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How To Achieve Positive Financial Independence In 2021?

Financial independence can be referred to as a status where one has enough income or earnings for all of their expenses and does not depend on others for the same.

One who wants to have financial independence should have a clear picture of their incomes and expenses. A financial budget would be a great help for such people. The budget should be prepared based on the incomes and expenses.

When you understand that your self-worth is not determined by your net worth, then you’ll have financial freedom.

Suze Orman

Financial Independence – What is it?

Financial independence can also be achieved when a person can cover all the expenses from the income generated by secondary sources and not the primary occupation.

For example: If Mr X has Rs.10000 expenses per month and has assets that generate Rs. 10000 or more per month, which means financial independence has been achieved.

If Mr Y earns Rs. 50000 per month and his expenses are equal to or more than his earnings, which means financial independence has not been achieved.

These can be simple examples but apart from income and expenses, many factors have to be considered for determining financial independence.

Financial Independence

Different ways of attaining Financial Independence.

Asset Accumulation: this could be a way where more assets can be accumulated which would generate income for covering all the expenses so that a person need not depend only on the income from primary occupation.

Reduction of expenses: one way could be to reduce the expenses according to the income being earned. This could also help in accumulating more assets or increasing savings.

Financial plan: the financial plan is also called a financial budget which is prepared based on the income and the expenses which help to attain the financial goals.

Financial goals: Financial goals are similar to a financial plan or budget where one has to have a clear picture of the financial needs.

Financial independence is also something that would have a lot of risk involved and people who want financial independence will have to take the SMART risk. Some of the smart risk options for attaining financial independence could be starting a business, investing in Mutual Funds or Stock Markets, rental properties etc.

Financial independence would need lifetime commitment towards any approach that is chosen. It can be attained by not just earning more or reducing expenses but also looking out for new opportunities, new strategies and new ways to become financially independent.

Financial Independence

FIRE Program for a better life

There is a program or movement called FIRE, which is Financial Independence, Retire Early. It means a person who is financially independent can retire early. When a person is having financial freedom, they need not work until it is necessary.

The followers of the FIRE program would generally have more savings and would retire before the retirement age. For the living expenses, they would withdraw the amount needed from their savings themselves. FIRE followers would generally save 70% of their earnings and would retire way before the retirement age.

There are several styles of people’s lifestyle in the FIRE program. They are:

Fat FIRE: this refers to an individual who follows a very traditional lifestyle who saves more than an average savings of a person

Lean FIRE: this refers to an individual who has a very strict lifestyle and saves more like when a person follows a restricted lifestyle

Barista FIRE: it refers to individuals who do not do 9-5 job but would do some part-time jobs to generate income to cover daily expenses

Coast FIRE: it refers to individuals who do part time jobs and do not have enough saved amount to retire

Financial independence means having long-term wealth and not only income or savings. Income is definitely a component of wealth but that is not the only source or factor. Long term thinking could be one of the important strategy or characteristics for wealth accumulation.

Long term thinking is basically thinking about different ways to increase wealth. Maintaining a portfolio of investments, stocks, mutual funds, real estates etc. could help in wealth creation. Wealth creation and financial independence is a slow process that requires a lot of time and research.

Financial Independence

Taxes should also be kept in mind. Little or more wealth would have taxes payable on it so this is an important factor that has to be kept in mind while planning for wealth creation and financial planning.

When a young person is asked about financial freedom, the answer would be the joy of not asking for money from parents instead earn and spend on their own. Financial independence could be a topic that can be taught to children from their young age by the parents so that as they grow, they would strive towards being financially independent and also this would help children know the importance of money, savings etc.

This concept would encourage children to save more and reduce unnecessary expenditure. In the present world of competition, inflation, demand etc. every individual wants to be financially strong. Women who are generally at home also want to be independent and does not want to depend on their families. So many women have started or restarted their career to be financially strong.

Financial Independence

Women started looking for opportunities in micro-enterprises where there is a lot of scopes. Micro enterprises included boutiques, event management, catering services, online business, baking services, coaching classes, hobby classes and a lot more options.

Financial freedom means different for different people. For kids it could be buying chocolates without asking parents, for young people it could be spending money without being dependent on parents, for women it could be earning enough to not depend on their family, for parents it could be providing everything their children need and for households it could be not worrying about money for daily expenses.

Pandemic and Financial Freedom

The Covid-19 pandemic has changed the idea of financial freedom. It has taken away the sense of financial freedom from people since many lost their jobs, their pay got reduced, businesspeople got losses, small business had to close their business, people are in a position to spend, daily labourer’s are not getting any money etc. this pandemic teaches everyone the lesson of saving more than spending.

Financial freedom concerning the pandemic period could be able to stay at homes safely without worrying about money. This pandemic has definitely made people understand the importance of saving money and financial planning.

How to Achieve it?

There are few steps that should be followed in order to achieve financial independence.

  1. Stop procrastination i.e., postponing. If things are getting postponed the future would become challenging. So, any decision should be taken quickly but with proper research and understanding.
  2. looking at the income and expenses and planning the budget or savings accordingly.
  3. Saving all the surplus income and investing them to get more returns. Proper research about the portfolio combination and areas of investment should be done before investing.
  4. Knowledge and Planning about your goals. The goals could be education, business, health, marriage etc.
  5. The taxes should also be kept in mind before planning anything.

The investment combination should be concerning the goals and a proper combination should be chosen and also follow up of the investment is very important.

Following these simple steps could pave the way for an individual towards their financial independence.


Let me conclude with a simple and small experience of mine with regards to financial freedom. Since my childhood, I have been saving some money in my piggy bank. That money includes surplus money from my pocket money, grandmothers’ gift, birthday gifts in the form of money from friends and relatives etc. So when I have to surprise my parents on their special days, I use my savings instead of asking my parents themselves. Using my savings gives me a special feeling and joy that I can use my money.

From this, I can say the journey from financial independence could start from your piggy bank also. The only thing we need is dedication and planning.

Wealth is the ability to fully experience life.

Henry David Thoreau



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