The Complete Guide to Financial Independence (2023)

Financial Independence is the ability to live life without the need for earned income. Achieving financial independence comes down to earning and investing your money in assets and investments such as stocks, real estate, or businesses.

The Complete Guide to Financial Independence (2023)

Financial Independence may sound like a trendy buzz word for wealthy people like doctors, lawyers, and wall street executives. But financial independence is something that all income brackets have been achieving for many years. The recent FIRE (financially independent retire early) movement has revealed the idea and given a new financial goal for many young earners.  

Let me tell you a little secret - regular middle class people just like you and me - are retiring early with MILLIONS in the bank. Every. single. day.

 You don't need a high income (although it helps get you there faster).

 You don't need to get lucky on an investment.

Financial independence comes down to three things: earning money, investing money, and time.

Replacing your earned income (your job) with passive income from assets and investments is actually a pretty simple concept.

Earn money. Invest money. Repeat.

However, building enough assets and investments takes time. The more you earn and the better investments you choose – the quicker you will reach financial independence.

Bottom line – anyone can achieve financial independence. The sooner you start earning and investing  the sooner you can quit your job and live the life of your dreams.

Are you ready?

We've read all the books and interviewed countless experts in finance to bring you the Complete Guide to Financial Independence.

In this guide we will teach you the 3 steps to achieve Financial Independence:

  1. Income
  2. Investing
  3. Time & Management

But first, let's learn what financial independence means and why it is not widely accepted or understood by western culture.

The Broken System

For a majority of American's - financial life after education looks like this:

  1. You get a job you think you will like.
  2. You buy the biggest house you can afford.
  3. You buy the nicest car you can afford.
  4. You save money for new toys and vacations.

Any money left over can be saved for retirement at 65 from a job you lost interest in year ago.

Sound right?

The system is weighed to keep you employed and keep you spending money. To be completely honest – this system is perfectly acceptable for many people. It works if you have a career you love and have everything you need.

But as someone who ended up at a dead end job – it's not for me.

I'd guess since you are reading this guide – it's not for you either.

You want to spend your life living - not working and keeping up with the jones.

There is a better way - it's called financial independence and it does not require you working a job you hate or working until you are too old to enjoy life.

What is financial independence?

Financial Independence is having enough money or assets that return a higher amount than your cost of living.

Example: If your monthly expenses are $5000 (rent, utilities, groceries, etc) and you have assets such as real estate or stocks that earn MORE than $5000 a month - there is no need to work or earn income. You are financially independent.

The road to financial independence is simply a matter of earning more than you spend and investing the difference.

Good investments and time will do the rest. If you continue to earn and consistently invest your money, eventually your investments will earn more than your day job.

So why wait until you are in your mid-60's (or later) to retire?

Work hard now, invest your money today, and then quit your job and retire in your 50's, 40's, or even 30's! We'll show you how.

Let's dive in.

The Math Behind Financial Independence

Let's start with the end goal: You will need a lot of money.

Financial independence requires a lot of money. Cash in the bank, real estate, stock, and/or streams of income (owning a business) that will cover the expenses for the REST OF YOUR LIFE.

The amount needed to achieve financial independence will be different for everyone. There is no magic number and you cant predict the future. We can can use historic returns and use our lifestyle to make a good guess. Many use the 4% rule.

The 4% Rule

A common figure amongst the financial independent and retire early (FIRE) crowd is "the 4% rule". This is an highly debated topic - but let's take a look at the math so we can better understand the logic behind it.

The 4% rule refers to the amount of money you should be able to safely withdrawal from your entire portfolio and never run out of money. The thinking is that your assets will increase at a rate greater than 4% per year (on average).

Example: If you have $1,000,000 invested into a diversified portfolio you should be able to safely withdraw 4% or 40,000 per year and that your portfolio will grow at a rate of (at least) 4% per year. The average return rate of a balance stock fund is 6-8%. You should never run out of cash.

There has been much debate over whether 4% is enough. Some say 2%. The truth is that no one can predict the future, and everyone has different needs. We think there is no perfect answer - but the 4% rule at least gives you a number to strive for.

IMPORTANT TIP: You should meet with a certified financial planner at some point in your journey (before you quit your job) to discuss your own individual strategy and figures. Income, investments, taxes, etc. are different for everyone. We ARE NOT financial advisors, we are simply suppling you with an idea and information to get started.

