I am not telling you what you should do. This is advice I am giving to me for myself. Things I would tell my younger self on how to reach FI.
AMFM’s Basic Guide to Achieve Financial Independence
- Know how much money you make and spend every month/year and where it is going. Decide if that is actually where you want your money going and cut the things that you don’t want/need.
- The rough target for total investments in order to retire is 25 times your annual spending needs.
- Have an emergency fund (3-6 months ish) in a high yield savings account.
- Learn and appreciate the power of compound interest. Time in the market beats trying to time the market.
- Eliminate high interest debt and always pay off credit cards monthly.
- Save and invest as much as possible. Invest in low cost total market index funds (such as VTSAX at Vanguard or FSKAX at Fidelity). You can diversify at some point, but this is a good starting point. The north star to shoot for is the goal to have 25 times your anticipated annual expenses during retirement in investments.
- Buy and hold for the long term. The market will drop 20% at some point, but it will recover. Do not panic, do not sell, continue buying when it drops.
- Always take the company match for 401k and HSA reward programs.
- Minimize the big 3 expense categories (housing, transportation, food).
Other things that can help:
- Double check current investments to make sure they have low expense ratios
- Eliminate unnecessary recurring expenses and explore cheaper options (switching to Mint Mobile, shopping car/home insurance)
- Generate additional revenue sources (rental, OnlyFans, dog walking, etc)
- Avoid lifestyle creep
Yes, these images are AI generated by Gemini. I don’t know why it came up with this slogan, “Chosen Path, Achieved Life” but it’s growing on me with its ridiculousness with some elements of truth. In the Chosen Path, she is wearing a lanyard with her name and the title of FI Warrior on it. I love the old-timey key in the right picture and really that does look like she Achieved Life.
Yes, if you follow these tips, you too could some day ‘Achieve Life.’