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What does FI Mean? – 4 Steps to the Life You Dream Of!


You may have heard or seen the acronym “FI” before but you weren’t sure what it meant. Or maybe you’ve never heard the term FI. Well, I am here to answer the question “What does FI mean?” because I am dying to spread the word! 

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What is FI?

FI stands for Financial Independence. I personally believe that anyone can reach Financial Independence if they want to! 

Image of road that says financial freedom

FI is often followed by RE (FIRE), which stands for Retire Early. 

But seeking Financial Independence doesn’t always equal early retirement. Or at least it doesn’t have to if you don’t want to retire early. 

To me, Financial Independence just means freedom. Freedom to live my life on my terms. 

And not on the terms of a company that is dictating my time off, my workload, and my hours for the majority of my life!

But Financial Independence looks different for everyone and can be defined differently depending on who you ask!

JL Collins describes Financial Independence as having F-you money in his book The Simple Path to Wealth and his website jlcollinsnh.com

Basically, if you have F-You money you can do whatever you want in your life whenever you want to do it!

Why I am on the Path to FI

I realized early on in my working life that I didn’t want to waste the bulk of my life working for someone else. 

I feel like I am wasting my life at work just to make money so that I can live my life, which is not fun. I just wish I had learned about FI earlier in my life!

Yes, making money is important, but what I finally realized was, saving money and growing money is way more important!

How to Achieve FI?

Image of cloud with the words financial freedom - what does fi mean

Achieving financial independence will look different for everyone. But the essential steps to take to get on a path towards Financial Independence are these: 

Step 1: Control your Spending

You should get a good grip on your expenses and cut the things that aren’t needed.

This is a complicated task for someone that is prone to spending money. But once I realized that financial freedom was a thing and was obtainable, it helped to switch my mindset to want to save money instead!

If you need help with tracking your expenses, check out my post on tracking expenses to learn how I do it and join the Savvy Savving’s email list to get my free spending spreadsheet!

Once you have started tracking your expenses, it is also helpful to create a budget that works for you! Creating a budget helps you be intentional with your money. 

When you give every dollar a “job” in your budget, it is much less likely that you will waste it. And it will make saving money easier!

Step 2: Avoid Debt

road sign with debt and financial independence

Debt is the one force that can inhibit and delay your journey to Financial Independence. If you can avoid debt, do it!

It will get you to freedom wayyyyyy faster!

Step 3: Save a High Percentage of your Income

Most FI-ers save 50% or more of their income during their working years. A lot of them save 70-80%! That’s an insane amount of money to save!

But the more money you can save the faster you will reach Financial Independence.

You have to be smart about where you save your money as well. Low-cost index funds (like Vanguard’s VTI) are highly recommended in the FI community.    

If you are at all interested in reaching financial freedom one day, I would highly recommend reading both Quit Like a Millionaire (you can read my review of the book here) and The Simple Path to Wealth

Both of these books are super helpful in explaining the process of saving and the right way to invest your money so that you can reach financial independence and retire early (if that is your goal)!

The Rule of 4

The Rule of 4 comes from a study where it was concluded that you can retire, or you are financially free when your investments reach the point to where you can withdraw just 4% a year and cover your expenses. 

To give you some real-life examples, Kristy Shen, the author of Quit Like a Millionaire, and her husband kept their expenses to about $40,000 per year for both of them. 

They saved a high percentage of their income year after year. When they got promotions and made more money, they increased their savings and kept their expenses the same.

They retired (at the age of 30) when their investments reached $1,000,000 (4% of $1M is $40,000). And they have found that their portfolio keeps growing even as they live off of the investments!

They also found that they could keep their expenses pretty much the same while traveling around the world! That is the dream!!

table covered with travel items - what does fi mean

Another person I admire so much is A Purple Life. I love her blog posts! She detailed her whole journey to FIRE and provided numbers for EVERYTHING! 

What I admire most is how she is such a pro at controlling her expenses! She spent around $18,000-$20,000 per year!

She reached FIRE also at the age of 30 with $500,000 in the bank! 

The less you spend per year on expenses, the less you need to save to reach financial independence!

Step 4: Relax and Enjoy your New Found Freedom

woman silhouette - what does fi mean

Once you reach your FI number, you can sit back and enjoy! Now you can decide what you want to do next with your life! Have a passion you want to want to pursue, go for it!

Want to volunteer? Do it! Want to spend more time with your kids? You’ve got the time!

The world is your oyster!

You can Partial-FI

If becoming fully financially independent seems daunting or you don’t want to work at a full-time job for as long as required, you have another option of partial-fi. 

You could save up half of what you need to be financially independent, then work part-time at a more fulfilling job to make up the rest of your needed income! 

Since you won’t be fully dependant on your job or your investments yet, you have some flexibility on both! 

So, Is FI for you?

Now that you know what FI means and the basics, what do you think? 

Do you think FI is for you? I hope I have at least opened your eyes to a new possibility for your future! 

You don’t have to work your whole life just to “one day” enjoy your retirement. Start living your life now the way you want to!

And, make sure to read Quit Like a Millionaire and The Simple Path to Wealth to get clear on all the specifics for FIRE!

Also, start working on your mindset TODAY by using these 19 money mantras in your everyday life!

Are you ready to start living your life on your own terms? Let me know in the comments!

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