OK, so now you know you need to save a TON of money. How the heck do you save millions of dollars?!

Let's start with step 1... Income


We've all heard "you need money to make money". This is especially true in buying assets and creating wealth. It starts with your income.

Let's take a look at what income means, what you've been taught, and how you should start thinking about income if you want to achieve financial independence.

The Problem with Income

Our culture has deceived us about income. We've been taught that we can afford everything we want up to our income limit. And when we can't afford what we want we simply use debt to pay for it.

We buy the big house, the nice cars, all the toys, and then if there's any money left over we put it into a savings or retirement account. We've been taught to prioritize spending over saving (or investing).

Some people will live a great life on their income. They will make more money and buy nicer things. The problem with income is that unless you have an NBA contract - it's not guaranteed. What happens if you lose your job or you become unable to work? Your income goes to ZERO, but your expenses remain the same.

Over the course of a 40 year working career you have a pretty good chance of loosing your income at least once. Companies go out of business. Recessions happen. Accidents happen. Life... happens.

Many people will argue that self employment or investing money in the stock market is "risky". I would argue that being employed is the greater risk.

The other problem with income is that we tend to let it become a level in which we live our lives. As our income grows, so does our need to spend it. This is not a sustainable lifestyle.

A Better Way to Think About Income

Instead of thinking of your income as how much money you can afford to spend on things – think of your income as a way to buy more income.

The more fuel you can contribute to your investments – the faster they will grow.

Some are fortunate to have high income. Others may work multiple jobs. The important part is how much you have left after expenses - this is the amount you can put to work to make you MORE money.

When people realize this two things happen: you spend less and you find ways to earn more.

The more money you make, the more money you can start investing - and the faster you will reach financial independence.

Some high income earners can do this in 10 years. But this does not mean those earning $40k a year are not able to reach their goals - it simply takes more time and more effort choosing the right investments.

Many people today are creating multiple sources of income to get wealthy. Side hustles, blogs, real estate, teaching, etc. are all easy ways to earn an extra income.

Bottom line: Focus on earning as much income as possible and keeping your expenses low. Climb your way up at your full time job and/or find a side-hustle to increase your income. Work hard in the beginning of your career while you have limited expenses and more energy.  The less you spend - the less you will need to work to later in life.


Start a side hustle

Staring a side hustle or small business is a great way to increase your income. There are endless choices when it comes to finding a way to make a little extra cash. Start a blog, create a brand, freelance your skills, resell items.

Check out these 10 Passive Income Ideas

Move on up

Sometimes the best path is the one you are already on. If you have the ability to work your way up the company ladder - learn everything you can and work your ass off. If you reach a stumbling block, find another company that values your skills and make the move.

Ask for a raise

One of the best ways to make more money is to simply ask for more of it. Create a list of your assets and achievements. Ask your boss for a meeting and pitch why you would like to be considered for an increase. It never hurts to ask.

Keep track of your expenses

Keeping track of your expenses is an important part of any small business or side hustle. You will need to report your extra income on your taxes and you will be able to deduct any expenses related to your business. Use an app like Quickbooks or FreshBooks for accounting.


Investing your money means placing it into an asset that appreciates overtime and/or generates income. Investing is putting your money to work. Investing is where the magic of compound interest happens.

There are an endless amount of ways to invest your money. The stock market, real estate, and businesses are a few of the most common investment options.

IMPORTANT: All investments come with some level of risk. Please consider all of the risks and do your homework on any investment you choose to put your hard earned money into.

Ultimately choosing investments will be up to you. Each investment will require a different amount of money, knowledge, and sweat equity to get started.

Choose your own investments depending upon your individual:
• investment goals
• risk tolerance
• timeline
• age
• interests/knowledge

Let's take a look at 3 common ways to invest your money...

Stock market

Buying shares of publicly traded stock is one of the most accessible and time-tested ways to make money - it's also one of my favorites.

Making money in stock can be as easy as choosing a well known company or finding the next big trend.

I enjoy finding new trends and buying shares in the companies that are supplying them.

You can invest in the latest tech stocks like Google and Apple, invest in dividend paying blue ships such as Exon Mobile and 3M, or find the next unicorn such as Tesla or Amazon.

