Sometimes when bloggers want to guest post at ESI Money they send me suggested topics.
In other cases, I give them some ideas I’ve been wanting to cover and just haven’t had the time. If they think they can write a post on one of my suggestions then we go with that one.
Today’s topic is one I’ve been wanting to cover for a while now, but just haven’t gotten around to it for one reason or another.
Thankfully, we have a writer who has done an excellent job IMO.
Today we have a post on the key qualities it takes to reach financial independence. Obviously the qualities are subjective and up for debate, but this post does a great job of listing the top 10 (in no particular order) and advocating why each should be included as a vital part of the FI journey.
The following is a guest post from Miguel, the Florida lawyer and blogger behind The Rich Miser, where he and his wife Lily share practical tips, life hacks, and reviews to help you live well for less.
Take it away, Miguel…
Financial independence. Sounds amazing, right? You’re free to do what you want and don’t depend on paid work anymore. Pursue a new passion, take a long vacation, discover a new side of yourself – whatever you’ve been meaning to do, you now have the means to do it.
But like everything really worth attaining, financial independence (FI) doesn’t come easily.
It’s not just a matter of making a lot of money; unless you win the lottery or receive a big inheritance, you’re going to have to work really hard and plan for it.
Along that journey, there are certain qualities that will make the path much smoother, and make you far more likely to succeed. Some of these you may already have, and some you may have to develop. But they’re all worth it, and will improve your life beyond just the pursuit of FI.
Let’s see what they are.
If you are going through hell, keep going. ― Winston Churchill
When author J.K. Rowling wrote her first Harry Potter book, she was down on her luck – a single mom on welfare.
To make things even harder, once she finished the manuscript, the first literary agent she sent it to rejected it.
The second accepted it, but then submitted it to twelve publishers unsuccessfully. It was only the thirteenth that agreed to take a chance on the now-famous book.
It is that same kind of perseverance in the face of adversity that is necessary to succeed in our financial endeavors.
All of us will get rejected many times throughout our lives. We might send out resume after resume without a response, or get passed over for a promotion. Or perhaps the bank will deny our mortgage application for the house of our dreams.
To reach FI, you can’t just quickly give up and accept the fate that someone else has handed you. Like J.K. Rowling, you must keep going and trying, approaching success one step at a time.
I am a slow walker, but I never walk back. ― Abraham Lincoln
To reach FI, you can’t lose sight of the goal. Always remember what you’re persevering for, what you’re fighting for.
In the same way that giving up can stop your progress on the road to FI, straying from that path or getting distracted can sap your chances of reaching the destination.
So don’t forget where you’re going and stay the course, even if you have to make a detour along the way. Life happens; you can have a big, unexpected expense that temporarily sets you back. Maybe your house floods and you’re not insured, or you fall ill and get large, unexpected medical bills. All of us have to contend with such a surprise expense at one point or another.
The lesson here is to not allow such a setback to knock you off the track. Make a plan to recover, stick to it, and get back on the path to FI.
Rule your mind or it will rule you. ― Horace
To control your finances, you must first control yourself. We all feel impulses, wants, desires.
Many of them can be satisfied, at least in the short run, with a purchase.
If I want a thrill, I can rent a Lamborghini; if I want luxury, I can book a first-class ticket to Paris; if I’m feeling anxious, I can stress-eat and drink for hours.
But of course, do these things often enough, and you’ll quickly drain your savings and sabotage your progress to FI. Reaching the destination means that you must not just earn the money, but also control your worst impulses to spend it.
Even if you are on the right track, you’ll get run over if you just sit there. ― Will Rogers
Nothing worthwhile ever comes easy. If you’re not willing to work for the money you need to reach FI, no employer will pay you, and any business you start is doomed to fail.
So you need to work. A lot.
You need to be willing to go the extra mile, whether FI for you means a passive income of $20,000 or $200,000.
If you skate by with the bare minimum, you might be able to hold down a job, but you won’t get that promotion and big raise, or that fat end-of-year bonus.
At best, you’ll be able to retire at the traditional retirement age, but you won’t reach FI any sooner than that, and you might even have to cut back drastically on your lifestyle in retirement.
