. This has been my reality for so long that I think it has warped my view of what I need to account for in my post financial independence calculations.

Inspecting the Budget

I have been scrutinizing my post FI budget – looking for ways to bring my early retirement date forward. I’ll take anything at this point to make that happen. And whilst I was watching the dog with all her boundless energy and enthusiasm for life I suddenly thought – if this was my life, what would I need to escape from? When you don’t have to spend all the sunny days of the year stuck in an office praying that the weather will stick around for the weekend, your priorities change.

Because I took my current expenses as a starting point, my post FI budget includes a sizeable chunk for holidays abroad. I’m starting to think this is somewhat excessive and I could have found a really quick win to shave some time off my working life.

Do I want travel to be part of my future? Yes, of course I do, who wouldn’t? But how much do I want that? Free of the stresses of working life, the need for a holiday is suddenly far less. Is building in expensive breaks really worth the sacrifice of a few more year’s work? Sometimes it takes a pivot in our way of thinking to make us judge how much we really want something.

What is the Real Cost?

To make the numbers easy, let’s say we allocated £5k a year for a single person’s travel expense. To be spent however you please – stretched over a longer term exploring cheaper places or blown all at once in a top resort. Sounds great. Would I pay £5k for that? Absolutely yes.

But when you look through the lense of financial independence, the price is not £5k. Using the 4% rule, the true cost is 25 x £5k = £125k. That’s how much bigger the FI pot would need to be to support that level of spend every year. So the real price is how long it would take to save that extra £125k. And for most people, myself included, that’s years.

The question then becomes do you want to work that much longer in order to save those additional funds or do you want to find a way to build a life that doesn’t need that expense?

Having Something to Strive For

I recognise there are many benefits of travel outside of recuperation from a hectic work schedule. And I don’t want to write that off from my future. But I am no longer going to build it in to my calculations.

I have plenty of things built in which may or may not be needed every year. Home maintenance costs, new furnishings, large vets bills and a 10% contingency for a start. They have to form part of the budget because they could be needed. But I’m not going to spend all of these every single year. So where I save money on those line items, I can reallocate those funds to travel, if I feel the urge.

If you asked me a year ago whether this line item was negotiable the answer would have been an unequivocal “no”. No way, absolutely not, no chance. But I have started to view things in a different way. If we are aiming for the perfect life and putting off early retirement until we can afford our vision of that perfect life, firstly it will take forever to get there and secondly, we have nothing left to strive for once we do.

I am as competitive as they come and I can see myself rising to the challenge of finding creative ways to get the luxuries of life if I need to. It’s all very well saying we might earn some extra income in the future, but if we have accounted for every single eventuality in our budget, what would be the point?

When Less is More

Just because we may be striving for an early retirement, it doesn’t mean we have to reach perfection. The way I see it, I have two choices here. I can plan for many years of comfortable financial independence with a good chance of some upside (better investment returns / lower expenses / higher side-income) that would allow for some luxuries.

Or I can grind away for an extra few years with all the negativity, weight gain, stress and liver damage that would bring, just to afford a lifestyle that many people would consider affluent. When I put it like that, it’s obvious to me that working less would ultimately give me more.

Join the Discussion

Having had my epiphany, I’m on on a mission to find any other excesses that might be over-inflating my budget. Are there things that you’ve thought about that you will no longer need once you don’t have to work any more? Are you planning for the perfect retirement, a modest one or completely Lean? If you’ve already pulled the trigger, do you find how you spend your money is different to what you expected?


8 thoughts on “Rethinking the FI Budget – What Do We Really Need to Include?”

  1. Our FIRE budget is definitely lower than our at work budget, precisely for the reasons you articulated above. Any holidaying we do post retirement will be cheaper (late deals, out of season) and is secondary to the main budget. Our savings rate in terms of pounds per year is not high so like you to save £125k for that £5k holiday expense is a non-starter. Far too many years lost to additional work meant expensive holidays bit the dust very quickly in our calculations.

    Have you calculated how much sooner you could retire as a result of cutting expensive holidays out of the budget?

    Liked by 1 person

    1. It’s difficult because I still have the children at home for a good few years yet. If it was just me then I would consider myself FI now and quit my day job. But the next few years are quite expensive compared to the rest of my life, if that makes sense. Retirement calculators don’t seem to account for several life stages with different levels of expense in them – or not any that I’ve found (suggestions welcome!).
      You have a great attitude to life – I’m learning from your writing 😊

      Liked by 1 person

  2. I think there are many different ways of travelling and holidaying – if you were using holidays as an escape from your working life, yes you will not need them as much when FIREd. However if you are the wanderlusty culture type traveller, you’d want to use FIRE to travel more. Slow travel can be very cheap, especially if you don’t need to keep a home base.

    Liked by 1 person

    1. One of the main reasons to want to retire early for me is to travel and id like to be able to not scrimp hence why I’m aiming for quite a large number before calling it quits.

      My actual day to day living ex holiday is fairly cheap. (id say 2. 3k a month and that includes my silly car which will go next year so will be more like 1800). If I can get my savings up enough to cover my basic mortgage and bills this will go a long way to reducing the stress . A long way to go for me for now but then I am 37 so only at the start of the snowball. Actually including my retention bonus next year my pension will probably be up around 220k with a fair wind so you could argue that plus the oap I’m almost there. Just need to build my non pension wealth to fill in the gap years.


  3. Yes, leaving that 220k to compound for around 20 years is powerful stuff! I would say you are more than nearly there with your pensions. You might need to start thinking about the lifetime allowance if we have some high growth years. I wish I hadn’t put so much in pensions in last few years. Yes there’s the tax benefit now. But with ISAs you get the tax benefit later


    1. True yes its a bizarre thing the lta i never thoughtnid need to worry but in some quite extreme examples i could stop paying in next year and breach the limit which is mad. Im hoping they get rid of it by the time i get there


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