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Is Financial Independence Achievable?

Updated: Apr 17, 2021

Many people dream about financial independence or financial freedom, yet very few realise just what it takes to reach financial independence, let alone financial freedom. The general belief is that you need to earn extremely well in order to accumulate wealth. This is, however, far from necessary and also by no means any guarantee of success. The good news is that accumulating wealth has a lot less to do with how much you earn than most people assume. The truth is that reaching financial independence has more to do with your spending than your earning. In reality, though, very few people are prepared to honestly scrutinise and adjust their spending in order to reach financial independence.

What is the difference between financial independence and financial freedom?

The way we see it, there are three steps along the path towards reaching financial freedom:

Financial Security

This is when you have sufficient passive income which can cover your basic living expenses (e.g. accommodation, food and other basic necessities) indefinitely.

Financial Independence

At this point, your passive income can cover your current lifestyle indefinitely. This may include some discretionary spending on luxury items, but will most likely still be a budget-conscious approach towards spending.

Financial Freedom

For many, this is the ultimate goal, when your passive income not only covers your current lifestyle but is sufficient to cover your ideal lifestyle.

People often ask us how we are able to travel full time. Neither of us has won the lottery nor inherited wealth. The truth is that it took us years of planning, lots of hard work, many sacrifices and an ongoing commitment towards a shared passion and goal. Although we are able to sustain our current lifestyle through passive income, we remain incredibly aware and frugal in our spending. We enjoy the FREEDOM that comes with financial independence, without having reached complete financial freedom!

Whether your goal is financial security, financial independence or financial freedom, we hope that these ten simple steps can help lead you towards that goal, no matter how much you earn. It is in no way a recipe or guarantee for success. We simply want to share this with you in the hope that it will help you realise that reaching financial independence has more to do with your spending than your earning and that if you are motivated and prepared to make the necessary sacrifices along the way, then financial independence can be within your reach.


Disclaimer: This is not financial advice and neither of us are financial advisors. This is simply something that has worked for us and which we wish to share. You should consult your own advisor and consider what is best suited for your specific circumstances.


You need to define your starting point. In order to do this, you need to clearly define your current financial position.

Make a list of all your assets and liabilities to establish your current net worth. From here, you will be able to work towards increasing your net worth according to your specific financial goal. There is plenty of guidance as to what your net worth should be at the various stages of financial security, financial independence and financial freedom.

Next, compile a detailed budget that honestly reflects how much you currently spend annually. Try to categorise your spending, in particular into those aspects which are ESSENTIALS (housing, food and other necessities) versus those aspects which are NON-ESSENTIALS (cafe coffee, beauty treatments, entertainment etc). At this point, it is very important to be honest about your spending. Most people are completely unaware of what percentage of their spending goes towards non-essentials.


For most people, this is the most difficult step as it requires continued commitment! In our opinion, however, this is the single most important step in order to empower yourself to be able to reach your financial goals, no matter what they are.

Firstly, you need to understand your spending. The best way to do this is by tracking your spending on an ongoing basis. There are many apps available these days that this doesn’t need to be difficult or complicated. We have been using Trabee Pocket for years while we travel as it allows you to create your own categories and spend in multiple different currencies. We also use Quicken to track all our accounts, assets and investments. At the press of a button, we know exactly how much we have spent on pretty much anything over a 20 year period and the exact state of our current finances. Some people (most actually!) might see this as completely over the top obsessive-compulsive behaviour but I can guarantee you that having the real picture of your financial status brutally laid out in front of you has major benefits. There’s nowhere to hide from your bad choices and you have to be completely honest about your finances.

Nowadays there are many tools available to make this process a lot easier than it was 20 years ago and in our view, this is the single most important step people can take towards financial freedom. Luckily nowadays there are many other, even simpler, websites and apps such as 22seven, Personal Capital and Mint, some of which can categorise your spending for you. It really doesn’t matter what you use, the important thing is to track ALL your spending on an ONGOING basis.

