Jeez, how hard is it to achieve financial freedom, and how long does it take?

Good questions. To answer them, though, we need first to discuss what financial freedom really is and what it means to achieve it.

A critical component of personal freedom is financial freedom: having enough financial assets to generate income that will cover your living expenses without the need for any kind of employment (except for personal pleasure, fulfillment, or altruism). The individual components of financial freedom are pretty straightforward – there are only two:

  1. Living expenses that are manageable and reasonable (it’s extremely difficult to achieve financial freedom if you insist on consuming at a level beyond your means, whether working or living off the income generated by your assets)
  2. Financial assets that, when managed responsibly and conservatively, will both be preserved (and, if possible, grow over time) and generate enough passive income to cover your living expenses

Charles Dickens said it back in 1850, in his novel David Copperfield: “Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” To be financially free, you just need to keep your annual expenses lower than your annual income, and your annual income needs to come from financial assets you’ve accumulated that produce passive income. Pretty simple, huh?

Of course, most people do not achieve anything close to financial freedom because they can’t seem to accumulate enough financial assets, or manage them well enough, that they generate enough passive income to cover their expenses. This is caused by some combination of

–         Not earning enough money (e.g., trapped in a low-paying, low-opportunity job)

–         Earning enough money, but not saving enough money to create or invest in significant income-producing assets

–         Spending too much money, regardless of income level

If you’re not earning enough money to meet expenses, you may need to upgrade your job, your skills, your network, your credentials, or all four. This can be a tough slog: folks who decide to take the credential route to increased job opportunity often spend years at expensive schools accumulating the right certificates to be able to get the right job (e.g., becoming a certified nurse practitioner or physician’s assistant is currently a very viable path to a fulfilling career and a higher income and better opportunities, but it can take years). Likewise, upgrading skills can take a lot of time in training, reading, volunteering, or otherwise accumulating the knowledge to significantly enhance skills and earnings potential. You may also choose to ditch that low-paying retail job in favor of an opportunity to strike out on your own and become more entrepreneurial – a real estate investor, perhaps, or an ebay seller – which is, of course, more risky but also potentially far more rewarding (more on this later). The point is that the foundation of financial freedom, if you’re starting from scratch (as most of us are), is to have high-enough earned income (income from your own labor, wits, deal-making, or other income-generating activities that are dependent on you and your time, and not on your financial assets) that you have more than enough money coming in to cover your living expenses.

Once you are earning enough money to cover your expenses, you need to be able to save enough to build capital – that is, create savings that can then be used to invest in income-generating assets like savings accounts, stocks, bonds, real estate, and other investment vehicles. This brings us to the second stumbling block to achieving financial freedom: not saving enough money. It makes absolutely no difference if you make $35,000 a year or $1,000,000 a year: if you are saving no money, you are in exactly the same financial position with zero savings and a zero net financial worth (total assets, like savings and investments, minus total liabilities, like debt or other financial obligations, equals net financial worth). In order to achieve the goal of financial freedom, you need to be able to save enough that it hurts; as a rule of thumb, that’s anywhere between 20% and 50% of your gross income (not after-tax income) – see Thomas J. Stanley’s excellent book, The Millionaire Next Door, for much more on the savings habits of the wealthy. That means giving up “vente caramel mochafrappacinolattes” three times a week (see David Bach’s book, Finish Rich, for a discussion of the “latte factor”), a new pair of shoes every time you feel like it, or shopping as therapy. The purpose of money is not to buy things: it is to buy freedom, opportunities, and experiences for yourself and others who are meaningful to you. That’s it. Things will, of course, come along for the ride (you may buy a motorcycle to take that trip around the world, and you may need a bicycle or a car to get around on, or a condo or house to live in), but they should not be the focus – accumulating things that in turn drain financial resources with storage, upkeep, and maintenance is a recipe for financial ruin, not to mention personal unhappiness and a one-way ticket on the wage-slave express.

You absolutely must resist rampant consumerism in your own personal life if you want to achieve financial freedom – you simply cannot consistently spend more than your income permits, no matter what the level of that income. Mr. Money Mustache (Http:// calls these materialists “consumer suckahs” because they are, indeed, suckered in by the almost constant siren song of advertising across all forms and channels of media to buy, buy, buy – and then buy some more – because they think such purchases will make them happier, slimmer, younger, sexier, more likeable, or in some vague sense better or more worthy. Don’t be a consumer suckah. Instead, be a conscious consumer, aware of every dollar you spend and whether that dollar is being spent in the best way possible for you (and your near and dear ones) to achieve financial freedom – and, in turn, personal freedom.

