FI (short for Financial Independence) is a framework that allows individuals to achieve financial freedoms in multiple steps rather than just in retirement.

Traditionally, most people view working and retiring as a two step process:

  1. Start earning and saving money
  2. Retire

What happens between steps 1 and 2 is kind of cloudy, right? This sounds like getting a complex lego kit with instructions that just say ‘Good Luck!‘.

Let’s break up step 1 using some common suggestions for how to save money and also call out that you have to reach a certain point before you can retire:

  1. Start earning and saving money
  2. Contribute to retirement accounts (401k, IRA, etc.)
  3. Build up a large enough retirement portfolio to live off of
  4. Retire

Okay, okay, looking better.

But what about keeping yourself financially secure along the way? Retirement is the endgame, but let’s not be irresponsible along the way. I mean, life happens right? Let’s add some more for that:

  1. Start earning and saving money
  2. Build emergency fund
  3. Pay down debt
  4. Contribute to retirement accounts (401k, IRA, etc.)
  5. Build up a large enough retirement portfolio to live off of
  6. Retire

Great, we’re feeling a lot better knowing we’re good for emergencies in the near future and we’re still working towards retirement.

In addition to preparing for emergencies, most of us need to continuously increase the amount we are able to save or even get to the point where we can save. Let’s add that in:

  1. Start earning and saving money
  2. Build emergency fund
  3. Pay down debt
  4. Improve cashflow (increase income and/or decrease spending)
  5. Contribute to retirement accounts (401k, IRA, etc.)
  6. Build up a large enough retirement portfolio to live off of
  7. Retire

If you follow those steps, chances are you’re probably going to have a good retirement.

There’s just one, ginormous, gaping problem.

Breaking huge, seemingly unmanageable problems into smaller solvable problems. We’ve down that for traditional retirement. But what if I want options along the way as my life and goals change to retire, semi-retire, take a break, etc.?

That’s where FI comes in.


FI adds more goal posts in your journey so that you can enjoy financial stability in your many stages of life.

Let’s change the end goal posts before we start adding new ones. Retiring in the traditional sense implies age. Let’s remove that so we don’t assume when you can or want to retire. Let’s change those last two steps:

  • Build up a large enough retirement portfolio to live off of Build up a large enough portfolio that is accessible when it will be needed
  • Retire Stop working

While seemingly small changes, it’s extremely important to call out that the portfolio has to be accessible when it’s needed, whether that be before or after retirement age. With the newly defined end goals, there’s now a few ways to think about working towards them and what we can achieve when.

First off, we don’t have to wait until we have a large enough portfolio to stop working. Don’t think of ‘stop working’ as needing to be the endgame (although it can be if that’s what your goal is – remember, FI is about options, not required steps). Here are some goals that can be hit before fully retiring:

  1. Have just enough saved up in retirement accounts where you could stop contributing, let it grow organically, and either work less or spend more until then.
  2. Have enough money saved up in non-retirement accounts where you can weather long periods of time without working (either to search for the next thing, spend more time at home, travel the world, etc.).

The great thing about either of these steps, if they fit the lifestyle you want, is that they can provide quite a lot of enjoyment in the near future rather than waiting until later in life.

In addition to having new potential goal posts before reaching the end, there are also multiple options at the end as well:

  1. Build up a large enough portfolio that provides enough non-retirement funds to live until the traditional retirement age after which you can switch to retirement account funds.
  2. Focus heavily on lowering the amount of money needed to live so that a relatively small portfolio allows retirement earlier than normal.
  3. Build up a huge portfolio so large that you don’t need to think about a budget (AKA become rich)

Now. The most important thing when considering all of these possibilities: they are just that. options. Take or leave whatever strikes your fancy. Whatever you decide, learn about the various ways to get FI and mindfully work towards whatever you want.


If you fancy FI, check out these other pages: