How to achieve Financial Independence

By Slow Dad - January 04, 2017

Want to know the secret to achieving financial independence? If I could achieve this then anyone can. Here is a summary of what worked for me.

Want to achieve financial independence?

Time and money are the two factors I use to measure wealth. The truly wealthy have an abundance of both. Until you gain control over both you are not financially independent.

I achieved financial independence before the age of 40. You can too. Here is what I know:

How to achieve financial independence

Spend less than you earn.

If you don’t, you are doomed. End of discussion.

Start now.

There is never a right time. The best time to invest was always yesterday, but unless you have a time machine handy... get over it!

Quit procrastinating and just get on with it.

Own your decisions.

You are the boss of you. Not your employer or your spouse or your advisor or your government.
Only you are responsible for the decisions you make, so own them.

Only you are responsible for the decisions you make, so own them.
They made me do it” or “it is their fault”… bollocks to that! Only dickheads shirk accountability or attempt to blame shift. "They" aren't going to help you reach financial independence, for that you will need to rely on your own self.

If you can’t afford to pay cash for something, then you can’t afford it.

Pay day loans are for dickheads. Car loans are for dickheads. Personal loans are for dickheads. Carrying a credit card balance is for dickheads. Equity release loans used to fund consumer spending are for dickheads.

Any debt that does not generate you more income than it costs you is dragging you away from financial independence. Don't be a dickhead by getting into consumer debt, it is the biggest financial own goal you can score.

If you have already fallen into the consumer debt created hole, then stop digging!

Saving is not the same as deferred spending.

Setting aside money to pay for a holiday, or Christmas presents, or a new car, or meeting your tax obligations is great from a budgeting perspective. However it is not saving, it is deferred spending.

You are lying to yourself if you include deferred spending in your saving rate calculations. Spending is spending.

Cash is a medium of exchange, not a store of value.

Inflation pushes up prices and erodes purchasing power over time.

Keep score by looking at what your net worth can buy you, not how large a number it is. Remember that people with a million dollars used to be considered rich, but no longer given there are now more than 33 million “millionaires” in the world.

Finish every day with a larger hoard than you started it.

Achieve this more often than not, and you will be heading in the right direction.

Leverage is a powerful investment tool... but only if the investment is self funding.

The careful application of leverage to accelerate investment portfolio growth can shave years off your journey towards financial independence.

Any “investment” that fails to cover its ownership costs should not be considered an asset, as holding it will cost you money and adversely impact on your lifestyle on an ongoing basis. If you are having to subsidise your investments then you are making your journey towards financial independence a more arduous journey than it needs to be.

Your home is (probably) not an investment.

We all need to live somewhere, but most people don’t derive any income from their homes. The cost of occupying your home is either your rent, or your mortgage interest + ownership costs.

Many home owners lie to themselves that as the value of their house increases they are getting wealthier. However if all the surrounding houses in your neighbourhood have also increased in value, then unless you are prepared to move somewhere smaller or cheaper you are actually no better off.

Your home can become an investment if you generate an income from it, or if you apply your accumulated equity towards securing the purchase of income producing investments.

Manage tax like you would any other expense.

Plan using before-tax numbers, to ensure you minimise taxation like you would any other expenses such as mortgage interest or brokerage fees.

Plan using before-tax numbers
Beware of investments that only make sense after taking into account financial trickery like depreciation or tax credits or rebates or subsidies. The tax man can change the rules at any time which may leave you holding an investment that no longer makes sense.

Stick with it.

Regular investing eliminates the temptation to try and time the market.

When prices are high your regular investment will purchase a lesser quantity, conversely when prices are low you will scoop up many bargains.

"Slow and steady wins the race" is a cliché for a reason.

Spread your risk.

Markets rise and fall. Companies boom and go broke. Natural disasters happen.

Spread your money over a variety of asset classes, providers, markets, and geographies.

This way your investment portfolio always contains some winners, some losers, and the remainder plodding along.

Financial Independence is about gaining control your time, not about money.

We all have the exact same number of hours in a week. Financial Independence is about you, not your employer or your lender or your family, determining how you will choose to spend those hours.

Financial Independence is the power to determine how you spend your time.

Defend your time.

Is the thing currently shouting for your attention going to take you closer to financial independence?

Is it something you would choose to do after financial independence?

If the answer to both questions is no, then why would you want to do it now?

Assign a value to your time, then prioritise everything you do using that figure.

