What is the path to Financial Independence?

It seems like everyone wants it and yet so very few people actually get it. So just what is the path to financial independence? Mr Fire and I have been on this journey for the last three years and we have had multiple ups and downs along the way. It doesn’t always feel like it but we are slowly climbing towards financial independence. The path is something we refer back to frequently.

Find out your why

This one is quite hard in my opinion. Why do you want it? Do you hate your current workplace? The commute? inflexible hours? There are a multitude of reasons why we strive for financial independence and everyone’s “why”! is different.

It helps to grab a pen and paper and write it all down. I’m a stationery fanatic so I like to have the perfect notebook for the occasion and the moto on this one sums it all up perfectly! Start by writing down your reasons why you want financial independence along with any specifics you see in your future. My why is to spend more time together as a family. Mr Fire works quite long hours so we only really get weekends together and these are often spent running out business.

Have a money date

Not for the faint-hearted! In order to get to where you want to go financially, you have to start looking at where you currently are. Start simple and avoid doing any detailed assets and debt calculations just yet. Schedule in a date with your money, grab a cup of tea and some chocolate. Put it in your calendar, do whatever you need to but make it happen!

The idea behind this one is to know how much you earn now and how much you have going out. Be sure to include any future expenses such as planned holidays or big occasions. Also, note down if your due any pay increases or bonus. With all this laid out in front of you, it can often be easy to spot the areas that can be tackled straight away.

If you spend all your money on grabbing breakfast in the morning then that’s the first area to tackle. Avoid making any big money plans yet as this can be tackled in the next step. 

Create goals in line with your spending

I love goal planning! It fills me with hope and excitement! Not everyone is like me though. It can be really daunting to see your finances laid out bare in front of you. I’ve found the easiest way to create steps to help you reach financial independence is to align your money and your goals. Keep a copy of this either in your notebook you used earlier, in a spreadsheet or in a cute planner! (I use this one and this daily greatness one)

If you want to increase your income this can be linked to a personal goal or hobbies. I’ve always dreamed of being an entrepreneur and so I set up my own business. This means I automatically increase my earnings whilst fulfilling my dream, win-win, plus I’m working on my personal goals as well as my money ones. 

Paying off debt in any form is essential in order to reach financial independence so write down all your debt from credit cards to student debt (the jury is out on the benefits of paying off student debt earlier but I will get to that in another post) Car finance and mortgages, I’m talking the works. Don’t panic about it – just write it down. 

Design your new life

All the information you have collected this far is your blueprint to your new life. It will more than likely involve sacrifice and delayed gratification. That’s OK as long as you can make it part of your lifestyle. If you absolutely can’t give up your morning Starbucks coffee then DON’T! (Sorry Mr Money Mustache) Find something else to remove or cutback on. Mr Fire is a coffee fanatic and in order to replace his morning coffee we invested in a coffee machine. It was a big initial expensive but now we save money basically every day as he uses the machine instead of driving out of his way to Starbucks and spending £10 a time (it’s hard to resist the other things Starbucks sell especially when you are already in the queue)

There are multiple blogs out there that advocate all out war on anything that costs you money that are essential for living. This is not sustainable. Mr Fire and I won’t compromise on something. Food for instance. We both love food. We don’t cut out eating out completely as we would both be miserable. Instead, we find a balance by setting a monthly budget and then we decide if we spend it all in one fancy restaurant or if we eat in some cheaper ones a few times a month instead.

Somethings are less easily balanced such as if you are spending a fortune on the annual family holiday. No need to give it up but try less expensive options such as late holiday deals or UK based holidays instead.

A key point to make here is the people you are surrounded by. If your tribe is basically a “live for the moment YOLO” type then it could be much harder to reduce expenditure when everyone around you is splashing the cash. 

