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Financial Independence (FI)

The What of FI

Financial Independence (or FI as it is widely referred to) essentially means: 

“having enough monthly passive income to cover monthly expenses.”

That is, you no longer have to trade your time for money just to survive. 

It means getting off the hamster wheel, getting out of the rat race, and no longer being tied to working a traditional 9am-5pm job.

The Why of FI

Being financially independent gives you the choice and psychological freedom to choose how to spend your time and energy. 

Basically most people I know, when it comes down to the bottom line, just want to be happy. 

Increasingly however, people are reportedly not happy. Studies suggest that we do not believe that working hard in our careers for 40 years in a 9am-5pm job will get us ahead, nor that it will make us happy.

So, if working for 40 years in a traditional 9-5 pm job does not make us happy, then its time to start taking some different action. 

Actions that get us out of the trading our time for money and into activities which give us energy.

And the first action is to figure out what is your why? What is your mission or overarching noble goal?

Once you figure this out, the fire will burn so bright that the what and how will figure itself out along the way.

To figure out my Why, i took myself through a coaching exercise called the “Five Why’s.” 

Essentially when it boils down to it, my Why-Fi is to get there faster!  So that I can spend more of my time and energy on the people and activities that I enjoy and re-energise me.

The Who of FI

The FI community are folk who know there is a better way and so they will not stand for being stuck in a hamster wheel repeating the same BS, day in day out for the best part of their lives, i.e. those 30 or 40 years when when they are fully functional and able.

This generation of FI’ers do not accept the lies which were sold to previous generations and they are taking their destiny into their own hands.

FI folk are about becoming really intentional and focused about speeding up the process towards Financial Independence.

FI folk are about escaping this toxic rat race forever, and then choosing to re-enter when and if you want to, and in your terms, while pursuing the passion projects you want to pursue.

In summary FI folk are about:

  • Not needing to work hard just to keep a job or keep up with the Jones’.
  • Retiring when you want and re-entering if and when you want.
  • Having more time for recreational pursuits and time with loved ones.
  • Having more time for passion projects.

The When of FI

The mechanics of reaching financial independence are relatively straight forward. 

Step 1 – Know how much you are spending (after tax) per year.
Step 2 – Multiply this number by 25
Step 3 – Do some math and you will know your FI number, or just look at the grid below where I have done the math for you. 

This grid gives you a theoretical birds eye view of how long it would take to reach FI based on a certain level of after tax income and yearly expenditure.

The grid assumes you are investing the difference (the savings) into a low cost index fund earning 5% per annum real rate of return (i.e. after tax and inflation) compounded annually. 

Years to FI

Years Until Financial Independence Grid

Earn more, spend less, invest the difference wisely, get there faster!

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