3550: [Part 2] How I Measure Progress Toward Financial Independence by Craig Stephens of Retire Before Dad

Optimal Finance Daily - Financial Independence and Money Advice

Optimal Living Daily LLC

Business, Education, Investing, Self-improvement

4.5 • 1.3K Ratings

🗓️ 6 May 2026

⏱️ 14 minutes

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Summary

Discover all of the podcasts in our network, search for specific episodes, get the Optimal Living Daily workbook, and learn more at: OLDPodcast.com. Episode 3550: Craig Stephens breaks down a practical way to measure financial independence by focusing on annual spending, invested assets, and sustainable income streams rather than misleading net worth figures. By adjusting expenses with passive income and tracking progress visually, he reveals a clearer, more motivating path toward early retirement. This approach helps you see exactly how close you are, and where you can accelerate the journey. Read along with the original article(s) here: https://www.retirebeforedad.com/measure-financial-independence/ Quotes to ponder: "Best practice is to use invested assets to measure progress toward financial independence instead of net worth." "Start tracking anyways. You’ll be amazed with the amount of progress you can make in a year or two." "I prefer to keep taxable passive income assets and retirement savings separate because I do not want to draw down the principal of my sustainable income streams." Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	This episode is brought to you by Expedia and Visit Scotland.
0:04.6	Start your story in Scotland.
0:06.9	Experience the pool of wide, untamed landscapes and fresh cuisine that feels rooted in place.
0:13.6	Discover castles steeped in legend.
0:16.6	And feel the genuine warmth from locals you meet in a place that will stay with you long after you leave.
0:23.2	Start planning your own Scottish holiday today at Expedia.co.uk slash visit Scotland.
0:30.5	This is Optimal Finance Daily,
0:33.2	how I measure progress towards financial independence, part two, by Craig Stevens of Retire Before Dad.com.
0:41.4	Start with Annual Spending.
0:44.5	Late last year, I demonstrated how I track annual spending using Excel and its pivot table functionality.
0:51.8	That method gave me the exact amount our family spent in 2018. Start with
0:57.4	your annual expenses. In this example, I'm going to use the number 65,000 for annual expenses.
1:04.6	For someone whose annual spending is $65,000, their fine number, based on the math of the 4% rule, would be $1,625,000.
1:16.3	Invested assets or net worth. Remember, the FI number goal is to build a lump sum of savings
1:24.0	and investments, or invested assets assets equal to the amount.
1:28.2	That's different than net worth.
1:30.6	Some people simply calculate their net worth and use that to measure progress towards
1:35.0	financial independence.
1:37.0	Using net worth is less accurate because it includes the equity in your primary residence.
1:42.6	Unless you plan to liquidate your home and move to Guatemala,
1:46.1	you're going to need the home. Best practice is to use invested assets to measure progress
1:51.9	towards financial independence instead of net worth. Adjust for sustainable investment income.
	...

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