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Financial independence

I have mentioned the phrase financial independence or financially independent, several times so far throughout this website, and will mention it many more times before the end. This is because it is such a crucial phrase, and financial independence may well be something you wish to aspire to achieve, in as short a period of time as is possible.

What is financial independence?

Financial independence takes the process of budgeting and living within your means one step further, although granted, it is quite a big step! As you will recall from the previous pages, when you live within your means, your outgo or spending is less than your income.


So far so good. But to be financially independent, you need to be able to generate enough income yourself, to pay all of your monthly outgoings, each and every month.

By generating the income yourself, I don’t mean generating it by working for someone else in a job. You are not financially independent if you have to rely on the income from a job, to pay your outgoings.

Most people will aim to get good grades in school, college and university, to secure a decent job, and I am not suggesting otherwise.

However, you should understand from the outset of your working life, that after you have secured a job, or even your dream job and future career, you are NOT in control of that position, or your financial future, you don't have financial independence.

Your job, and therefore your income, can be terminated for any reason within your probation period. You can also be sacked with no reason and no rights, within the first two years of your employment, and even after the first two years, you can still get sacked for no reason, with only limited scope for recourse or financial compensation.

Then there is the potential for dismissal by redundancy if the economy slows, or even a new boss may take a dislike to you if your face doesn’t fit, and then find a way to force you out.


Doesn’t that all sound a bit unfair? Well yes, life is unfair, and the life of an employee can be very unfair indeed.

That’s why you need to take control of your own financial destiny and become financially literate, and financially independent as soon as you can.   


Alternative income

Although you will probably generate most, if not all, of your current money through a salary from your job or jobs to begin with, you should also try and find some alternative income streams in addition to your salary, as soon as you possibly can.

The ultimate medium to long term plan, should be to gradually replace your dependence on an earned income, or salary, with unearned income. By unearned income, I could be talking about income from investments, rent from property, interest from savings, or regular income from eBay or any other online business. There are numerous other ways to generate additional income, other than through employment, and we shall explore some of these here.  

Whilst in the early years, your unearned income will only account for a small proportion of your overall income. It will, over time, grow to become more and more significant, once you master the art of investing. Eventually, unearned income has the potential to be able to cover ALL of your monthly outgoings!

How much is enough to reach financial independence?

This all depends on how much your monthly outgoings are on average.

If you only have £750 of outgoings each month, and you can happily live off that, then that’s all you need. Whereas, if you had a mortgage, owned a car, went to the gym, socialised frequently, and had a family, then you may need something nearer £4,000 to £5,000 per month, to cover those expenses.

How do I become financially independent?

Unless you are born into money or win the Lottery, (and the chances of that are pretty slim), then the route to financial independence, or financial freedom as it’s often called, is a long and at times challenging journey, although ultimately well worth it in the end.

Reading this website and learning financial literacy, is a great first step on the journey to financial independence, and it will provide you with all the information you need to get there. The other main ingredient of becoming financially independent is time, and that is something young people have in abundance and must learn to use it wisely. 

So in a nutshell, you must learn how to reduce and control your outgoings, whilst also building up a passive income stream, through the continuous acquisition of assets. We shall define “assets” as things that can produce an income or appreciate in value.


Just remember this simple cycle:

Think | Save | Invest |Repeat


  • Think: Do you really need to buy what you are planning to buy?

  • Save: If you don’t need to buy the item, save the money.

  • Invest: Invest the money saved, into income-generating assets.

  • Repeat: Do it all over again, every day, for every potential purchase.

Roadmap to financial independence 

  1. You must create a budget, and live within your means.

  2. You must learn to save part of your monthly income or allowance.

  3. You must continue to save every month, for years and years.

  4. Your savings habit must expand into an investing habit.

  5. You must continue investing, for years and years.

  6. After years and years of investing, your assets will grow by themselves.

  7. There will come a point, where your assets generate more income than you are saving or investing. But don’t stop saving or investing, keep it up!

  8. When you earn more money, increase the amount you save and invest.

  9. Don’t be tempted to take money out of your pot for unnecessary items.

  10. After many, many, years, possibly even decades, your investments will generate a passive income (i.e. without you having to do anything) that is equal to, or higher than your monthly outgoings.

  11. Congratulations, you have now reached financial independence !

We will explore and expand upon the key items in this roadmap in more detail throughout the website.

Get rich slowly

As you can see, this is not a get rich quick scheme, and you won’t become a millionaire overnight. However, with determination, a long term plan, and time on your side, it will happen eventually.

Once you have obtained financial independence and financial freedom, then it’s up to you if you want to continue working for your employer, or do something else, like charity work or even set up your own business.

Life is so much more relaxed when you don’t need to rely on anyone else for your income, and you know all your monthly expenses are covered by your passive income streams.

TIP: The sooner you start your journey to financial independence, the quicker you will reach it. Don’t delay, start today!

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