The 25x Rule Doesn’t Work for a Solo Creative Business
Someone sent me the math a while back. Take your annual spending, multiply it by twenty five, and that is supposedly your number. Hit it, invest it, and you are financially independent for life. It gets repeated in every personal finance thread like it is gravity, like it applies to everyone the exact same way regardless of how their income actually behaves.
I ran my own numbers through it once out of curiosity. My burn rate as a sole proprietor sits somewhere between forty and sixty thousand dollars a year depending on the year. Multiply that by twenty five and you land somewhere north of a million dollars sitting in an index fund before I am supposedly allowed to feel safe. For a photographer who spent close to a decade running a one person business out of a van, that number is not just unrealistic on a photographer's income. It is the wrong question entirely.
It took me a while to actually put my finger on why the formula bothered me so much. It is not that a million dollars would be unwelcome. It is that chasing it as the finish line ignores everything that actually makes a freelance creative business fragile or resilient in the years before you ever get close to a number like that.
I have built my own version of what actually keeps a solo creative business solvent, and almost none of it involves a net worth target. I lay out the real system, the pricing, the overhead rules, the whole thing, in The Adventure Photographer's Playbook, if you want the long version of everything below.
Why the 25x Rule Breaks Down for a Solo Business
The 25x rule comes out of a specific assumption. You have a job, that job pays you a predictable salary, and one day you want to replace that salary with withdrawals from a portfolio. The math works because the input, your spending, and the thing you are replacing, a steady paycheck, are both stable numbers. Swap a fixed number in for a fixed number and you get a clean multiple.
None of that describes freelance work. My income does not arrive as a steady paycheck. It arrives in chunks, some jobs are five hundred dollars, some are ten to fifty thousand dollars, and the gap between a busy quarter and a quiet one can be enormous. There is no single number being replaced, so there is no clean multiple to chase, no matter how satisfying it would be to have one.
The actual danger was never a lack of a seven figure portfolio. It was fixed costs that cannot flex down when the work goes quiet. A mortgage payment does not care that a client account went silent for two months. An office lease does not care that a shoot got postponed. Those are the obligations that turn a slow quarter into an actual crisis, and they have nothing to do with your net worth on a given day.
I think a lot of creative people hear the 25x rule, do the math, feel a little sick, and quietly assume financial independence is not for them. That is the wrong takeaway. The formula was never built for how this kind of income actually behaves, so failing to hit it does not mean anything about whether your business is healthy right now.
What the rule gets right, even if it gets the math wrong for freelancers, is that safety comes from a gap between what you have and what you need. It is just that for a solo business, that gap is measured in months of runway against unpredictable income, not in a multiple against a stable one. Once you reframe it that way, the whole formula stops being useful and a completely different set of numbers starts to matter more.
Chasing the wrong number also has a real psychological cost. I have talked to photographers who quietly decided their business was failing because a savings app told them they were nowhere near their number. Measuring a variable income business against a formula built for a stable one is not a neutral mistake. It can talk a genuinely healthy freelance business out of feeling like one.
The formula also assumes the withdrawal number stays fixed forever, which does not match how a creative career actually moves. My burn rate at year one looked nothing like it does now, and it will look different again in another decade. A single multiple calculated once cannot account for a business that keeps changing shape, which is one more reason it was never built for people like us in the first place.
What Actually Protects You Instead
If the multiple is the wrong tool, the right one is runway. I try to hold six months to a year of expenses in reserve at all times, because the business is genuinely unpredictable. I have had stretches of two to three months with no outside client work at all. Those stretches used to scare me. Now they are just part of the rhythm, because the runway is already there to absorb them without any drama.
Runway only works if the cost side stays flexible. That means being honest about which expenses are fixed and unavoidable and which ones just feel that way out of habit. I do not carry an office lease. I do not carry a car payment tied to a specific vehicle I need for a specific job. Almost everything in my overhead can flex down in a bad month, which means a bad month never turns into a bad year on its own.
The other piece is knowing your real costs instead of guessing at them. Early in my pricing, I was quoting off a gut feeling of what I personally needed that month, which is a different thing entirely from what a job actually costs to deliver. Now every job gets priced with a full line item breakdown, memory cards, drives, monitors, rigs, insurance, all of it shown to the client as production and light. When you actually know what a job costs to deliver, you also know exactly how much cushion you are working with, instead of finding out the hard way three months later.
Self initiated work is the last leg of the stool, and it might be the most underrated one. Only a couple of shoots I did this year came from outside briefs. Almost everything else came from projects I pitched to myself first, and some of that work turned into real income later, licensed out to brands who were never the original client. That diversification matters as much as the runway does, because it means a quiet stretch of client work is not automatically the same as a quiet stretch of income.
None of these four things, runway, flexible overhead, real cost knowledge, and diversified work, requires you to hit any specific net worth number first. They are things you can start building in month one of a freelance career, which is exactly why I think they matter more than a lump sum you might not see for fifteen years.
It also changes how a slow month feels while you are in it. A slow month against a rigid multiple feels like falling behind on a countdown. A slow month against real runway and flexible costs just feels like a slow month, something the business is built to absorb rather than something that should trigger panic.
I would rather have four smaller, flexible protections working together than one giant number sitting untouched for a decade. A single point of failure, even a wealthy one, is still a single point of failure. Runway, low fixed costs, real pricing, and diversified work all fail differently, which means they rarely fail at the same time.
