Financial Independence

Six Steps to Reach Financial Independence.

Financial independence and early retirement might seem like an impossible goal, but it’s not an all or nothing deal. Along the way there are six layers of financial independence, each one giving you a bigger and better taste of that freedom that you’re after. These are the steps to reach financial independence.

Steps to reach financial independence

You’re most likely reading this because you want to quit your job and retire early. If you explore that desire a bit deeper I think you’ll realize what you’re really looking for is the freedom to do whatever you want with you time. To chase your passions.

To do that you need to reach financial independence, and that means that you need to save up twenty five times your annual expenses, invest that money in the stock market, then live off of 4% of your investment returns.

The Steps to Reach Financial Independence

Each one of these steps not only gets you closer to your ultimate goal of financial freedom, but it also gives you a bigger and better taste of that freedom that you’re chasing.


When a person takes the time to understand exactly how much money they’ve got coming in each month and exactly where all of that money is going, they’ve taken the very first step on their financial journey.

Once you’ve got a clear understanding of that you can begin making improvements.  This is not only the smart thing to do, but it’s extremely motivating to KNOW that you are making finical progress – and it feels great!

This feeling is the first small taste of what financial independence is like.  For most, that taste is so delicious that it’s full steam ahead onto the next step.


As great as it feels to get your finances in order it can be equally devastating to face an expense that you can’t cover without going into debt. That’s where the emergency fund comes into play.

Think of an emergency fund as insurance to protect your budget.  According to recent articles, nearly one half of all Americans can’t cover a $400 emergency without going into debt.

If you’ve taken the time to get your spending under control and created a budget, don’t let a $400 surprise sink your ship.  Start building your emergency fund by setting a goal to save $400.

Once you’ve got $400 saved you’ll be able to cover those small unexpected expenses without going back into debt.

After you’ve saved $400, keep saving till you’ve got a $1,000 stash.  Do whatever you can do to save that money as soon as possible:

  • Take on more hours a work if possible
  • Get a second job or start a side hustle
  • Sell unneeded possessions

Knowing that you are able to take a financial punch and keep fighting is empowering, and while it kinda sucks to spend some money from that fund, knowing that you’ve got it under control will motivate you to roll-up your sleeves and refill that fund ASAP.


F-You money is just what it sounds like. It’s allows you to operate from a position of strength for a short period of time without worrying about the financial implications.  The obvious example is that you are able to take your current job and shove it.

Maybe you were asked to do something that ethically or morally you don’t agree with.  Or maybe you’ve just had it with your boss. The reasons don’t matter, what does matter is that you’ve got the F-You money you need and are able to take a stand.

The amount of money in everyone’s F-You fund is different and largely dependent upon your monthly expenses, but having this cash cushion means that you are in the financial position that allows you to take a stand.

Whatever purpose your F-You money serves, it gives you options.  For many, it’s at this point in their journey and life when options, because of money, are available to them – and it feels damn good!  And if you think that is a good feeling, imagine how nice it must be to have enough cash to call you own shots 100% of the time.


I’m not really sure what to call this level (leave your ideas in the comment section below if you’ve got them, please n’ thanks), but the idea here is that you’ve got enough cash and assets built up to sustain yourself for one full year without having any income. It’s kind of like F-You money on steroids.

This is a luxury that few people get to enjoy and it takes hard work, patience, and discipline to get to this stage, but once you do having the option to step away from work for one year is like taking a mini-retirement.

Whether you take this one year off intentionally, or if it’s forced upon you, being able to live a financially independent lifestyle for a full year is like FIRE on training wheels.


The idea of part-time financial independence is that you’re able to escape full-time work for the rest of your life. While you’re not completely financially independent at this stage, your debt and financial portfolio are such that you could get by just fine, permanently if you’d like, on the income generated from a part time job.

For many people, this stage is their ultimate goal because they don’t intend to retire early (or at all).  If you happen to have a job or a side hustle that provides enough income to subsidize the gap between your expenses and your investment income, then you are free to pursue that other gig and live an intentional lifestyle, doing what you love and are passionate about.

Or maybe you just want to pick up a job your passionate about, but doesn’t pay well.  For example, maybe you want to be a part-time park ranger at a national park.  If you’re at this stage of your journey, you’re free to do so without worrying about the financial implications.


Congratulations, you’ve made it!

You’ve worked hard for years, been smart and intentional with your spending, have invested a large percentage of your income, and have probably ran into a bit of luck along the way.  But you’ve reached the point where your expenses can be fully covered by money generated from your assets. At this point, work is  optional and you’re officially FIRE.

It must feel amazing!

Achieving FIRE might seem like an impossible goal, but it's not an all or nothing deal. These are the steps to reach #FinancialIndependence and #RetireEarly. #FI #TheFIREMovement


Going from financial disarray to financial independence can seem daunting when you first begin this journey.  And guess what, it can be.  But it’s not impossible.  It can be done pretty quickly actually, but only if you get started.

If you’ve been motivated by reading this, then DO SOMETHING ABOUT IT.  Fix your budget.  Beef up your emergency fund.  Get a second job or start a side hustle to earn more money.  It might suck right now, but it beats the hell out of the alternative.

By Ty Roberts

Ty Roberts is the founder of Camp FIRE Finance, and a husband and father of four living in the Seattle area. He's a fan of the 4% rule, 80s movies and music, dad jokes and cast iron cooking.