All else being equal, the more you earn, the faster you’ll reach FI. To maximize that earning potential, work hard and rise to the top of your field.
He who will not economize will have to agonize. ― Confucius
This one is quite obvious. To reach FI, you need to save money, which means that your income must exceed your expenses (including taxes).
No matter how much you make, your expenses cannot grow in tandem with your earnings, or else you’ll just be walking in place.
So learn to be thrifty. You don’t have to live a life of monastic deprivation, but don’t waste your money on things that don’t add much to your life.
Seek simplicity, and limit luxuries and impulse buys. Most of the time, you’ll find that they weren’t making you that happy in the first place.
Here, I’m a proponent of balance. My wife and I like living well, and spent a lot buying and remodeling a house that makes us happy. But we’ve also downgraded our car and are always looking to get the most from our money when we shop. We’re still learning and still make mistakes, but are steadily reducing expenses and increasing income.
So buy that which is necessary, and limit those expenditures that are not. Remember, every dollar that you spend takes you a bit farther from FI, so make sure that those you do spend are well-spent.
Those who will not reason, are bigots, those who cannot, are fools, and those who dare not, are slaves. ― George Gordon Byron
To reach FI, it’s not enough to work tirelessly, with single-minded purpose. You must also be clever and smart. You have to watch your surroundings and the people you associate with at work and in your life outside of work, and avoid the pitfalls that could delay or even completely stop your march towards FI.
No matter how well you’re progressing financially, if you fall prey to a scammer, isolate yourself at work, or even marry the wrong person, all of your efforts could turn to dust. That’s why you must think, and be clever and vigilant, to protect the wealth you’re building up.
Do you have a teenage driver? Make sure you’re well-insured. Is your friend trying to sell you on a “once in a lifetime” investment opportunity? Be careful, because it might be a swindle.
Think things through, analyze everything, and watch your back, because no one else might.
In the course of my life, I have often had to eat my words, and I must confess that I have always found it a wholesome diet. ― Winston Churchill
When I was starting out as an attorney, I had to take an introductory class about the basics of lawyering. There was a panel of experienced lawyers, and the class leader asked the panel members to raise their hands if they had made a mistake in the past week. All did.
That stuck with me. We’re all human and make mistakes; wisdom lies not in avoiding them all, but in learning from them.
And that’s why I think humility, and the ability to admit that you’ll frequently be wrong, is critical to FI.
At some point, you’ll make a bad investment, career misstep, or other error. You’ll then have two choices: either admit your mistake, cut your losses, and move on, or refuse to acknowledge that you were wrong and double down.
Those who double down eventually lose far more than they would have otherwise. For instance, if you make a bad investment and refuse to recognize it, you can easily throw good money after bad by investing more and compounding your losses.
It’s far better to have the humility to acknowledge that you’re human and will make mistakes, and just learn from them when you identify them.
Don’t be afraid of your fears. They’re not there to scare you. They’re there to let you know that something is worth it. ― C. JoyBell C.
I always chuckle a bit when I see campaigning politicians that “know” they’re going to win the election; and when they do, they act like they always had absolute certainty in that outcome.
It’s funny to me because I’m sure that they were never 100% certain of their victory, but I also think their attitude is wise.
For if we don’t have faith in the fact that we will reach FI, if we let ourselves be wracked by doubts and misgivings, it’s very likely we won’t make it. What would happen to an electoral candidate who said “I think I have the best ideas, but I probably won’t win?”
To bring this a little more down to earth, think of the last time you had a big challenge up ahead. Perhaps you had to deliver a speech or work round-the-clock on a project. If you prepared and had faith in your ability, it probably went well, right? On the other hand, if you didn’t think you could do it, were you tempted to quit?
So just as you’ve surmounted innumerable challenges large and small throughout your life, have faith that you’ll overcome those up ahead.
Work hard, prepare, and give it your best; you’ll probably surprise yourself with how well you do.
