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: May 27, 2023

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, but 100 times better as it allows you to gain control of your investment and retirement accounts, whereas 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. I hope that next year I would become debt free and I can’t wait for it! I already have a budget and I’m trying hard to stick on it.

  2. I’m still working on #3 and #4. I reckon I’ve got the others pretty much covered – especially the “Still Have Fun” bit. 🙂

    Ramping up the income side of the equation is sometimes your best option to speed up the process. A sacrifice of time and energy for sure, but a worthy one!


    1. Yes, definitely a worthy one.

  3. Passive income is what I am after and I am still considering at the moment how I can achieve financial independence. What I am doing now to reach it are first to stay out of debt and second to save as much as I can.

  4. I’m pretty close and when my house is paid off I’ll be even closer! It can happen if you keep your eye on the big prize at the end!

  5. Luke Fitzgerald @ FinanciallyFitz

    Great tips! For the vast majority, the foundation of financial independence is reducing debt (#2). The quicker you’re debt free the quicker you can get to financial independence. IMO, debt and financial independence cannot coexist.

    The ace in the hole = Earn Passive Income. Something I hope to start dabbling in! Thanks for the list!

  6. Jeff

    i have achieved independence and it’s a great feeling. For those who are young your greatest asset is time. You may not be able to save a lot but save what you can. Besides maxing out your 401K make sure you have non-qualified savings as well. That creates a lot of flexibility for you in generating passive income. Stick to it, you can do it.

  7. Great tips, Michelle! We are definitely working toward creating passive income streams and being able to retire early. Like you, I don’t think I’ll ever completely stop working though. I enjoy it too much and like that it keeps my mind active!

    Our goals now are small – pay off our car loan, purchase a house, pay it off as early as possible and buy rental properties. Unfortunately, we’re totally in the waiting phase as we can’t get a loan until we have two years proven income (since we’re both self-employed). Once we hit that two year mark we have big plans for our own house and rental properties!

    1. Yes, I always like a challenge so I always see myself doing something productive!

  8. Yes, yes, yes, yes! The whole point of me blogging and writing more is to earn more income streams so that I can 1) pay down my law school debt, and 2) build wealth. It’s a process, and I think you lay it out very nicely here. Again, compartmentalizing is helpful to see the bigger picture, which I think helps keep things focused and simple. Great post!

  9. Jef

    Completely confident you’ll get there! 🙂

    For me achieving financial independence is something that I will reach however really starting to come around to it being a process rather than an event.. If I were to focus on this and need keep in touch with friends, family, health, travel etc then it’d be hollow when I do reach it..

    Having said that definitely a big one is focusing on budgeting however not be overly concerned.. Spend money when you go out without guilt but be aware of any purchases you make might make it harder to reach that goal.. Investing is another way to do this and calculating what sort of income you’d like

    You’re tips are great too!

    Keep up the awesome work 🙂

  10. Financial independence is a goal of mine as well. Paying off debt is my primary goal at the moment since I don’t want debt payments to control my finances. Anyone who wants to be financially independent should also work on investing, diversifying income and increasing their savings rate.

    1. Good luck! I’m sure you will reach it.

  11. One tip is to just make reaching financial independence a game. The other is to circle your calendar, and write out your goals of WHEN you plan to be financially independent. You’ll surprise yourself at how much farther you’ll go if you do!

    Financial Independence is worth the hard work. I don’t know if anybody has ever regretted giving it everything they’ve got to be free.

    1. Yes, making it a game and goal can really help!

  12. I’m ABSOLUTELY shooting for early retirement. I don’t want to stop working one bit – I just LOVE the idea of not having to work if I don’t want to.


  13. Good points! I notice a lot of people seem to get really hung up on the Make More Money aspect. They falsely assume that means “working more”. Thankfully things like investing and blogging have added thousands of extra dollars to my income every year. It pays to make a hobby out of things that can end up making you richer along the way.

