Financial independence is a shared aspiration for many couples. Here’s how you and your partner can work towards this important goal together.

Now more than ever, achieving financial security is vital. Over recent years, many individuals, especially women, have focused on attaining financial freedom. Just the other day, a friend shared her enthusiasm about fully paying off her mortgage. She was thrilled to be close to a point where just one month’s salary would allow her to eliminate that payment entirely.

“Can you believe it?” she exclaimed, “I plan to celebrate my 37th birthday by paying off my mortgage!”

I chuckled, noting that instead of a new car for her birthday, she was working towards a much bigger life milestone.

She’s not alone in this journey. The pandemic has shifted many people’s priorities, with some aiming to clear debts while others reevaluate their lifestyle choices.

My partner and I have embraced the goal of financial independence, or FI for short.

Understanding Financial Independence

Jessica, 34, who operates a financial advice blog, defines financial independence as “achieving a level of passive income that covers all your living expenses.”

To figure out how much you need to save for financial independence, she uses the safe withdrawal rate (SWR). This is the percentage you can withdraw from your investments yearly without depleting your principal too quickly. Jessica explains that many people target a withdrawal rate of either 3.5% or 4%, meaning they need to save 25 to 28.5 times their annual expenses to reach FI.

Determining Your Financial Independence Target

How can you find out how much money you need to feel financially independent? For instance, if your yearly expenses amount to $60,000, then you would need $1,500,000 invested to achieve that independence. If you aim for a more luxurious lifestyle, say $100,000 annually, you’d require $2,500,000. It’s a daunting figure, but remember that compounding interest significantly boosts your savings.

Intentional Steps Towards Financial Independence

Achieving financial independence starts with intentional actions—taking deliberate steps towards your goals. There are various paths to consider. “People typically pursue financial independence through two main avenues: stock market investments and creating passive income,” Jessica shares.

My spouse and I began by saving 6-10% of our income in our 401(k)s, but soon realized we needed to tighten our budgets to reach our goals. By our late 20s, we were maxing out our contributions at $19,500 each, supplemented by company matches. Since the contributions are deducted from our paychecks, we don’t even notice them, which helps us avoid the temptation to spend.

Now, at age 33, we save over $48,000 each year. While we’re still 10-15 years from achieving financial independence, every bit contributes to our progress.

To understand your financial status better, consider using a calculator available on various financial websites to estimate when you might meet your FI target.

Making Progress

If your regular job doesn’t provide enough income to reach financial independence quickly, consider side jobs or freelancing. I’ve explored freelancing and decided to return to it this year. Jessica mentions the great advantage of side hustles is that they can help people find ways to monetize their passions. Although side gigs aren't the sole path to FI, they can significantly contribute to your financial growth. “A side hustle can sometimes help you transition to a more liberated lifestyle sooner,” she explains.

Enjoy the Journey

Don’t let the pursuit of savings consume you entirely; otherwise, you risk missing out on valuable experiences. A core principle of financial independence is recognizing the value of your time. Jessica advises enjoying the journey while building savings that allow you to live with intention.

This mindset enables you to envision your ideal life. What would your daily routine include? Would you take daily walks or dedicate time to hobbies such as interior design? Consider how you can start integrating these elements into your life now.

Jessica refers to this as “lifestyle design,” an essential aspect of what the FI community calls “SlowFi.” She describes SlowFi as “a mindset focused on using the financial freedom gained during your journey to craft your perfect life.”

Ultimately, set your sights on financial freedom while savoring each step along the way!

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