What Living Lean Actually Looked Like
None of this is theoretical for me. For eight years I lived out of a van, and before that, a genuinely creepy van, and for a stretch, off a bicycle. Fifteen hundred dollars a month covered everything. That is not a humblebrag about minimalism, it is the actual reason a single bad year never happened. When your baseline cost of living is that low, almost nothing in this business can knock you off course financially.
I still think about overhead the same way now that the business looks completely different from the outside. A gimbal and a motorized time lapse rig both got bought early on, used once or twice, and sold. Good gear, useful gear even, but not gear that earned its keep against what it cost to own. The instinct to question every recurring cost, every subscription, every piece of equipment sitting unused, never went away just because the client roster got bigger.
I also lean on the roughly thirty to thirty five percent tax savings rule and take every legitimate business write off available, because taxes are one of the few genuinely predictable costs in this business. Knowing that number cold, instead of discovering it every April, is its own form of runway. It means a client payment that lands in my account is never fully mine, and I am not tempted to spend against money I do not actually have yet.
Low overhead also changes how negotiations feel. When a brand pushes back on a quote, or shops around because a friend of theirs will do it cheaper, that conversation lands very differently depending on how much monthly burn you are carrying. A photographer with a low personal burn rate can walk away from a bad deal. A photographer with a high one usually cannot, and clients can often tell the difference even if nobody says it out loud.
None of this required a windfall or a lucky break. It required keeping the baseline low enough, for long enough, that the business had time to become what it is now. Low overhead was not a phase before the real business started. It was the thing that let the real business survive its own early years without a single financial scare forcing a different path.
The same instinct applies to gear decisions now, even with a much bigger equipment list than the early years. Weather sealing and durability get budget priority because they get used on every single job. A specialty rig that might get used once does not, no matter how tempting it looks in the moment. That is the same lean logic from the van years, just applied to a bigger number.
The years living that lean also changed what counted as an emergency. A flat tire, a cancelled shoot, a slow month, none of it registered as a crisis the way it might for someone with a much higher fixed cost of living. Lowering the baseline did not just save money. It raised the threshold for what could actually knock the business off course.
Building the Cushion Before You Ever Need It
My path into this was not a straight line. College led to an outdoor education job, and a first client convinced me to take photography seriously as more than a hobby. I kept substitute teaching on the side for years afterward, all the way through 2021, specifically as a safety net against a dry spell. That safety net almost got tested for real when COVID hit and a huge amount of client work disappeared almost overnight.
If someone asked me for a rule of thumb today, it would be this. Three months of runway is the bare minimum to have in place before you go full time, enough to survive a genuinely rough stretch while you scramble for the next job. Six months is realistic for most people trying to do this seriously. If you already have a strong referral network or a head start on clients, you can lean toward the shorter end, but I would not go below three months for anyone starting out.
The mistake I see most often is building the cushion after quitting the day job instead of before. It feels backwards to keep a second income stream running while you are trying to prove the first one can work, but that overlap is exactly what buys you the time to be patient with pricing, patient with which clients you say yes to, and patient with slow months that are not actually a sign anything is wrong.
A second income stream in those early years is not a lack of commitment to photography. It is what keeps you from taking a job you should turn down, or underpricing a job out of panic, both of which do far more long term damage to a creative business than an extra year of a side income ever would.
It also buys you negotiating leverage you would not otherwise have. A photographer who genuinely does not need the next job can quote honestly and walk away from a bad one. A photographer running on fumes usually cannot, and that difference shows up in every conversation about price, scope, and deadlines, whether either side says it out loud or not.
The 25x rule asks you to hit a number and then stop worrying. My version asks you to build a floor low enough to survive on, a runway long enough to outlast a slow stretch, and enough income diversity that no single quiet client relationship can sink you. That is not as tidy as a single multiple, but it is the version that actually held up over a decade of unpredictable income.
If I define financial independence for myself at all, it is not a portfolio balance. It is not needing to say yes to a bad job because the runway ran out, and not needing a single client relationship to survive in order to make rent next month. That version of independence is available a lot sooner than twenty five times anything.
It is also a definition that holds up whether a given year is a great one or a genuinely slow one, which is more than I can say for a formula that only makes sense once you have already crossed the finish line. A working definition you can use on your worst month is worth more than a perfect one you can only use on your best year.
Conclusion
A million dollar number sitting in an index fund was never going to be what protected this business. Runway, flexible overhead, and work that does not all come from the same three clients did that instead. If you are running your own creative business and the 25x rule makes you feel like you are behind, you are probably just measuring the wrong thing.
If you want the full breakdown of how I price, save, and structure this business so a slow quarter never turns into a crisis, it is all in The Adventure Photographer's Playbook.
Further reading, on the money side of this business:
Reflection Questions
If your income stopped for two months tomorrow, which of your fixed costs could actually flex down, and which couldn't?
What would your own "25x number" have to be, and does chasing it even make sense for how your business actually earns money?
How many months of runway do you currently have, and is that enough given how unpredictable your slowest season has been?
What is one self-initiated project you could start now that might turn into paid work later, the way self-funded projects have for others?
About the Author
Dalton Johnson is an adventure and editorial photographer and director based in South Lake Tahoe, California. He has shot on all seven continents for brands including Patagonia, GoPro, Arc’teryx, Four Seasons, Nike, Rivian, Big Agnes, and Ford Bronco, directed more than fifty commercial spots, and spent eight years living out of a van and a car while building his business from nothing. His documentary work includes a PBS aired film and the self initiated project 72 Miles of Blue. He writes about the real business and craft of adventure photography for other photographers building their own careers.
