Straight to the Point
- [FIST] = Financial Independence Score Test / FI Score Test.
- FISc = FI Score – a number to help track your progress towards FI.
- [FIST] takes the FI Checkpoint 1.0 to another level.
Brief Introduction
I wanted to find a fun way to track my progress towards FI and link it to my work in some way. That was when I came up with the FI Checkpoint 1.0, expanding on some of the ideas by Joel at FI 180 and JD Roth at Money Boss.
It really wasn’t meant to be something serious. I wanted to ‘gamify’ the whole process of tracking my FI journey. My intention was through answering 20 very simple questions, it will help people think about what area of their personal finance could be improved on. For example, getting rid of credit cards, paying off student loans, build up an emergency fund or generating more passive income.
The feedback I received was overwhelmingly positive. Everyone has been so forgiving of its flaws and accepted it for what it was meant to be. I wrote a follow-up post about some fascinating results from the poll.
FI Checkpoint 2.0, from hereon [FIST] – Financial Independence Score Test / FI Score Test has more checkpoints and the score it produces is based on real numbers which you input.
Unlike the original version, [FIST] does not heavily rely on passive income to determine your result. The main improvements are:
- Guided by Safe Withdrawal Rates research by Early Retirement Now.
- Asset allocation option.
- Length of retirement.
- Forecast FI date.
- Success rate.
- Net-worth.
- Value of your home.
- Anticipated extra spending in retirement.
- Basic personal tips to help people improve you score.
- No maximum score so there is always room to improve your score, even if you are at the final checkpoint.
- Your score will not reveal your net-worth for those who want to keep it secret. So sharing your score is not a problem!
- A progress bar included.
- Plus lots more!
This post will be a bit long, so I have broken it down into three parts for those who wish to skip different sections.
I hope to keep improving on this so long as people find it useful.
- Test
- Instructions – recommended read before taking the test.
- Maths – not a requirement to take the test.
Oh, and my results card and acknowledgements are right at the end.
[FIST] – FI Score Test
DISCLAIMER: I am not responsible for any decision you make as a result of taking this test.
Thinking of using this to decide if you should hit the FIRE button? I have two words: “HELL NO!”. This is purely a guide and should be treated more for entertainment purposes.
The test is in its development stage and there may be some undiscovered errors.
Every question needs to be answered, so don’t skip any.
You can choose a Target FI Level from Tiny FI to Filthy FI.
The test is best completed on a laptop, desktop or tablet.
If you get an error, try refreshing the page. If the problem keeps re-occurring, have a read of the limitations I’ve described below. If they do not apply, then please contact me and I’ll look into it.
Nothing you enter is saved or recorded. As soon as you refresh, all the information is reset.
Lastly, please complete the poll to see how the rest of the community are doing and comment below.
If you want to be kept informed about future fixes and updates to the test, then sign up to the blog.
ANNOUNCEMENT:
- The Ultimate Directory of FIRE Calculators has been released.
- Version 3.0 is currently being worked on. It will also be more intuitive to suit those new to the idea of FI as well as veterans. There will also be further features!
- Want to have a nosey around other people’s FI Score cards? The FI Score Directory has been released. Enjoy.
- I am looking for stories to for my Humans of FI project. Please contact me if interested.
Previous Versions:
Poll
Instructions
There are now 29 questions in total. Originally I wanted to keep it real simple, but based on the general feedback, I got the feeling the community wanted something a bit more to it. As a result, I needed to increase the number of questions to be able to generate some meaningful results.
Before I briefly explain some of the questions, I should point out that there are 18 Checkpoints to FI now. This is to break the journey down a bit more:
I have worked on some rough definitions for each. The likely characteristics column indicate what financial position someone is likely to be in given a certain checkpoint position. Not all characterises need to be present but the majority would be.
Now to the questions in the test themselves. I’ll skip the self-explanatory ones, but if they prove to be not as obvious as I think, then just leave a comment and I’ll update the instructions :
Question 2 – The target FI Level lets you choose a level you want to reach before and after FI. This could give you a closer checkpoint to work towards. You can only select from ‘Tiny FI’ onwards (at present).
Question 7– Enter your total amount of debt as a positive value, i.e. not a negative number.
Question 9 – If you want live it up once you retire and think you will spend more in retirement than you do now, add this additional annual expense here.