Just as you took stock and defined your starting point in step one above, in order to reach your financial goals, you need to always know exactly where you stand. The only way to do this is to track both your net worth and your spending on an ongoing basis.


Once you start tracking your spending, you might be surprised to realise what percentage of your spending goes towards non-essentials! Now, we’re not suggesting that you cut all non-essential spending, but it is necessary to scrutinise your expenses in more detail in order to be able to prioritise. Start by asking yourself how important each category of spending is to you and be honest with regards to how much pleasure specific spending really gives you. Some people will prioritise drinking good quality coffee, while others may deem a social club membership as a personal priority. It doesn’t matter what your priorities are, what is important is that you are able to identify and quantify each of your priorities. Apart from gaining insight into your spending habits, keeping track of expenses will point out small ‘leaks’ which over time can really add up. This might be something like overly expensive banking fees or perhaps a subscription to a service that you don’t use anymore.

After prioritising your spending, it should be fairly easy to reduce your spending simply by eliminating the purchase of items that are of the lowest priority to you. You can then continue by limiting your spending on the next level of priority items, all without having a significant effect on your overall happiness and quality of life. Often, being conscious about what you spend your money on can give you more satisfaction than simply spending more without understanding your priorities.


After completing steps 1 to 3, you should now have a good understanding of what aspects of your spending are really essential and what are in fact non-essential luxuries. Being frugal does not mean spending on only the essentials. It is also not the same as being cheap! Being frugal means that you are prepared to save money on certain things such that you are able to spend on the things which are most important to you. Being frugal is never just about the cost of something but more about the value or joy that item or experience brings you. And just think about the value that financial independence can add to your life!

So stay away from unnecessary luxuries like fancy new cars, living in the most expensive area of town or regularly dining out with overpriced cocktails. Try to reduce your spending to predominantly the essentials and only spoil yourself with a select few of your priority non-essential luxuries. Being consciously frugal allows you to save more money faster and keeps you focused on achieving your financial goal. See this as a short term sacrifice required to achieve a wonderful long term goal.


No matter how much you earn, always aim to save as much as you can. And even more importantly, as you gradually earn more, don't spend more! It is important to understand that an essential challenge towards achieving financial independence is not only to live within your means but also to allow for savings whatever your means may be. Never underestimate the effect that many small savings can make when added together. The cheaper you are able to live today, the faster you will be able to save for tomorrow. To quote Albert Einstein: “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it.” It has been proven over and over, that the earlier on that you can start saving, the better. So make sure that saving is one of your top priorities.

The idea of not being a slave to money but rather letting your money work for you sounds clichéd but most people tend to get caught up in the system of spending and instant gratification rather than honestly assessing their financial state and determining an achievable financial goal for themselves.


In the light of understanding the wonderful effect of compound interest, you can see that the sooner you can increase your income the better. Strive to maximise your earning potential early on. This can be done by increasing your qualifications, working harder or smarter. You only have the opportunity to earn a finite number of paychecks in your lifetime, so make sure that the ones you earn early on count!

If possible, start a side business to earn a little more in addition to your fixed salary. This could be based on a hobby, a passion or simply a feasible financial opportunity. Be open to opportunities, but don’t give up the fixed salary just yet! The truth is that very few people are able to become wealthy by only pursuing a passion. Most of us need to work hard at our ‘non-dream jobs’ to accumulate wealth in order to pursue our passion and dreams.

Try to find opportunities to start to generate passive income. This could be through various financial investments or rental property. Every little bit of passive income adds up.


If you’ve made it this far through this article, you’ve probably realised that reaching financial freedom is not something that happens overnight! It requires making difficult decisions over and over again, as only continued commitment eventually leads to success and to achieving financial independence. For most people, this is simply too far outside their comfort zone and they are not prepared to make these short term sacrifices for the long term benefit.