Let’s get back now to the question first raised above: how hard is it to achieve financial freedom, and how long does it take? As all of the background material we just went through above indicates, the answer is: it all depends on you and your personal situation (this isn’t a get-rich-quick blog, so there isn’t a more thrillingly definitive punch-line!). If you are a high-earning attorney living in New York who manages to live frugally and save a ton of money, and who resists the consumerist call to binge-shop and buy the latest frammistat, thingamajig, or whatsit, or an entrepreneurial sort who, like Mark Zuckerberg, creates a killer social platform right out of college, you could accumulate enough financial assets to be financially free within 10 or fewer years. More likely, however, is the path that I took: I was a poor kid from Brooklyn, raised by a single mom, who was smart enough to take advantage of every educational opportunity that came my way, started a business in my early twenties with my college room-mate, worked really hard at it for about thirty years, lived within my means and saved prodigiously throughout, invested wisely, sold my business for a modest sum, and now, at 55, live off the income from investments made while earning and saving (and, by the way, it is extremely important to have a spouse who also believes in modest living, saving, and investing, otherwise you are highly unlikely to achieve financial freedom quickly or easily – if at all). I like to say, echoing an article I read in Barron’s some years ago, that I’m “beer and pretzels rich” (wealthy enough to live well but modestly, with a few extravagances once in a while) and not “champagne and caviar rich” (wealthy enough to have a private jet, yacht, mansion, cook, housekeeper, and all the accoutrements of a “rich and famous” lifestyle).  Champagne and caviar are nice, but they are not a necessity (neither are jets or yachts, by the way), and I made the decision long ago that I’d rather have the time to enjoy doing the things I’d like to do with the people I want to do them with (like my lovely, intelligent, hard-working, frugal, and extremely forgiving and patient wife, Suzanne), rather than a garage with a Ferrari in it.

Your own answer will vary depending on whether you decide you want to be “beer and pretzels rich,” “champagne and caviar rich,” or something in between, and whether accumulating things is more important to you than having the time to explore your interests, travel, learn, and enjoy life. These are all incredibly personal choices: if we had decided not to have children, we could have retired a decade or more ago, but we decided that we absolutely wanted kids and that something important and significant in our lives would be missing if we did not have them – and we’ve never regretted that decision. We also decided to live in pricey Westchester County to give our kids a great public school education, be close to our aging parents, and be close to job and career opportunities in New York City; if we had moved farther away, we could have lowered our cost of living, but would have paid for it in extra time spent commuting and traveling to see family and friends.

The point is that everyone makes decisions every day, week, month, and year that impact how much money they make and save and how much of those savings are turned into income-producing assets that will support financial freedom – and, therefore, how long it will take before there are enough of those assets (and enough income) to support the kind of lifestyle you desire. My own feeling is that it is wise always to live beneath your means and not to become accustomed to needless luxuries which will serve only to increase your dependence on such luxuries for happiness – a “hedonic treadmill” where you will become accustomed to ever-greater luxury at a faster and faster pace, necessitating ever-greater income (and spending) to support a fragile state of well-being.  Research now shows that the hedonic treadmill is real, and that a surer path to happiness is spending on experiences with family and friends, giving of your time and money to other people, and not focusing on keeping up with the Jones family down the block. To step off the hedonic treadmill and onto the path of happiness is to embrace a life with fewer things and luxury items (no yachts, please), which means that you need to earn and save less money than you think to be financially free – and it will take a lot less time. Mr. Money Mustache retired in his 30s, leading a frugal but happy life. I retired at 55, with perhaps a less frugal existence along the way, but enough savings and investments nonetheless (beer and pretzels, anyone?). Where along the spectrum will you be? You can start to answer that question by taking inventory:

–         Am I earning enough to cover my living expenses and still save significant amounts of my income (20% to 50% of my gross income)?

–         If not, how can I upgrade my job, skills, network, or credentials to do so?

–         If yes, am I saving enough?

–         Am I keeping my spending in check, not becoming a “consumer suckah” and addicted to purchasing ever-greater luxuries at the expense of my financial freedom?

–         What are the things that I want to have in my life that may delay my financial freedom (kids, further education, living in a high-priced area, etc.)? Do I really, really want them in my life, and is the trade-off worth it to me?

–         Are there things I want to do with my life that I’m putting off because I need to earn a paycheck? How can I work those into my life so that, when I become financially free, I am not a “retirement zombie” who has no idea what I want to do with my freedom, time, and money?

There are numerous resources on the web, including my favorites Mr. Money Mustache (, the Financial Samurai ( – an excellent resource for those who want to fast-track their financial independence), and the Mad Fientist (, among others, who can then help you calculate the numbers: how much you need to save, for how long, to have an amount that will provide the financial assets required to generate income to cover the spending that your lifestyle choice requires. But the journey starts with your commitment to freedom – with a desire to trade a 9-to-5 job for the freedom to pursue your own interests, to create meaning for your own life rather than relying on a job or what other people say or think to define it for you, and to spend more time on the things that will make you genuinely happier every day: your family, friends, learning and growing, exploring new places and ideas, giving back, and creating your own future every day with a sense of excitement. What are you waiting for?

2 thoughts on “Jeez, how hard is it to achieve financial freedom, and how long does it take?

  1. Max Coretto says:

    I’ve gotta say, the entire middle section of this post really makes me look at my hobbies! I think I have education and job locked down, but I need to spend more time off the “hedonism treadmill” to really get the savings locked down. The newest MTB parts or skis won’t make me any faster, or result in me having any more fun.

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