  14. Kayla @ Shoeaholicnomore

    I guess I define FI a little differently than you do. I consider FI to be when I don’t have any payments to make anymore and only need a small amount of money to live on every month. I want to independent from HAVING to work and that way I can work only if I choose or want. The steps you define are mostly all a part of my plan too. 🙂

    1. I’ve never heard of that definition for it but sounds like a good one 🙂

  15. Good luck! I’m sure you can do it.

  16. Thanks Kalie! I agree with you, that’s why I included #6 🙂

  17. Kristi

    My husband and I are actively trying to pay down our debts and cut our expenses so that we can stop living paycheck to paycheck. Hopefully our efforts will pay off and allow us to then put that money we were spending on debt into savings and retirement accounts.

    1. Good luck Kristi! I’m sure you will do well with your goal.

  18. I’m shooting to be able to retire early or at least be financially independent so that I can work on my own terms. Right now my main focus is reducing my debt so that I’ll have more flexibility in where that money goes. I’d rather have that money going towards my savings or something I really want to spend it on! It’s a small step on the journey but I think it’s an important one for me.

  19. Stockbeard

    I’m with you on the need for passive income. I do have some affiliate marketing going on on my online business, but it’s on a news website and revenue would tank if I stopped massaging it. I like the extra revenue, but the additional work is starting to wear me out

    1. Yes, passive income would be nice!

  20. Foodlove Girl

    My number one rule for cutting costs in your everyday life would be “Watch That Grocery Bill!” – it’s one of the few household bills you can control and over the course of a year it can really add up. I”m still working on getting mine to where I want it to be. Great post, Michelle!

  21. I eventually plan on becoming financially independent. I know it will take some time. In the meanwhile I will continue to knock this debt down and learn more about blogging and investing.

    1. I’m sure you’ll get there!

  22. Dane Hinson

    So important to become financial independent using all of these methods. On the expense side and the income side of the equation there is always more that can be done. My biggest advice for anyone aiming for financial independence is to save early and often. There is nothing that can replace the profound effect of compound returns.

  23. steve

    wait… You’re giving advice about being financially independent… But you’re not??

    1. This post is about my plan to be financially independent and hopefully helping others to do the same. Sorry, I’m not seeing what’s wrong about that?

  24. Kate @ Cashville Skyline

    I am definitely working toward financial independence. I’m continually looking for ways to cut back on expenses, so I can live on less. Right now, I’m focused on generating multiple streams of revenue so I can save and invest more of my money.

    1. Sounds like a good plan Kate!

  25. Tiffany Melvin

    Great post. I am working on getting our of debt right now and it is hard to stay so intense on our goal. We are currently trying to take a break for a little while so that we don’t lose motivation. I would advise others to do the same, weather it’s buying a shirt or something small to reward yourself every so often.

    1. Jesse Gernigin

      Rememer Tiffany you don’t have to get out of debt all at once (but my gosh wouldn’t it be nice). It’s about taking the journey real slow and easy. Automate and adapt, rinse, wash, repeat!

  26. Kim

    I think the key is multiple streams and passive income. Unless you make a really high salary or can live on really low expenses, you won’t get there by saving alone. I get really hung up on trying to build income that I sometimes forget to enjoy the day. I think it will always be a work in progress.

    1. Yes, multiple streams and passive income are both very important.

  27. Thanks for sharing! But it is also important to just take one step at a time. And you’re right, “when you put your mind to it and you never know what may happen.” One day, we will all be surprised with what we have achieved!

  28. Kelby

    Great post!!! I’ve already started on a lot of the tips that you mentioned. True financial independence seems so far down the road but it’s good to know I’m headed down the right track!

  29. 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).

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

  31. Yes, life still needs to be enjoyed as well!

  32. Mark@BareBudgetGuy

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

    1. I often have to do the same 🙂

  33. 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!

  34. 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.

  35. 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!

  36. 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. Thanks for sharing. Starting young is so great!

  37. 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.