Financial independence doesn’t mean being incredibly rich to the point where you never need to work another day in your life. For me, financial independence means having enough money so that my assets generate enough income for me to live comfortably. This idea seemed almost unbelievable to me—retiring before 65 and living a great life without a job? It sounded impossible.
However, this can be a reality if you don’t get caught up in the traditional education system’s path. Like many millennials, I was taught that going to college, getting a degree, and working a 9 to 5 job until retirement at 65 was the only way to live.
I used to hate my accounting job. Every night, I dreaded waking up, and every morning, my legs would tremble as I left the house. I was so depressed that I decided to quit my job and drop out of school.
A few years later, I’m leading a team in the grocery industry and writing a finance blog on the side, and I couldn’t be happier. I constantly strive to achieve and accomplish more in every aspect of my life, with the ultimate financial goal of reaching financial independence.
1. Find Your Passion and Do What Makes You Happy
Unless you were born into wealth, you’ll probably need to work to achieve financial independence. The key is to find a job that you are passionate about and that motivates you. If you’re going to spend 40 hours a week working, you might as well enjoy it. Passion naturally brings motivation and drive, pushing you to always improve and grow.
Why is this the first step to financial independence? Because the journey is long, and if you’re stuck in a job you hate, it will feel endlessly longer and more agonizing. The month I spent at my accounting job felt like an eternity. When I left, I returned to my old job as a grocery clerk. Even though the pay was much less than my accounting job, I was happier and more satisfied.
My work ethic and passion didn’t go unnoticed, and over the years, I quickly rose through the ranks, faster than many senior employees.
2. Calculate How Much You Need to Reach Financial Independence
The next step is figuring out how much you’ll need to be financially independent. It’s important to have a financial target before starting your journey. You’ll need to calculate two numbers:
1. Your annual expenses (how much your lifestyle costs each year).
2. Multiply this amount by 25.
The result will give you the amount you need to save to have a “safe withdrawal rate” of 4% annually.
3. Live Below Your Means While Earning More
When I was younger, I dreamt of owning a Rolex watch and a fancy car. While nice to have, these things aren’t necessary. It wasn’t until I started earning my own money that I realized how much more valuable those funds could be if used wisely—for travel, education, or investments.
There are two primary ways to build your funds for financial independence:
1. Increase your income.
2. Decrease your expenses.
A third, more effective method is combining both—earning more while spending less. Financial independence requires effort and hustle; whether it’s working multiple jobs, starting a business, or having a side gig. Remember, the more luxurious lifestyle you aspire to, the more money you’ll need. Someone living frugally will need less to achieve financial independence compared to someone who wants to retire in a mansion.
4. Learn How to Invest
One crucial subject absent from our education system is how to invest money. Schools often focus on teaching how to spend money but neglect lessons on saving, making, and investing it.
Investing is vital for financial independence because there are only so many hours in a day. While some jobs may not be tied to hourly work, many people are. With just 24 hours a day and 8 hours for sleep, earning money without impacting your health is challenging. Investing allows your money to grow exponentially, and this way, your hard-earned money works for you.
Conclusion
This wraps up my four-step journey to achieving financial independence. Share your thoughts in the comment section below!