No thief, however skillful, can rob one of knowledge, and that is why knowledge is the best and safest treasure to acquire. ― L. Frank Baum, The Lost Princess of Oz
As a reader of ESI Money, you know about study. Study, and that knowledge that comes from it, is critical to FI. You need to know about saving, investing, and protecting your money.
Lots of that knowledge will come from experience, but a great deal will also come from study. It’s important to learn about the stock market, interest rates, loans and credit, and many other personal finance topics. To fail to do so means that you will either be incapable of building wealth, or will need to pay someone to do it for you (and trust them with your life’s savings).
So I think it’s almost self-evident that FI requires that you study not just your profession or whatever you do to make money, but also a range of other core topics such as investing, real estate, and the ins and outs of living off passive income.
To persist with a goal, you must treasure the dream more than the costs of sacrifice to attain it. ― Richelle E. Goodrich, Smile Anyway
A pound of your flesh. FI will take something from you, but will give you a lot more. To reach it, you must be willing to pay the cost, to make the sacrifice.
There will be long nights and working weekends; you will have to resist doing things you want or buying what you crave. But making the necessary sacrifices will pave the way for FI. Those overtime hours, long work trip, and foregone vacation will directly result in greater savings and passive income, and movement towards that ever-closer financial independence.
That is not to say that you’ll have to live a life of misery – far from it. You can live well, have fun, and spend time with your friends and family. But there will come moments when you’ll have to batter down the hatches and push yourself hard – but it will be worth it, since the reward will be freedom.
Tying it All Together
Nobody said it would be easy; few people reach early FI.
But if you hone these 10 qualities, you can be one of those that do, and earn the liberty to live life on your terms.
P.S. For those who prefer a video version of this post, see the ESI Money YouTube channel.
[email protected] says
Such a great post!
Every quality you have highlighted is so important and a good point to make is that these qualities come at different stages of life through various experiences.
Honing in on “Sacrifice”, this one I find to be especially hard for many. Life is made up of Real trade-offs and many are not prepared to execute that trade of giving something for something else. Partly because people don’t generally like pain.
Thanks for sharing.
Miguel (The Rich Miser) says
Thanks! Exactly; the need to sacrifice often surprises people. Achieving anything worthwhile usually means we must first spend a lot of time and energy getting there, and often endure unpleasantness or at least leave our comfort zone. Not everyone is willing to do that, when the time comes.
Thank you for the article. This has inspired me to move out of my comfort zone and to become the best person I can be…even though I do not know who that person is yet, at least I am trying to find her.
Really outstanding post and I love the pertinent quotes you selected to highlight each teaching point.
The more of these traits you possess, the smoother and quicker your path to financial independence will be.
I have fallen trap to some of the pitfalls you mention (I did not choose the right spouse (in my defense it was an arranged marriage and she was essentially chosen for me) and it became financial mistake with the subsequent divorce highly contested divorce becoming the biggest hit to my net worth).
As a doctor we automatically have some aspect of sacrifice and delayed gratification because of the years of training but we can give up that advantage in an instant by having lifestyle inflation occur as soon as we finish residency and try to make up for lost time by going overboard with spending (doctor house and car come to mind).
Miguel (The Rich Miser) says
Thanks! I remember reading a post about your marriage – it stuck in my mind, what you had to go through.
I have some doctor friends, and have seen some fall into the lifestyle inflation that you mention. One in particular went beyond the house and car, with interior art and decorations running into the tens (or hundreds) of thousands of dollars. I guess they can “afford it”, but, like you say, they’re giving up a huge advantage.
This content would make an excellent lecture or discussion guide for high school economics classes. Instead of asking upperclassman what type of careers they are planning, they could be asked what type of life style they envision and how they plan to get there.
Miguel (The Rich Miser) says
I find that formal education is good at teaching you the skills needed to make money in a job, but that knowing how to save and manage that money (with a goal like FI in mind) is an entirely different ballgame. And it’s something that is not really taught as part of a curriculum, though it probably should be.
The Physician Philosopher says
Great post, Miguel! Spot on, really.
Achieving FI is really hard work, but it can be done – and you can balance enjoying a little bit today while setting yourself up for success. We simply cannot have everything that we want.