Triage whether a task actually needs to be done at all. If not, then don’t waste your time.

Assign a monetary value to every hour of your time, your employer certainly does!

If a given task is worth less to you than the value of your time, then pay somebody to do it for you. This is a great way to quickly identify the actual value to you of any given task.

Spending a weekend installing a new tap handle yourself may be rewarding, but if a professional could successfully complete the job in an hour then you are effectively saying your time is only worth 1/16th of their time. Does that sound right to you?

Now you can concentrate on those high value tasks that will get you closer to achieving your goals, or those you would derive satisfaction from once you were financially independent.

Only you can achieve your financial independence, use your time wisely
Remember that only you can achieve your financial independence. Don't make excuses, or put busy work ahead of the things that will really make a difference.

Every time you go to make a purchase think about its true cost.

The cost of purchasing something does not finish at the checkout.

Everything you buy must to be stored, and that incurs an ongoing cost. How much of your monthly rent or mortgage interest expense is going toward storage? Having lots of stuff is expensive!

How much is the purchase really worth to you?

Each purchase made today takes away money that could be invested for your future. Over a lifetime of compounding returns even a trivial expenditure can grow into a vast sum.

Unless a purchase is being made to meet an immediate basic need, multiply the price by 11 to assess how much your purchase will be stealing from your future self.

If the purchase still makes sense at this higher price then by all means proceed. If not then evaluate whether you really need it. Your financially independent future self will thank you.

Keep a lid on your lifestyle costs.

Many people were the happiest they’ll ever be while they were students or in their early 20s. Free of responsibility, flat broke, and with nothing to lose.

Those same people are often much less happy when they find themselves selling off their lives a day at a time in a job they don't much like, just so they can service the crushing weight of mortgage debt, car loans, school fees, and credit cards.

Keep things simple and stick with what genuinely makes you happy.

FIRE is as much about the journey as the destination.

You only get one life to live, it would be a great shame to waste it working yourself to death. Unfortunately not all of us will be so fortunate as to live to a ripe old age.

Determine why you so desperately wish to be financially independent or retire early, then start doing those things today.

Define boundaries around how much you are willing to work, then work smart within those boundaries. Your productivity won’t reduce by much, but you will be much happier and more relaxed for the more balanced lifestyle.

The most effective staff I have ever had were mothers returning to the workforce after having children. They knew they had a hard stop on their working day when they needed to collect their offspring from nursery or school. This turned them into productivity super heroes, often delivering more during their part time work day than than their colleagues achieved over a full working day.

Block out time for the truly important things like spending time with loved ones, playing with your kids and pets, travel, and experiencing new things.

Money is an enabler, not a goal.

Money can’t make you happy, but it can certainly can help remove some of the barriers to happiness.


In 2005 the Sydney Swans football team assembled an unremarkable squad of unproven kids, journeymen, and unheralded veterans using a now famous “no dickheads” recruitment policy.

The team didn’t contain any superstars or prima donnas, deliberately choosing to the avoid the headline grabbing and negative behaviours for which professional sportspeople are infamous.

The collective effort of each individually unglorified team member produced exemplary results, creating a dynasty of success lasting more than ten years.

Much like the assembly of a successful sporting team, the journey towards Financial Independence involves the combination of a great number of individually unremarkable behaviours in order to achieve a truly amazing outcome.

This endeavour is easily sabotaged by scoring own goals or adopting dickhead-like behaviour, such as lifestyle inflation, living beyond your means, or falling prey to consumer debt.
 Sydney Swans "no dickheads" recruitment policy
Sydney Swans "no dickheads" recruitment policy
If I could achieve Financial Independence, while raising two young children and living in one of the world’s most expensive cities, then anyone can.

So what?

Now that you know what it takes, I wish you every success on your own Financial Independence journey, and beyond.

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  1. 'Keep score by looking at what your net worth can buy you, not how large a number it is.'.. What do you use as a simple comparator?

  2. Dylantherabbit the point I'm making is the price and relative value of things can and does change over time. This means a nominal net worth value is relatively meaningless, particularly over the longer term. Instead focus on what you can achieve with your net worth.

    My way of looking at things is working out (for example) how many years worth of my own personal living costs that my own pile of wealth might sustain me. There would be little point comparing numbers between someone living in San Francisco with those of someone living in rural Australia (assuming neither wanted to relocate), as their living costs vary greatly.