Question 10 – Enter here only the amount of passive income or side hustle income you earn. Use this with caution.
This is the income are currently receiving and expect to continue to receive even once you quit your job.
By entering a value into this section, your ‘Years to FI’ will reduce. For example, if you input £10,000 per year as passive income and your total annual expenses are £20,000. Then, by definition, you are already Half-FI. You are basically telling the calculator you don’t need to work and you still earn enough to cover half your expenses.
Question 12 – The percentage of your investments in stocks as compared to bonds. For the sake of simplicity, consider any portion of your portfolio which is invested in property as stocks. The success rate is loosely guided on the research by Early Retirement Now. It gives the probability of your money lasting the period of retirement you set.
Question 15 – The percentage you hope your investments will grow by each year. This has a significant effect on the Years to FI forecast. If you are unsure, choose between 5% – 7%. The former being more conservative and will provide a date further in the future.
Question 26 and 27 – I’ve renamed the F U Fund to Freedom fund. The British in me got the better of me. It’s basically the F U Fund.
Question 28 – If you intend to include the equity of your home as part of your FISc, then you need to be sure you factor in alternative plans or add in extra expenses in question 9 to cover the fact that you won’t have a home to live in.
Assumptions
The main one is that anything you do not spend is automatically considered to be invested. So if that is not the case, increase your expenses as a proportion of your income accordingly.
There are more assumptions which relates to the mathematical formulas but let’s keep it simple for now.
Limitations
There are literally millions of possible combinations of answers, each needing to correspond to a particular Checkpoint. As a result, I’ve deigned it to capture what I think most people will enter.
Due to limits with Excel, or the maths itself, extreme values will return an error. For example, if your net-worth is highly negative, then the results cannot be calculated. In which case, my best advice is to tackle your debts first. See the FI Patrol Plan and FI Patrol Kit for some useful resources.
There may still be calculation bugs left in the spreadsheet. If you spot any, then please let me know and I will fix them as soon as I can.
The Maths
I wanted the FISc (FI Score) to be as mathematically robust as my simple cop mind can make it. I considered leaving this section out in case it puts people off. However, I felt on balance that disclosing it will provide transparency in the hope that it can be improved upon. There are far smarter people out there, so this is my best crack at it.
As you will see from below, FISc takes into account several variables before giving you a score to help determine over time how you are progressing. This includes how much you give to charity and your savings rate. It is not a simple FI ratio number, i.e. how much income your net-worth could potentially generate to cover your expenses.
FISc Formula
FISc = FI Score
FR = FI Ratio
CR = Charity Ratio
YTF = Years to FI
FI Ratio Formula
NW = Net-worth
FN = FI Number
Net-worth Formula
TA = Total Assets
PIV = Passive Income Value
TL = Total Liabilities
FI Number Formula
AE = Annual Expenses – this is the current annual expenses
FE = Future Expenses – this adds any extra annual expenses after retirement on top of AS
Charity Rate Formula
AC = Annual Charity – amount spent a year on charity
AI = Annual Income
Years to FI Excel Function
NPER = Number of Periods for an Investment – an MS Excel function
Rate = Inflation Adjusted Growth Rate
PMT = Amount Invested Monthly
PV = Current Net-worth as per NW formula
fv = FI Number as per FN formula
type = 1 – payments at the beginning of period
SWR
Not all the exact numbers from the above table completed by Early Retirement Now has been incorporated in the test. Only some of them.
My Results:
The tax year ends at the end of the month so my numbers have not been finalised. However, using last year’s tax returns covering April 2017 to April 2018, I scored 3,780, checkpoint 13/18, Lean FI and at Chief Superintendent Level.
The main thing which is of concern to me is that my charity rate is zero percent. It has alway been on the back of my mind and have been meaning to research trustful charities which align with my values to donate to. Now that it is spelt out like that, I am very embarrassed and ashamed (?). This is a priority for me to rectify going forward.
What has your FISc revealed about yourself and what are you going to do about it?
Acknowledgements
I’d like to thank the following people who has helped to spread the word and as been very enthusiastic about this project: J. Money, Joel, Laura. I am sorry if I have missed anyone out. It has been a crazy week! I’ve only recently been made aware that FI Checkpoint 1.0 was featured in Business Insider. It is still very surreal that a random cop in a small English county town has managed to generate a bit of interest for a silly little game. I am humbled.
I am also grateful to the volunteers who kindly gave up their free time to test [FIST] so that as many of the bugs can be removed before release. They are: Joel (again), J. Money (yup, again), Alan, Dan and HCF. They were all strangers a week ago. I am still amazed by the power of the internet.
Thank you to Big Ern for kindly allowing me to incorporate his research into the test.
Finally, I want to be clear that any errors in the test are all mine and mine alone. The testers are not responsible. If I have misunderstood and misapplied Big Ern’s research, then again, that is my fault and nothing to do with his research.
Further Reading:
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I got unexpectedly got promoted to Superintendent so I’m not sure it’s so accurate, haha!! It predicted that I have only 3 years to get to FI but my spreadsheets aren’t so optimistic!
I’ll try again tomorrow (when I haven’t been drinking!)
Haha! Give it another try tomorrow when you’re on top form.
The rank structure has changed. Also, if you entered values into the passive income section, then your rank will increase. For example – if you earn £1,000pm of passive income and your total expenses are are £2,000pm, then based on the maths, you are automatically Half Fi.
In terms of your Years to FI, it is difficult for me to comment without knowing a bit more. It is based on an Excel function and I’ve tested it again with a few random numbers and the forecast seems to be working my end. I have a sneaky feeling it might have something to do with passive income again.
It could also be that you selected the option to include your home equity? In which case, that would positively affect your net-worth and therefore reduce your Years to FI. The growth rate would also have a significant effect. It might be none of these and something else altogether.
If you give it another shot, let me know if you find something unexpected so I can make any changes to the formulas if needed. Thanks Weenie!
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This is such a cool program! To be honest, I had not run the numbers to see how close I was to FI, I just kept working and saving. Apparently this is working. Only 8 years to go!
Thank you. Glad you found it useful!
Fun and useful tool, thanks for sharing! This has clearly taken quite some time to build and test. There isn’t another tool like this online in the UK that I’m aware of so will definitely be coming back to track progress. The output I got correlates with my spreadsheets so looks good – Chief Inspector no less.
I’m glad you found it useful. I am currently working on version 3. If you have any feedback, just drop me a message and I will try to incorporate in the update.
Chief Inspector? Things are going to move along much quicker from now on. Good job, Sir!
This calculator doesn’t seem to have a straightforward way to factor in Social Security, or a pension for that matter. I realize Social Security is of diminished value for someone who retires very early (insufficient earning years), but this is a FI score test, not a FIRE score test, and in some cases, Social Security and/or pensions may be an important factor. The only ways I see to factor these in are either to turn the Social Security or pension amounts into an FN equivalent based on the income and working backwards using the SWR, or lower annual spend to be after Social Security and pensions, but neither of these allow for modeling these kicking in only in future years, so you have to jump ahead to those years, and see if you have enough to bridge. Neither works well for a non-inflation adjusted pension either. If there are better ways to factor these in such that they provide credit towards achieving FI, or ideally an enhancement to the FI score test to allow these to be factored in, that would be great.
You are right. It is on my to-do list for the next update. Pension is quite difficult to factor in: career average, final salary, defined contribution, defined benefit, different social security (state pension) depending on personal circumstances.
A rough way to do it is to estimate the value of your state pension. Take the current estimated annual amount multiplied about 20 for example. I don’t like it, but it’s a way to factor it into your networth to use the above calculator. The problem is also taking into account different ages we are allowed to access certain pensions. Some allow access much younger. Not straight forward and before long, the calculator will get so complex; it won’t be useful for most…a few things for me to figure out.
Thank you for the feedback. Watch this space.
Thanks for your reply, and the tool. To further clarify, I’m not suggesting you model Social Security or pension benefits – each offers their own ways/tools to get estimates directly from those sources (e.g. monthly payment starting at a certain age/year). I’m only suggesting you provide a way to enter those into the model as guaranteed income starting at a certain year or in a certain number of years from present, separate from net worth. As I said, one workaround is to use the calculated SWR backwards to convert an inflation adjusted income into a net worth equivalent lump sum (which I think would more accurately model than a fixed 20X multiplier). Thanks again.