Skip to content


Strategies To Achieve Financial Independence

Here are some strategies that can be implemented to help you achieve financial independence (FI). Remember that what financial independence means to me is different from what it’ll mean to you and others. You can choose to implement a single one of these strategies and achieve your FI goals but I’ve found that a hybrid approach of two or more of these yields far greater results than just one alone. You’d still want to focus on one strategy at a time until the effort of doing it is minimal. You don’t want to try too much change at once.

Be Frugal & Debt Free

When being frugal you either spend from a place of necessity or from a place of power. When it’s a necessity to be frugal it’s because you don’t have enough money and every cent counts. Frugality in this context can quite literally be a matter of life or death. When frugality is from a place of power it’s because you have the money but don’t want to spend it. These people are sometimes referred to as cheap.

  • Spend less money on the essentials and non essentials things.
  • Create a budget to better control your spending. Budgets create a predetermined maximum of how money you can spend on things, typically some high-level category like “Dining Out”. There are different ways to budget so to help you out here are a few.
    • Reverse Budget – In this method you create a savings goal for things like retirement, vacation or a new car. Think pay yourself first. Then you use what’s left to pay for everything else.
    • Envelope System – The envelope method of budgeting comes from putting certain amounts of money in an envelope for each of your spending categories. Then when you need to spend money for each of the categories you pull from the individual envelope. This makes it impossible to overspend because you only have so much money in cash to spend in each envelope.
    • Zero Based Budget – With this budgeting method you must account for every dollar you earn and plan each month where all your money goes. So your total income minus all expenses, savings, and investments equals zero.
  • Pay off debts with excess money saved from being frugal until you’re debt-free.
  • Make frugality a lifestyle not a one and done activity. Be frugal day in and day out watching everything you spend as if your financial freedom depended on it, because for most it does. Shop for bargains, put off non essential purchases, eat out less and so on. You’ll find that once you get into the habit of being frugal that it gets easier. So easy that you might forget you’re being frugal.

Make More Money

It’s great if you can make good money with one source of income but having multiple streams of income is even better and sometimes necessary to achieve your goals in the desired time horizon. Multiple income streams also lower your risk should something happen with one of them, like say you get fired or laid off.

  • Get a side hustle
    • There are numerous ways to make more when you already have a job. You can sell things around the house, online, make things and sell them, start a YouTube channel or blog.
  • Get a raise – How about asking your current employer for a raise. The good thing is you can do this even if you have a side hustle.
  • Get a new job – some times you’ll hit a ceiling at one place where they can only pay you so much and may be there no upward opportunities for higher pay. Or may be you just don’t like what you do. Getting a new job sometimes come with an increase in pay.

Invest In The Stock Market

Investing in the stock market is a great way to grow your money. Since the stock market is not my thing I prefer to invest in stocks passively and for the long term. That means I’m not sitting and watching the stocks i own go up and down by the minute. To me, that’s more gambling than it is investing and I don’t like to gamble.

  • index funds – this type of investment tracks an entire market or index like the S&P 500 instead of hand picking individual stocks. The benefit is that these funds contain a broad selection of stocks so its not a big deal if a few go down in value or worse bankrupt. And it’s not likely that the index will go to zero. The fund typically has a lower number of trades because the holdings in the fund doesn’t change much. This in turn can result in lower fees and taxes versus funds that buy and trade more often.
  • ETF – the exchange traded fund is similar to the index fund except you can trade ETFs similar to individual stocks.
  • IRAs – individual retirement account is an after tax investment that defers taxes on gains.
  • 401K – the 401k is a retirement fund offered through your job. What’s great about 401ks is that they’re funded pretax, it also defers taxes, your employer may offer a match to what you contribute and you may be able to take out a loan without penalty but certain rules apply.

Invest In Real estate

Real estate has been a fruitful asset to invest in long before the stock market. With that said, it still amazes me how many people don’t invest in real estate. Sure many people buy real estate as a means to put a roof over their heads and fill that need for shelter. But there’s still a large number of people who don’t see the potential wealth-building effects that owning real estate can bring.

  • Buy and hold – this is when you invest in physical real estate for the long term. There are a few strategies to buy and hold but simply break it down into two different buckets.
    • Long Term Rental – In this strategy you’re renting out the property or unit for typically a one year period and there’s a tenant who signs a lease. The property or unit is typically unfurnished and does not come with all utilities included.
    • Short Term Rental – In this strategy you’re renting out the property or unit for a short period of time for temporary stays to a guest. The property or unit is typically furnished with all the basic necessities for living in a home. This also means utilities are all turned on so the guest can simply so up a stay similar to a hotel.
  • REITs – this is basically like investing in a stock except that they’re focus is some type of real estate and there are rules that requires that the REIT distribute 90% of its profits to shareholders.


FIRE or Financial Independence Retire Early just like the other strategies of reaching financial independence have variations in how they can be implemented. Let’s take a look at a few of the different ways to achieve FIRE.

  • Lean FI – With Lean FI you’re only looking to cover your essential expenses like food, housing, and utilities. This would not include things like vacations, entertainment or other discretionary items.
  • Coast FI – This is when you invest up to a certain predetermined amount and then let compound interest do the rest. This assumes your investment will yield enough after you’ve stopped contributing to it to reach your FI number.
  • Fat FI – Fat FI can be seen as the opposite of Lean FI. With this strategy you have enough investments to cover a lifestyle that includes more than just your basic necessities. In this strategy you may have more discretionary spend on things like travel.
  • Barista FI – With Barista FI you’re looking to have enough investments to cover a portion of your expenses and then bring in more income working a side hustle or part time job. In this strategy you’re afforded the option of working at something you’re more passionate about or that’s less stressful.

Dave Ramsey’s 7 Baby Steps

This strategy shows you how to build wealth one step at a time in a formulaic way. You simply follow the “baby” steps to pay off your debt, create an emergency fund and build wealth. The steps are below but you can find more information here.

  1. Save $1,000 for your starter emergency fund.
  2. Pay off all debt (except the house) using the debt snowball.
  3. Save 3–6 months of expenses in a fully funded emergency fund.
  4. Invest 15% of your household income in retirement.
  5. Save for your children’s college fund.
  6. Pay off your home early.
  7. Build wealth and give.

As I’ve mentioned before there are numerous ways of becoming financially independent. There’s really no need to list every single strategy because it’s a personal journey that you need to map out for yourself based on your current situation. The common elements of all the strategies are summed up in this quote by JL Collins.

“Here’s the simple formula: Spend less than you earn—invest the surplus—avoid debt” —J.L. Collins