Financial Independence with Garrett & Sam

In this week's episode of Financially Naked: Stories from The Financial Gym, hosts Garrett and Sam, Certified Financial Trainers, discuss financial independence or FI. They talk about the concept of financial independence and the different ways it can be accomplished. They cover various types of financial independence, from Lean FI to Fat FI and everything in between. Whether you're just learning about FI for the first time or looking to assess your path to financial freedom, Garrett and Sam offer insights and practical advice to help you on your journey. Learn about the power of making work optional, calculating your FI number, and finding your unique path to financial independence.   

Podcast Notes  

  • Financial independence means having the financial freedom to make work optional. It's not necessarily about lounging on a beach all day; it's about working because you want to, not because you have to.  

  • FIRE stands for Financial Independence, Retire Early. In the last few years, the community's focus has shifted to the first half, financial independence, or FI.   

  • The concept of FIRE was popularized by Vicki Robin's book, Your Money or Your Life, and Mr. Money Mustache's blog. Now, you can learn about this topic from many books, blogs, podcasts, and YouTube channels.    

  • A sustainable budget supports you now and in the future. Living life right now is part of the journey, so don't deprive yourself. Extreme frugality can be an option, but it isn't for everyone. It is important to find what works for you.    

  • Level one financial freedom is being debt-free with a fully funded emergency fund. Remember to start where you are, and don't underestimate the power of small steps.  

Different Types of Financial Independence  

Personal finance is personal, and everyone has a different vision of what financial independence will look like. The community has coined various types of financial independence to help people stay connected, excited, and motivated.   

  • Lean FI: This method is about being frugal or having a minimalist lifestyle. The goal is to keep expenses as low as possible so your FI number is smaller.  

  • Fat FI: This is if you already have high expenses or want a more lavish lifestyle once you retire. This FI number will be on the larger end of the spectrum. 

  • Barista FI: This is about combining financial independence with planned part-time work instead of living on retirement savings alone. You're doing something that creates a stream of income, but you do not have to work full-time.   

  • Coast FI:  Where you reach a point in your saving goal where your investments will grow independently to the number you need to reach FI by your goal age without contributing more. 

  • Slow FI: All about gradually working towards financial independence while creating a life that aligns with your FI vision before fully achieving FI.   

Calculating Your FI Number   

  • Each financial situation is different, but some simple equations can be used for quick math. These do not include every nuance or consideration, and life will always be unpredictable.    

  • The first step is to understand where you are right now and the total amount you'll need for financial independence. Start by calculating your annual expenses. From there, consider whether that is how much you plan to spend in the future.    

  • Once you have your annual expense number, multiply that by 25. This total gives you the amount you'll need to be financially independent. For example, if your yearly expenses are $40,000, your FI number is $1,000,000.     

  • Coast FI Calculator: If you are 45 years old, $271,000 would grow to $1,000,000 by the time you hit retirement age. This example demonstrates the power of compounding interest. You don't need to save $1,000,000 to have that amount in retirement.       

Final Thoughts 

  • If your FI number seems intimidating, don't panic. As with every goal, you can work on financial independence one step at a time.   

  • If you want to learn more about financial health, find a teacher that resonates with you. There are so many books, podcasts, and resources to explore. If you don't want to do it alone, a Certified Financial Trainer can walk you through it.  

  • Every journey to financial independence is different. Don't compare yourself to others; instead, focus on your own growth.   

  • It's never too late or too early to start planning for financial independence. If you feel late, give yourself grace and know you can catch up.   

  • Financial independence is a long-term goal that takes time. Recognize and appreciate all of the small milestones on your journey. 

If you want to work with a Certified Financial Trainer to help navigate your finances, schedule a free warm-up call today! If you have any ideas or questions for the show, send an email to trainerpodcast@fingyms.com. 

Resources 

Meet The Trainers 

Meet Garrett Faulconer, Certified Financial Trainer 
Meet Sam Cash, Certified Financial Trainer  

The Financial Gym Team Comment