I think of the ten characteristics that you mentioned determination, perseverance, and sacrifice are probably the biggest three. If you focus on the reason and then have the fortitude to get there… Early FI is more than a possibility. It’s likely.
Keep up the great work at your awesome, blog. Really good stuff over there that everyone should check out.
Miguel (The Rich Miser) says
Thanks Physician Philosopher,
I’m a big believer in a balanced approach where, for me, buying stuff comes in last (I think most just winds up as clutter).
Yes, to reach FI I believe we have to consciously set it as a goal and work steadily towards it.
Thanks for the kind words!
Fred Leamnson says
Fantastic, Miguel. Sometimes I think the whole FI movement glamorizes the end result (FI) forgetting about the work it takes to get there.
These ten qualities are pertinent in anything we’re doing in life, not just the pursuit of financial independence.
Outstanding article. Well done, my friend.
Miguel (The Rich Miser) says
Indeed, it takes a lot of work over a long time.
I find that the more I develop these qualities, the better I do in most everything in life, as you say.
Elise Daniel says
Fantastic Post!! These qualities and this focus are what it takes to succeed in life. THANK YOU for not making it seem simple to achieve financial independence because it is not!! I believe all ten of these traits are equally critical to get there and you did a beautiful job presenting the hard work and dedication that it takes.
Miguel (The Rich Miser) says
Thank you for the kind words!
Yes, it takes a lot of effort, especially to master ourselves and make that effort over a long time! It’s easy to change your ways for a day or two, but takes a whole lot more to do it over months and years.
Frogdancer Jones says
Love the quotes you selected. Especially the Will Rogers one about being on the right track. It made me chuckle.
Young and the Invested says
Wonderful list of qualities needed to reach financial independence. I’m early in my journey and luckily have a few of these under my belt. Some of the others, well, not so much.
My wife and I work hard to prioritize saving, preparing for a life of fulfillment balanced with cost-mindedness, and pursuing our personal goals. Luckily, these ambitions largely align and some of the frictions we experience are in the periphery.
As we progress in our lives and experience financial success, we try not to let lifestyle creep set in. We allow ourselves certain rewards to incentivize ourselves but we also strive to have non-material rewards be the strongest driving force.
As I’ve aged, I’ve redefined my ideal for success as finding the financial independence to pursue any dream I have. I’d like not to worry about money one day.
I don’t have a net worth number which satisfies this and likely never will. I think my mental calculus will change over time to make money be less important as I accumulate financial peace of mind. That’s how I view financial independence and achieving lifelong success.
Dan K says
What a great post. Very insightful. Love the list of qualities to achieve FIRE. Yes, it is hard work and I will have to share you post to my friends and family!
The English Investor says
Very solid post. I enjoyed reading it. I’m a fan of how you discussed Thrift: it’s important to save so that you have cash to invest and generate passive income. Yet, that does not mean living like a caveman with no hot water. It’s a matter of balance and it’s ok to spend for some things and cut back on others.
Dr. Dividend says
Thanks for this incredible article Miguel,
People always focus in the money aspect when doing lists on how to become financially endowed. But what a lot don’t focus on is that you first become successful before you can attain wealth. And this list has all the per-requisites on how to attain success in order to attain wealth.
Thanks for this awesome post. Keep up the great job.
Eric @ Flip n Finances says
Awesome post! I think my top quality to reach FI would need to be determination aka gumption. If people don’t have enough determination then they simply won’t reach your goal. All the qualities you mention round it out quite nicely though!
I had no idea J.K. Rowling was on welfare when she wrote her first book. And now Harry Potter is a classic! That is really inspirational.
Tim LifeForTheBetter says
These are all great! We often glance over the details and only focus in on the big picture. To me these are more than just “buzz words”. They are a way of life for the FI mindset.
Chris @ Mindful Explorer says
Such an awesome guest post Miguel, I really enjoyed this one and was a bit of refreshing content after having read 6 years worth of FIRE content. I really enjoyed the quotes attached to each quality as well. Thanks for sharing a great guest post ESI