Increase your income

There is no getting away from the fact that the more you earn the more you have leftover. Ordinarily this would result in an increase in expenditure but not now we are on track to reaching financial independence. Increased income is the holy grail in financial independence land. It’s something that sounds easy but can be a complete minefield. Check out my make money section as I will be adding to it regularly!

Saving and Investing

These two go hand in hand in my book. All the extra income that you should be earning will need to go somewhere. Instead of just leaving it in your usual current account, it needs to go out the way otherwise it will get spent. It’s so tempting to just take a bit here and take a bit there when you can see all this money in your bank account.

The infamous emergency fund is the first type of saving you should be aiming for. The first type of emergency fund should be a pot of cash used to cover the annual expenses that aren’t tracked in your monthly budget. Car MOT, house insurance and boiler checks are the types of expenses kept in this one. This stash of cash is find to be kept in a regular bank saving account. The interest rate is irrelevant since the money will be coming and going.

Next is to save up to 30 days worth of living expenses. This is a real motivational boost! After you’ve completed this, the next milestone is to save another 30 days. Keep the momentum going until you have 6 months to a year saved up. The general rule here is a salaried employee needs between 3 – 6 months saved up whereas a self employed person needs between 6 – 12months saved.

This emergency fund is the beginning of your financial independence fund so it’s a good idea to keep this one in an ISA. The key is to get your money to work for you. Placing your money in an ISA is perfect as you get to save your money tax-free and you can top up to your full allowance each year.

I can’t recommend any particular bank account ISA’s yet as I’m still researching them!

Once your emergency fund is stocked up and thriving, it’s time to turn your attention to investments. I’m dubious to delve too far into investments in this post just yet.

Diversify Everything

Income and investments alike – diversification is everything. Diversification is the ultimate safety net, if one avenue fails then you will always have other streams to fall back on. Income wise, if you’re in salaried work then get a side hustle (or ten), if you own your own business then get another income stream such as investing in someone else businesses as well

The same applies to investments, don’t make every investment by following the stock market too closely. Shake up your portfolio a bit. This way if one stock takes a hit, you can rely on the other streams to pick it back up.

Having multiple income streams can also be a form of financial independence so it makes sense to do it.

Check in with your goals often

Don’t just write it all down and then forget about it. Schedule in a weekly, monthly or quarterly money date catch up. One of the most important actions you can take towards financial independence is to know where you are anywhere you are going. Collect the receipts, check the bank accounts and refocus on your why along with your goals.

Tips and Tricks

For aligning personal and financial goals I find its best to start simply and not to overcomplicate it. For example  If your goal is to get fitter then it can be linked to cutting your grocery bill. Eating healthy actually doesn’t cost as much as people think. I’ve found the by making meals from scratch it actually costs less than ready meals for us all. Now you are working on your personal goal of getting fitter whilst working on your money goal of spending less. Being able to have multiple ways to motivate myself really help me stay in it for the long haul.

I also find having the notebook, planner and goal tracker that I linked earlier really help me to stay focused. I love having a physical record of my journey that I can access at any time. I can see exactly where me and my money are at anytime! 

Enjoy the journey

The last part and most important is to enjoy your journey. It’s a long and winding road but we are on it together and we will succeed. It’s so easy to get frustrated with slow progress and worn down by deprivation. Remember to check your goals and your why. This blog is all about reaching the journey together and we will make it!

Where are you on the road to financial independence? Are you following the guide above? I’d love to hear about everyone’s journey. Comment below or get in touch.


  1. having read this post and your “about me” is Early Retirement really right for you?
    Did the 5 year old you put her feet up and say “I own the post office but just collect the dividends and rent”?

    I think that you might enjoy working / entrepreneurship too much to just stop doing it – what do you think?

    • Hi GFF,

      Thanks for your comment. You defiantly raise some thought provoking points! I agree that I do really love entrepreneurship however for me its all about the freedom around FIRE.

      I want it so I can wake up some mornings and just do nothing whilst not having to worry about paying the bills!


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