As late starters, we long for a strategy or any tips that will catapult us into financial independence territory in a hurry.
After all, we are already so behind, with traditional retirement looming ahead, let alone daring to dream about retiring early.
We struggle to understand why we are not further along the path to financial independence despite working hard over many years.
The truth is, without practising the most important money habit of all – spend less than you earn – we will never get far ahead.
If I can summarise all the teachings on how to achieve financial independence, it is this – increase the difference between your income and expenses and invest this gap wisely – appropriated from Paula Pant of Afford Anything podcast.
The wider this gap is between income and expenses, the more options we have. We can use this gap to save for an emergency fund, eliminate debt, invest in index funds, purchase rental properties, start a side hustle etc – anything to move us further along our path to FI.
Why is it so difficult for us to live below our means? I know we all struggle with this, based on the many stories fellow late starters have shared in the Late Starter to FI series.
I don’t think it is entirely our fault.
I think I need to have a chat with you about affiliates.
Up until now, it’s always been in the ‘too hard’ basket…
Anytime, Frogdancer!
I did Michelle Schroeder-Gardner’s course – Making Sense of Affiliate Marketing – my link is in my Recommendations and Resources page – or here it is – https://makingsenseofaffiliatemarketing.com/?affcode=57702_ijzszdrf
I highly recommend it 🙂
Let me know if you are interested – I may have an upcoming discount code
This is such a key skill for reaching financial independence. It’s simple and effective, but not easy! As you’ve pointed out, all of us have reasons to spend more. It’s not always easy to resist the temptations!
Although I’m a natural saver, your post has inspired me to take another look at our expenses to see where we can save even more. (I’m a bit weird and actually find this task to be enjoyable!)
“This is such a key skill for reaching financial independence.” – isn’t it, just? I am so much better at it once I embraced mindful spending and just delaying for a few days is usually enough to stop the purchase. Unless it is something that I really, really want, of course 🙂
Most people who hit the $1M mark through saving and investing learn this early. It is really the only way to generate enough cash to invest.
Simple but not easy 🙂 The challenge later is to keep increasing that gap and to invest it
I appreciate how you simplify it down to “increase the difference between your income and expenses and invest this gap wisely” but yet, then go into why that is so hard. Thanks for sharing.
What I will do to help me be frugal and always stay in the mindset of hustling is to keep our chequing’s bank account at a low value. This forces me to always think about when money is coming in, and when money is leaving our account. I think by continuing to keep our account with a low balance it helps me the most to stay frugal.
By continuing to keep the chequing account low it also means that I continue to transfer money into my savings. What a wonderful reward!
Hi Financial Fred, I do the same too. I have many sinking funds for various things I’m saving for eg investment, travel, house maintenance, future car etc. Money is deducted weekly from my pay and diverted to all these accounts, leaving my everyday account with a low balance. Totally agree that it is a good system – limit our temptation to spend 🙂