The Financial Formula For Achieving Your Mini-Retirement Dreams Today

Stepping off the traditional retirement path and hiking into a sustainable mini-retirement is a journey that’s often held back by money worries: how can I possibly afford to quit my job? How will I pay the bills?

These are legitimate concerns that should not be overlooked. But, it’s too easy to dismiss the possibility of greater freedom without actually doing the math. Crunching the right numbers will help reduce financial anxiety with tangible dollar figures allocated to making your mini-retirement goals a relevant savings target.

The financial freedom formula outlined here is what we use and has proven effective in successfully preparing to take a mini-retirement.

Start-up costs

With a vision for a fulfilling mini-retirement in place, the first reality check that will propel you from daydream to doing is calculating how much you need to put in a (liquid) “start-up” fund.

For example, if long-term travel or volunteering abroad is part of your plans, estimate the expense of just what you need to get you there: do you have to buy plane tickets or are you road-tripping in a vehicle you already own? Will you be lounging on a beach in minimal wardrobe or do you need to invest in hiking poles and a good pair of trail shoes? Will you be in a place where you’re covered by your current healthcare or do you need to supplement with global insurance?

Word of caution here: this is a point where our dreams can quickly become too dreamy. Social media especially have a way of influencing us into believing that everything should be epic. And human nature can lead us to over-prepare when we don’t really know what to expect.

Maintain a running list of gear, gadgets and resources you think you need. Most purchases can wait until after sufficient experience confirms the advantages are worth the expense. But, if an item has been on the list for at least 3 weeks, and research indicates it’s a valuable investment to begin your mini-retirement, then include it as part of your estimated startup cost.

Remember to be realistic about what you really want and how much you really need. Knowing that you have (just) enough to kick-off your lifestyle helps keep you focused on the most important goal: the joy of accomplishing the goals that you set out to achieve.

Repatriation fund

Taking the leap to a mini-retirement can be nerve-wracking. Heck, eliminating income at any age is a source of anxiety, even when the numbers show we are well prepared. A great way to alleviate these concerns is to give yourself a cash cushion that will be there to keep you comfortable you when you’re ready to “repatriate”.

So ask yourself, “how much time do I need to re-establish steady cash flow after a mini-retirement?” A general rule of thumb is that it can take 3 to 6 months to find a new position, if you’re aiming for full-time employment.

Rather than having to return home desperate for income—and living in a van down by the river—you’ll have savings available to cover your living expenses during your job search period so you can ease back into a “normal” routine. Plus, any repatriation funds that are not spent can be a bonus you pay to your future self by allocating them to make your next mini-retirement possible even sooner!


Monthly burn rate

The term burn rate is typically used in the context of corporate accounting to refer to the amount of money a company is losing on a monthly basis. But, this is also one of the few data points that is actually worth your time and effort to track in individual and family finances. Especially as part of a financial freedom plan that budgets for mini-retirements, it’s critical to understand how much cash you “burn through” on a monthly basis.

A positive burn rate means that you are making more money than you are spending. Your personal burn rate while working full-time should (hopefully) be positive—if not, your first financial freedom goal should be to change that (then come back to this guide).

Now, unless you are already making money through passive income, your earnings during a career break will likely fall significantly or zero-out while expenses continue to exist. That shouldn’t be a show-stopper, though! Thus, mini-retirements are periods you’ve planned and prepared for a negative burn rate.

The key is to understand your available non-work income that can cover your cost of living. So, use an expense tracking spreadsheet or money management app to aggregate:

  • passive income sources such as real estate rental, taxable investments, etc;

  • all expenses that come out of your wallet, bank account, credit cards, and pre-tax paycheck, etc.;

  • any debts like student loans, mortgage, etc. that must continue to be paid.

Try to use at least one year’s worth of earning and expense data, and omit any outliers. Then calculate your average monthly mini-retirement burn rate by subtracting annual expenses from annual passive income and dividing by 12.


Maintaining a sustainable burn rate for the period of your mini-retirement is the metric that determines how long you can enjoy workless freedom. Don’t sweat whether your calculation is precise to the penny at this point. In a lot of cases, budget categories will shift during a mini-retirement while overall lifestyle costs remain comparable.

Start by planning for a period of time you can comfortably sustain your current monthly living expenses. And, we’ll talk later (in bonus section 5) about some useful money hacks to make your mini-retirement budget more stressless and more affordable.

Your monthly burn rate is also a good figure to use to double-check your repatriation fund estimate. For example, 6x your monthly burn rate gives you a 6-month runway when you return.

Cash runway analysis

Drum roll please! Time for the big unveil. And we’re willing to bet you’ll be surprised by the cumulative result! Now put all of these figures together to capture a remarkable drone shot of your financial freedom needs:

Available Mini-Retirement Funds= Savings - Start-up Costs - Repatriation Fund
Months Mini-Retirement is Sustainable= Available Mini-Retirement Funds / Monthly Mini-Retirement Burn Rate

Case study: putting the mini-retirement financial freedom formula into action

When we first committed to change our own lives back in 2014, we envisioned our freedom on the open roads. An Airstream would be our charming toaster on wheels that would serve up slices of the good ‘ol days. Or maybe we’d prefer urban camping in a stealth mode Sprinter van. Oh the possibilities!

As we were downsizing to move into our mobile tiny home, we eventually realized we were still lusting over material possessions to buy our way to freedom. Our alternative dream homes were smaller, but not necessarily less expensive. So we shifted gears to focus on a more affordable mini-retirement style. And, it was a cool mid-November day when we finally moved 1,596 meters (5,237 feet) closer to the sun.

After three years dedicated to gradual lifestyle adjustments, including downsizing and deliberate financial management, we landed on a mountain-side in the Bajio. We invested in a few items of travel gear, packed only what we already owned that fit in our one bag (each), reduced our cost of living, immersed in a different culture, started learning spanish, and capitalized on currency exchange rates to work less and experience more. It’s amazing how far a little scrappiness can take you!

This table shows what real-life numbers could look like when plugged in to the financial freedom formula for mini-retirement planning.

Total Available Savings For Mini-Retirement $62,000
Start-Up Costs $5,0000 e.g. gear, plane flights, global insurance, etc
Repatriation Fund $21,0000 covers 6 months of living expenses for when return home
Remaining Mini-Retirement Savings $36,000
Monthly Expenses $3,5000 ongoing debt payments + general living costs
Monthly Passive Income $500 dividends from taxable investment accounts
Monthly Mini-Retirement Burn Rate $3,000
Months Mini-Retirement is Sustainable 12.0

And voila! You now have the knowledge that is power to follow-through on your goal-based savings plan to make your workless freedom dreams come true. See how easily you put your dream mini-retirement within reach?