These days, consumerism is worse than ever and society makes us feel comfortable spending far more than we earn. This has become the new comfort zone and very few people are willing to stand out from the crowd in order to pursue their own path. Even though it isn't always easy, you need to be comfortable making decisions in alignment with and in support of your financial goals.

Over the years, our friends and family often questioned our spending (or rather lack of spending) on certain aspects of our life. It’s something that you can’t always explain to others as your priorities may be different to theirs. We knew what added value to our lives and didn’t shy away from spending on those aspects, while other aspects simply weren’t important to us in comparison to the bigger picture and goal that we were working towards.


Now for the hard truth: it doesn't matter how well you strategise, things don't always go according to plan. In fact, they are almost guaranteed not to go according to plan at some point! For this reason, it’s really important to have a buffer and alternative plan for if, or rather when, things don't go according to plan.

This is applicable both to your journey towards financial independence as well as to the future once you have achieved your financial goal. Although it is important to remain focused, plan to be flexible in your approach as to how you will reach your financial goal and possibly even with regards to what that goal may be. Our priorities sometimes change over time and there is nothing wrong with adjusting your goals accordingly, as long as you remain focused on achieving those goals.

Nothing in life is guaranteed, but that doesn’t mean we shouldn’t take risks - they should just be calculated risks. Having a buffer in place allows you to feel more comfortable should things not go according to plan. The more prepared you are for change, the less of a negative effect it will have on your eventual outcomes.


As mentioned in the previous point, sometimes things don’t go according to plan. Even when they do, your personal priorities might change over time. That is why we suggest that you regularly review your goals, your progress and the path that you are currently following to reach these goals. Perhaps after reviewing your position, you will want to adjust your goals accordingly. Be careful not to simply procrastinate and delay achieving your goals, and don’t be shy to proactively adjust your goals and possibly readjust your spending to keep on track in order to achieve your goals. Review, readjust and remain focused!


If you are able to remain committed to achieving financial independence by following the steps above, the day should (sooner or later) arrive when you realise that you have reached your financial goal! It may happen sooner than you think or it may take a little longer. Either way, it’s the most incredible feeling when you do those calculations, then do them once again because you just can’t quite believe it’s true, and realise that you have actually achieved your goal!

No matter how long it takes you, by remaining in the frugal and saving frame of mind, you will have cultivated good spending habits. And there’s no reason for that to change now. Reaching financial independence usually means that you start spending less and not more. You will most likely realise that once you reach financial independence, you have more simplistic needs and fewer expensive overheads. You might also find that you need less distraction from reality as your new lifestyle is more relaxing and allows you to focus on what is most important to you on a daily basis.

Reaching financial independence allows you the option to self insure against most possible unexpected expenses. Having the freedom to spend doesn’t mean you should or will spend everything you have. It means that you’ve got enough surplus to sleep well at night knowing that your financial future is not at risk. If you can manage to continue to spend less (and possibly even earn more) than planned, then it is entirely possible to move swiftly from each goal to the next: financial security to financial independence and possibly even on to financial freedom one day.


Most people simply don't consider the option of reaching financial independence based on their earnings. Yet, the possibility of reaching financial independence has more to do with your spending than your earning. If you are motivated and prepared to make the necessary sacrifices along the way, then it can more than likely be within your reach.

Of course, how long it takes you to reach your goal will depend on just how much you are able to save. The truth is that it doesn't matter when you reach financial independence or how much you have when you reach this point. The important thing to understand is that it can be achieved if it is something that you truly want and that you are prepared to work hard and make ongoing short term sacrifices to reach this wonderful long term goal.

If you found this article useful, please share it with others! Let them know that it's not about how much you earn, but rather about how much you spend. Financial independence gives you wonderful freedom that can bring you much more happiness than being caught in an endless cycle of continuously spending more than you can afford. We are happy that we have chosen to make sacrifices today in order to worry less about tomorrow!






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