Financial independence is a state of living where your assets generate enough income to cover your living expenses without having to work a full-time job – ideally, for the rest of your life. Reaching financial independence doesn’t mean you have to stop working; you are just no longer dependent on your career income to cover your living expenses. That income is just extra icing on the cake! Is reaching financial independence realistic? Absolutely! But that doesn’t mean it is easy; it comes with a lot of short-term sacrifices that will be worth it in the long-run.


How to achieve financial independence?

There is not a “one-size fits all” solution to achieving financial independence, but here are some steps you can consider to get started:

1: Avoid High-Interest Debt.

In our materialistic society, it is easy to get swept up in the need to have “the latest and the greatest”. And often, in order to keep up with the Joneses we find ourselves spending more money than we bring in; thus, accumulating high-interest debt to maintain. Credit cards and pay day loans are two examples of high-interest debt. If you use these type of payment solutions for everyday consumer goods and services and carry a balance, you are enriching the pockets of the creditors and not yourself. To achieve financial independence, avoid having this type of debt. Think long-term, striving to spend much less than you earn.

Quick Tip: Having control over your debit is essential when establishing and maintaining a solid financial plan. To get started, read our Debt Control tips.

2: Create a Budget.

Creating a budget is one of the fundamental ways to manage your money and is key to building a successful financial future. A budget will show how much money is coming in and how much money is going out.  If the money is wisely spent, and will help you control spending. Though it may seem overwhelming at first, budgeting is a simple concept to grasp and will help you make knowledgeable financial decisions in the years to come.

Quick Tip: We make creating a budget easy with our downloadable budget worksheet. To get started, read our Successful Budgeting steps.

3: Prioritize Saving.

It is never too early to start saving. The younger you start your savings plan, the more time it has to grow! A common rule of thumb is to save 10% – 15% each year to prepare for retirement. However, if you would like to reach financial independence before the common age of retirement, 65 to 70 years old, you may consider stashing back more each year. One best practice is to pull the amount of money you plan to save each month directly from your pay check. Build your budget around only the remaining funds, only living on what is left. You may also consider:

  • Live off one income. If you and your spouse both work, consider living off one income and putting the rest in savings.
  • Plan your meals before you go grocery shopping. By planning ahead, you can determine exactly what you need for each meal and not waste money buying unnecessary items. (And remember to never go when you are hungry!)
  • Eat at home. Also, consider taking your lunch to work. For some, brown-bagging daily versus eating out can save you at least $25 a week.
  • Pay your bills on time. This will help you avoid unnecessary late fees.
  • Evaluate your telephone and cable needs. Assess your usage and research alternative, less expensive solutions.

Helpful Tool: Determine how saving just a little more each month can pay off in the future with our Impact of Saving More Calculator.

4: Invest in Appreciating Assets.

As your savings pool grows, consider putting that money to work in an appreciating asset. This may include the stock market, an investment property or even collectibles. When considering the asset to invest in, take the time to research key elements such as the potential return on investment, the payback period, volatility and risk. Also, consider consulting a financial advisor for their expert advice and opinion.


The key to making all these steps successful is flexibility! Life is ever-changing, and more than likely, your finances will change too. Some years will be great, but others might be more financially difficult. Through all the ups and downs, continue to stay focused and simply adjust your financial lifestyle in order to ultimately bring you to the end goal: Financial Independence.


The information voiced in this material is for general information and is not intended to provide specific advice or recommendations for any individual.