Reaching Financial Independence IS Possible And Here’s How You Can Do It

One of my top goals in life is to reach financial independence. I technically want to be financially independent as well as an early retiree, but to make this post simple we will mainly talk about becoming financially independent. Financial independence is when you earn enough income passively (such as through rental real estate or dividend income) to cover…

Michelle Schroeder-Gardner

Last Updated: January 21, 2025

Disclosure: This post may contain affiliate links, meaning if you decide to make a purchase via my links, I may earn a commission at no additional cost to you. See my disclosure for more info.

Financial Independence - How To Become Financially Independent (3)One of my top goals in life is to reach financial independence. I technically want to be financially independent as well as an early retiree, but to make this post simple we will mainly talk about becoming financially independent.

Financial independence is when you earn enough income passively (such as through rental real estate or dividend income) to cover your expenses.

This way you can leave a job you dislike and pursue other passions in life such as spending more time with family, traveling, seeking a job you love, and more.

I want to reach financial independence so that my investments are working for me and earning me money. This way my future costs are covered and I’m still bringing in an income in case anything happens in the future.

Now, don’t get me wrong. I absolutely love life and my online business. However, I would rather be safe because you never know what may happen later in life. As you know, I’m a worrier and I would much rather be safe than sorry. Something medically may occur, the industry may change, I may change, and so on.

You just never know!

Even when/if I do become financially independent, I don’t see myself doing something too different from what I currently do now. I would mainly just like to have the option in case something does change in the future.

It’s all about freedom and flexibility.

This is why others may want to reach financial independence as well. Reaching financial independence can mean that you have the option to do what you want to do and not feel as bound by your financial situation. You can therefore feel free to seek whatever it is in life that you want to seek out.

Below are my six tips on how to become financially independent.

1. Cut your expenses.

Cutting your expenses applies to becoming financially independent in an important way.

By cutting your expenses, you may be able to reach financial independence sooner because you then need to earn less money each month to cover your expenses. If you are able to cut your expenses by $1,000 each month, that’s $1,000 less that you need to earn. It helps put you that much closer to reaching financial independence.

Ways you can control and cut your spending include:

  • Stop keeping up with the Joneses. Buy only items that you actually need, not just because someone else has them.
  • Create a budget. By creating a budget, you can see where you have spending problems, where you can cut back, and more.
  • Spend less money than you earn. Too many people live paycheck to paycheck. This can lead to credit card debt, high interest rate loans, and more.
  • Challenge your expenses. You may want to think about cutting out useless memberships, expensive things such as cell phones, and more. If you are looking for a cheap cell phone service, check out Republic Wireless. Republic Wireless has monthly cell phone plans as low as $5 per month. Read Saving Over $2,000 A Year With Republic Wireless Review.

Related article: How To Live On One Income

2. Reduce your debt.

Depending who you are talking to, someone may say they have good debt and bad debt, and another may say that any debt is bad. Whatever your case may be, you will want to eliminate any debt that is controlling your life in order to reach financial independence.

If your loan that has a 0% interest rate is controlling your life, get rid of it.

If your loan that has a 25% interest rate is controlling your life, get rid of it.

Reducing your debt will lower your expenses each month and will make it easier for you to have enough income and savings in order to cover your expenses each month. This goes along with #1 above, the less expenses you have, the easier it will be to make enough income to cover your living costs.

3. Make more money.

Working towards making more money is helpful when trying to reach financial independence because you can then have more money to put towards investments, and then those investments can make you money (discussed further in #4 below).

Different people like to become financially independent in different ways. Some increase their income by working side hustles, seeking promotions throughout their career, and more, all while keeping a job that they love. Others are fine with working a job they hate in order to increase their income quickly so that they can save more of their money.

I’m lucky in that I earn a good income doing what I’m doing. However, I will be honest and say that I could never work a job I absolutely hated for an extended period of time in order to retire or to reach financial independence earlier. I’d rather live life to the fullest because you never know what may happen in your life.

Related article: 75+ Ways To Make Extra Money

4. Earn passive income.

In order to have your income continually cover your expenses month after month and year after year after you reach financial independence, you will need to earn passive income.

There are many ways to earn passive income and I plan on taking part in many of the different ways. My main form of passive income right now is affiliate marketing but it’s not too passive due to the fact that if I just left my blog alone, my affiliate income from it would most likely take a nosedive. This is why I want other forms of passive income, as I would like to be more diversified with it.

