What is Financial Independence?
Let's Go Back a Step
I messed up. I jumped immediately into calculating FI numbers and talking about studies and realized I've been talking about financial independence like everyone knows exactly what it means. Let me fix that. But first, I apologize in advance because I’ll probably do it again. I mentioned this is my first time writing anything for public consumption and it’s also the first time writing long-form content since college! In other words, I have no journalism experience, no editor, and no support staff. It’s just me and a keyboard, but I promise I’ll get the hang of this!
Financial Independence (FI) means having enough money invested that you could live without ever working again. It's the point where work becomes optional, not mandatory. When you cross that magic threshold, you own your time again and can choose to spend it however you like.
Notice I didn't say "having a lot of money in the bank." I said having enough money invested. There's a huge difference, and we'll talk about why in future posts.
What Financial Independence Actually Looks Like
Financial independence doesn't mean you stop working (though you can). It means you work because you want to, not because you have to pay rent. (For example, I could be doing anything, but I’m writing this because I feel like it.)
Some financially independent people:
Keep their same job but feel completely different about it (no more Sunday scaries!)
Switch to lower-paying work they actually enjoy (teaching, nonprofits, starting a business)
Retire completely and pursue hobbies, travel, or volunteer work
Work part-time or seasonally
Take extended breaks between jobs without financial stress
The key is choice. When you're financially independent, you make decisions based on what you want to do, not what you need to do to survive.
A Very Brief History of the FIRE Movement
The modern Financial Independence, Retire Early (FIRE) movement started gaining momentum in the 1990s, but the ideas are much older. (Cavemen probably fantasized about how nice it would be to have an endless supply of food so they could draw pictures on the walls all day.)
The OG: Vicki Robin and Joe Dominguez wrote "Your Money or Your Life" in 1992, which became the foundation for everything that followed. Their core insight: money represents your life energy (the time you traded to earn it), so spend it accordingly.
The Blogger Era: In the 2000s and 2010s, bloggers like Mr. Money Mustache and Early Retirement Extreme started sharing their stories online. These weren't financial advisors or trust fund kids. They were regular people who figured out how to retire in their 30s and 40s. (Special note: I learned about FIRE from Mr. Money Mustache in 2014.)
The Mainstream Moment: Around 2017-2018, FIRE hit mainstream media. Suddenly everyone was talking about 25-year-olds retiring with a million dollars. The media coverage was... let's say "mixed in quality."
Today: The movement has evolved beyond just early retirement. Many people pursue FI for the security and options it provides, whether they retire early or not. In fact, I don’t love the word retirement at all because I think it’s misleading. Also, the world has changed substantially since 2010. If there was nothing new to say, I would just direct you to read old content from decades ago and save myself the trouble of writing!
Why the Movement Resonates (Especially Now)
Think about the standard American financial path:
Work for 40+ years
Save a little in a 401k (if you're lucky enough to have one)
Hope Social Security still exists
Maybe retire at 65 with enough money to survive
Cross your fingers that your health and the economy cooperate
Does this sound like a great plan to you? No? That’s because it’s completely insane!
Meanwhile, we've watched:
Pensions mostly disappear
Healthcare costs skyrocket
College tuition (and student loan debt) explode
Housing prices outpace wages
Companies lay off workers regardless of loyalty or performance
The traditional "work until 65 and hope for the best" model feels increasingly risky. (That’s because it is!) Financial independence offers an alternative. Do you want to stress about money for the rest of your life or try something else?
The Real Benefits of Financial Independence
Security: When you have enough money invested to cover your expenses, you're much less vulnerable to job loss, economic downturns, or unexpected expenses. How is that for peace of mind?
Better Relationships: Money fights are one of the leading causes of divorce. When you're not stressed about money, your relationships improve.
Health: Financial stress literally makes you sick. Studies show people with financial security have lower rates of heart disease, depression, and other stress-related illnesses. (No, I didn’t make this up.)
Career Freedom: You can take risks, speak up at work, or pursue meaningful but lower-paying work when you're not desperate for every paycheck.
Time: This is the big one. You get to decide how to spend your days instead of having that decision made for you by financial necessity.
Sleep: Ask anyone who's achieved FI. They'll tell you they sleep better at night.
What Financial Independence Doesn't Mean
Let me clear up some misconceptions:
It doesn't mean you need to be extreme: You don't have to live on rice and beans, bike everywhere, or make your own soap. Some people do (and enjoy it!), but it's not required.
It doesn't mean you can't spend money: You can buy things you value. You just become more intentional about what you actually value versus what you think you should want.
It doesn't mean you have to retire early: Many people pursue FI for the security and freedom it provides, not necessarily to stop working.
It doesn't require a huge income: While a higher income certainly helps, people have achieved FI on modest salaries by focusing on the fundamentals.
It's not about depriving yourself: It's about aligning your spending with your actual values instead of spending mindlessly.
The Three Levers of Financial Independence
There are only three ways to achieve financial independence faster:
Earn more money
Spend less money
Invest the difference wisely
That's it. Every strategy, tip, or "hack" falls into one of these three categories. We'll dive deep into all three in future posts.
Different Flavors of FIRE
The FIRE community has developed some terminology you might see. There is no official handbook for these groupings and inflation means the numbers will change over time, but it can be helpful to understand the different options.
Lean FIRE: Achieving FI with lower expenses (maybe less than $40,000 per year)
Chubby FIRE: Achieving FI with higher expenses (perhaps $100,000 per year)
Fat FIRE: Achieving FI with lofty expenses (think $150,000+ per year)
Barista FIRE: Having enough invested to cover most expenses, supplemented by part-time work
Coast FIRE: Having enough invested that compound growth will get you to traditional retirement age without additional savings (e.g. you can spend 100% of your paycheck from now on and still retire on-time)
Don't get too hung up on labels. The goal is financial freedom, not fitting into a category. The exact numbers aren’t important because they change with inflation and personal circumstances The broader point is that not all plans are the same! Some people want to quit working as soon as possible and are okay living in a tent. Others never plan to retire, but they would like to make sure they have enough to afford a fully-stocked bunker to prepare for the apocalypse. It’s their life, not mine!
"But Max, This Sounds Too Good to Be True"
I get the skepticism. When I first heard about FIRE, I thought it was either:
Only for people making tech salaries
Requiring extreme lifestyle sacrifices
Some kind of scam
Turns out, I was wrong on all counts.
Is it easy? No. It requires discipline, planning, and patience. Is it complicated? Also no. The concepts are simple (though not always easy to execute). Is it possible for regular people? Absolutely.
The math works. The principles are sound. Thousands of people have done it and documented their journeys online.
Let me reinforce that! This is NOT easy! If it was easy, everyone would do it. This is more like running a marathon.
What's Next?
Now that you understand what financial independence actually means, you're ready to start building your plan. In other posts, we'll cover:
The surprising math behind early retirement
How to increase your income
Smart ways to reduce expenses without feeling deprived
Investment basics that actually work
Your homework for this week: Think about what financial independence would mean to you personally. What would you do if work became optional? What problems in your life would FI solve? What wouldn't it solve?
Understanding your "why" is just as important as learning the "how."
Here's to taking the first step toward freedom,
Max
Recommended Reading: If this post got you curious, check out "Your Money or Your Life" by Vicki Robin. It's the book that started it all, and it's still the best introduction to these concepts.