The stock market is how some of the world's greatest wealth is made.

Index Funds and ETFs

Index funds and ETFs (exchange traded-funds) are a great way to invest in the stock market without choosing individual stocks.

Funds and ETFs are much less volatile than individual companies and allow you to simply choose a fund and add it on a regular basis.

These investments are best for those who want a more hands-off approach to their investments. Many investors have done very well by simply owning and holding a fund like the S&P 500.

Buying index funds and ETFs is one of the most recommended investments for young investors.

Real Estate

Real Estate has a long history of creating generational wealth. Real Estate is a great way to invest your money if you have enough for a down payment and the interest in either home repair (flipping) or being a landlord.

The best part about real estate investing is the ability to use leverage. Leverage is using other peoples money (loans) and paying it down overtime.

If you are looking for a more "hands-off" approach to real estate investing take a look at REITs. REITs are purchased and traded just like index funds and you get paid a percentage of the rent into your account.


Owning a business is a great way to earn income and have an asset that can appreciate over time. Business owners also enjoy from tax benefits and the ability to hire others to run the business while they focus on other things.

Today, there are many ways to own a business. You can open up a local coffee shop, launch an e-commerce brand online, or even perform a service such as photography or lawn mowing on the weekends.


Take advantage of company sponsored plans such as 401(k)

If you have the ability to contribute money to a company sponsored plan such as a 401(k), this should be your first investment... especially if your employer offers a company match (free money). Plus, any money contributed to a 401(k) will reduce your taxes (less money owed to uncle Sam). The more money you can contribute to a tax-free account, the less you will pay in taxes today and greater compound interest you can earn in the long-term.

Roth IRA's are one of the best tools to invest your money

A Roth IRA is an individual retirement account where you can put after-tax money (up to $6k as of 2021). The magic of the Roth is that your investment will grow tax-free to withdraw starting at age 59.5. Plus, any contributions you make can also be withdrawn at anytime without penalty.

Automate your investments

Automate your investments to simplify your life and be consistent with investing. This removes the element of excuses from the equation and puts your money (and life) on auto-pilot. You can easily have your employer or brokerage account automatically deposit an amount or percentage for each paycheck. Every couple of weeks, log into your account to buy new investments.

Talk to pro

Before you make any major moves with your money or investing in new assets, its best to speak with a financial advisor or accountant. The advisor will help you make smart decisions and avoid any costly mistakes.


Financial Independence does not happen overnight - unless you hit the lottery. It takes time (compound interest) and good management (making smart decisions).

When you start adding new money to your investments and let them grow over time, you will start to experience compound interest. Some call it the eight wonder of the world - we totally agree.

Compound interest is when the interest you earn on your investments is earning you more interest. Compound interest accelerates the growth of your savings and investments over time. The greater the time, the greater the growth.

Here's an example with investments in a Roth IRA

If you open a Roth IRA at the age of 20 and contribute $6000 per year (current max) into a S&P 500 index fund (average return of 8%) you will have...
$38,000 by 25
$94,000 by 30
$300k by 40
and $1 Million by the age of 54

On that $1 Million in 34 years you would have only contributed $200k (of earned income) - that's $800,000 in compound interest!

Just think of how much money you will have if you invest MORE than $6000 per year!

Of course compound interest only happens if you make smart investments with your money. For some the smartest investment is simply a boring diversified index fund (or ETF). For others – Real Estate, small business, growth stocks, crowd funding, or crypto currency may be the right move.

There are endless ways you can use your money to compound over time. The important part is that you invest your money in what is RIGHT FOR YOU – and let TIME do the rest.

How to Achieve Financial Independence – LET'S REVIEW

Financial Independence requires assets that appreciate and/or provide income to cover your expenses without the need to exchange time for money (aka a job).

Start today:

• Increase your income

• Reduce/limit your expenses

Invest the difference

Financial Independence requires a commitment to a way of living where you spend less than your assets return.

  1. Create a budget and stick to it.
  2. Review your assets and investments regularly.
  3. Add to your investments regularly

Talk to a professional with any big picture items such as new investments, large purchases, and taxes.

Financial Independence is something anyone can achieve with income and smart investing – you got this.

Want to learn new ways to earn income and invest your money? Subscribe to The Afford for a weekly recap of money advice and investment ideas.