For passive income you can invest in dividend paying stocks, take part in rental real estate, create a product that produces royalties and more.

Related article: The Beginner’s Guide To Earning Passive Income

5. Save your money.

Doing all of the above doesn’t help much if you don’t actually save any of it. You will want to save your money in different ways such as by opening a 401(k) plan, a SEP plan, investment accounts, investing in real estate, and so on. You will have to do your research and see what applies for your specific situation.

Below are some articles I found on other websites that may help you decide what accounts and investments you should have.

I highly recommend you check out Personal Capital (a free service) if you are interested in gaining control of your financial situation. Personal Capital is very similar to Mint.com, but 100 times better as it allows you to gain control of your investment and retirement accounts, whereas Mint.com does not. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation, your cash flow, detailed graphs, and more. You can connect accounts such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more, and it is FREE.

6. Still have fun.

Like I’ve been saying a lot lately, making sure you still enjoy your life is very important. You can still live a great life on a budget, so don’t think you can’t.

You still want to live your life to the fullest, but you also want to save enough money so that you can reach financial independence. It can be a balancing act at times but it can be done.

Just put your mind to it and you never know what may happen.

Are you trying to reach financial independence or early retirement? Why or why not? What advice do you have for someone who is looking for tips on how to become financially independent?


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Michelle Schroeder-Gardner

Author: Michelle Schroeder-Gardner

Hey! I’m Michelle Schroeder-Gardner and I am the founder of Making Sense of Cents. I’m passionate about all things personal finance, side hustles, making extra money, and online businesses. I have been featured in major publications such as Forbes, CNBC, Time, and Business Insider. Learn more here.

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  1. Jesse Gernigin

    Great post! I love the FI movement but I feel they leave people feeling that it is all or nothing. I think true FI is achieved through slow adaptions to the things that make it work. First you budget. Next you pay down bill and build an emergency fund. Then you automate investments and then you take chances on building passive income. For me PI is real estate that I only buy if I can afford it outright (which means foreclosures and work. But i’m a big espouser in the ‘hard work up front’ philosophy). I also, since I own a coin and gold shop, buy silver and gold (but unless you are a serious student of it I would suggest not following this suit).

    1. Michelle Schroeder-Gardner

      Thanks Jesse!

  2. Mrs. Frugalwoods

    Keeping my focus on our end goal of financial independence really helps me to stay on track. I’ve found that by thinking of our frugality as a means towards this liberating end, it’s not a challenge to save at the rate that we do. It’s all about what we want out of life in the long term. That’s awesome that you’ve been so successful in charting your path!

    1. Michelle Schroeder-Gardner

      Yes, long-term thinking can really help, especially when it comes to financial independence.

  3. Michelle Schroeder-Gardner

    Yes, life still needs to be enjoyed as well!

  4. Mark@BareBudgetGuy

    Still having fun is so key! I have to consciously remember that.

    1. Michelle Schroeder-Gardner

      I often have to do the same 🙂

  5. Taylor

    I love this! My main goal last year was to make enough income to be self employed, but now I need to start pushing to reach bigger goals like financial independence. Love reading your blog and seeing what you’re doing to achieve that!

  6. Crystal John

    Great post, I must admit. All the points are awesome !. Becoming financial independence is a though job if you are in great debt but on the other hand its learning activity.

  7. Lisa

    Financial independence is definitely on my bucket list! Not that I dislike my job or anything, I just want the freedom to do what I want with my own time! Right now, I’m still working on decreasing my expenses as well as savings up for the future. In a couple of years, I want to be able to invest in more passive sources of income. Great guide!

  8. ellen

    We did all of the above starting in our 20’s back in the eighties. Paid off our house in 5 years, re-mortgaged and invested that money to double every 7 years. Owned 2 rental properties, sold one for double in the boom in 1986, kept the other for 20 years. Lived on one income, always had a budget but still managed to travel, enjoy life, our children had everything they needed without being wasteful. At 53 my husband retired, we sold the rental and our home, built an eco house. We get a passive income of $400 per month from 5kw solar panels selling electricity to the Canadian govt (a contract for 20 years). That $400 easily covers our energy expenses and most of our taxes allowing us to live very well on his pension. It can be done! Start YOUNG!!!!

    1. Michelle Schroeder-Gardner

      Thanks for sharing. Starting young is so great!

  9. Misty Farmer

    Financial independence in our 20s, 30s and 40s absolutely can be achieved! It just takes a PLAN and some sacrificing early to set ourselves up for a lot more options in the future.