Financial Independence Defined

Financial Independence Defined

Financial Independence (FI) simply means you have enough income to cover your living expenses without working. When you reach the point that the assets you have created provide passive income enough for you to live off, you’ve reached FI. Reaching FI can be accomplished in a number of ways; investing in the stock market, owning real estate, starting a business, or all of the above.

I won’t spend time discussing real estate or how to start a business. Plenty has been written on those subjects. I’m going to discuss one of the most successful, simple and overlooked ways to reach FI. Running a business or dealing with tenants can be stressful. This approach is within your control, it’s completely passive and you can decide how quickly you want to get there.

This is not a get rich quick strategy; it’s quite the opposite. This is a get rich slow strategy and depending on how disciplined you want to be can reach FI in 5 to 10 years.

“Most people overestimate what they can do in one year and underestimate what they can do in 10 years.” 

Start thinking about your finances longterm and focus on the things you can control.

Another way Financial Independence is defined is when you have saved 25x your annual expenses. For example, let’s say you’re in your late twenties. You spend about $34,000 a year. That would mean as soon as your investments grow to $850,000 ($34,000 x 25) you could essentially stop working and live off the interest.

I don’t like the phrase early retirement because most people who reach FI don’t stop working. They find they’re able to channel their energy into things that they are passionate about and usually make money doing so. When you reach FI, for example, in your thirties you’re not going to want to stop working, but you’re going to be able to focus on the work you love and you will be out of the rat race.

Assuming you start today if you maintain a 50% savings rate this can be done in 10-15 years or less. Everything I have shared so far and will continue to share on my blog is to help you reach financial independence. 

Here is a formula that I created to help simplify the process to achieve FI. 


Definiteness of purpose over gratitude multiplied by time equals financial independence.

Related: The Complete Guide to Achieving Financial Independence Through Simplifying

Definiteness of Purpose

In order to achieve anything, it requires definiteness of purpose. The desire to know what you want and a burning desire to achieve it.

“Whatever the mind of man can conceive and believe it can achieve.”

– Napoleon Hill, Think and Grow Rich

This is a timeless principle that was introduced by Napoleon Hill almost 100 years ago. If becoming financially independent, becoming debt-free, achieving a healthy body, or having great relationships is your goal, you really can achieve it with the right mindset and focus. 

Understanding and defining your purpose will enable you to live how you want to live. No amount of self-help books and inspirational stories can inspire you to bring a change unless you know what the change you seek actually is. It’s not uncommon for people to grow up believing that they need a “secure” job that can offer a paycheck in trade for the hours they spend fulfilling someone else’s dream. There is nothing wrong with a 9 to 5 job, they are fulfilling and rewarding, but only if that’s the choice you make.


It’s easy to forget all that we have been given. You can easily get caught up in wishing you had more or wishing that you were in a different situation than you are now. It’s easy to feel envious and look at what others have wishing you had more. I’ve seen personally what happens when the only thing someone wants is success and money and it destroyed them and their relationships. 

“Success without fulfillment is failure.”

Tony Robbins

Gratitude is a feeling of appreciation and thankfulness for blessings or benefits we have received. As we cultivate a grateful attitude, we are more likely to be happy and spiritually strong. We should regularly express our gratitude to God for the blessings He gives us and to others for the kind acts they do for us.


Most people can have a definiteness of purpose if they concentrate. And most people can have gratitude if they focus. Definiteness of purpose at some level can be achieved by most people if and when they care enough about a certain outcome. However, few people can add the next element of the formula for a very long time. Some adults can have definiteness of purpose for a week or a month, and when they do we usually applaud them and notice the movement in their lives. When an individual is able to focus on a task or subject for a decade or more than a year, you have a very unusual person. A year of intense exercise and watching what you eat will likely change the trajectory of your life physically. But only the first few weeks in January is not going to change the numbers on the scale. In his great book Outliers, Malcolm Gladwell writes that one of the keys to unusual heights of success is spending ten thousand hours of practice at your chosen craft. Jim Rohn said we are the average of the five people that we spend the most time with. Be careful who you spend your TIME with. 

You Are the Architect of Your Future

One of my friends Jole, who writes over at FI180 shared an example of what life looks like if you buy into what our society teaches us we should be doing. It has been modified slightly.

Two Different Futures

Future 1 
You graduate from college, you move to a new town and you get a high paying Physician Assistant position. You immediately buy a new house, a new car, fancy furniture. You live in a gated community with walking trails. Friends and family visit you and they marvel at all these nice things. You buy all the newest tech toys every year and consider yourself an early adopter of technology. Sure you pay a premium for the privilege but you can afford it with your salary. You get married to your high school sweetheart and enjoy an extravagant wedding and a tropical honeymoon. Weekly dinners at 5 star restaurants and weekly massages at the spa. And you’re quite the jet setter. You travel every other weekend all across the United States visiting friends and family. Your credit card has no limits and when you think of something you want you just buy it. Never-mind the $170,000 in student loans, you’ll get to those eventually. No one has to know how much you really owe. It’s time to treat yourself, you deserve it. This future is high class living. You blew past the joneses years ago.

Future 2
Five days a week your alarm clock wakes you up super early and you stumble getting up groggy from the lack of sleep. You make coffee and you rush out the door to sit in traffic on your half hour drive to work. When you’re finally alive and you arrive at work you look at your calendar and see that it is full. Same sights, same sounds, same crowd day in and day out. Same faces new day. You thought that a PA job interested you but you realize over the years that you’re starting to feel burned out. Another client that is behind schedule and gossip in the office. You’ve tried changing jobs but it’s no use. Same prison sentence. The fluorescent lights flicker above you and you glance down at your smartwatch and notice it is 75 degrees and sunny outside. Your legs ache to run outside and enjoy it but you can’t, you’re too behind on your schedule. You’re always behind. You’ve tried coming in earlier staying later. Working through lunch. Nothing works. You look at the clock every ten minutes hoping that time would move faster. All you want to do is go home. Tick tick tick tick the watch hand moves so slowly. When the day is done and you still haven’t completed everything, you’re still happy to leave. You get back in your car, sit another half hour on your commute home, drive past the same sites and sounds. You do some mental math and realize that you have driven this same route nearly 2500 times. You’ve gone home and vegged out on the tv to clear your stressed out mind 2500 times. You’re in an infinite loop and in just a few hours you wake up at the crack of dawn to do it all again. 

Hint. It is a trap. They are exactly the same future. This is what the hamster wheel looks like and this is how the majority of Americans live. 

Decide what you want, decide what you are willing to give up, and go to work.

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