Your personal situation

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It’s easy to tell someone they spend their time wrong and how to change it. But there are many other factors that play a big role. It not only depends on if you really want to become financially independent, but do you still have the time to make it happen?

Your age matters

Nobody is too old to learn. But an important factor to consider is your age. Someone who is young can afford mistakes and can plan their whole life ahead. Starting a business with zero knowledge when you’re seventy might give you a few heart attacks. You can’t risk everything when you are older. You also don’t have time to invest for a few decades. It is not a requirement to start young but the younger the better.

Relationship

A relationship can have a huge impact (both positive and negative) on your path towards financial independence. If you are frugal but your partner is not, the chance that you will become financially independent is very small. Saving and spending do not go together. This does not mean that you should look for another partner, but a conversation about your financial future is in order.

On the positive side, if you have a partner that (wants to) lives frugally, you have two incomes to get to the 50% saving and investing mark. And you can save and invest more money because you’re splitting all the costs.  

Children

If you have a wish for children (or already have children), you should definitely try to make it come true! A child costs a lot of money, but you get a lot in return. If we take a look strictly at becoming financially independent, you have to take this into account. According to this source, raising a child from zero till eighteen will cost you about $270,000 per child. So if you want to raise four kids, you need a small fortune. 

As with all other products and services, you can also keep the costs for your children low. You can choose to buy a new branded baby outfit every month, or you can buy a shirt from  a cheap second hand store like Vinted. And what about a pram. These things can cost a small fortune. Prams are ditched after a year so you can find a second hand pram on the market for only 25% of the original price. So even if you have kids, you can still save a lot of money. You can at least save $100,000 in spending in those eighteen years.

Rat race and other debts

Chances are you are stuck in the rat race and spend most of your money. You also might have a mortgage you need to pay off in the next ten,twenty or thirty years. If you currently have a life based on the money you earn, you won’t get financially independent anytime soon without giving up your current lifestyle. Unless you want to build a business. Living frugally and investing most of your income requires a pretty minimalist lifestyle. Depending on your current situation, that might not even be possible. If you can only save $100 a month because you need to pay all the bills, you don’t have any money left to invest. Even if you wanted to. 

Are you willing to change your life?

This is by far the most important part of becoming financially independent. Are you willing to change your current life? This can be very hard emotionally and you’ll receive a lot of negativity from people around you. For example, let's assume you have:

Are you willing to spend your free time in the evenings and weekends to build a business for the next five - ten years? Because that is what it takes to start a business. If not, then becoming a millionaire is not for you.

If you live based on your current income, are you willing to cut your spending, live in a smaller house and take the bike to work instead of the car? You might need to change jobs to make this happen. You can’t expect to become financially independent if you still live in a big house, have two cars and can only save $250 a month. Like I mentioned before, if you invest $425 for forty years, you’ll have one million. If you can invest $850 you’ll have one million in thirty one years (and have two million in year forty). The more you can save and invest, the faster you get there. But it also means you can’t spend all the money you earn.

The same thing for someone who is overweight, eats junk food everyday and suddenly needs to cut out the junk food and needs to start exercising to lose weight. It just takes some discipline. What makes it hard are your emotions and breaking your habits. The decision is much easier when you are twenty, have no wife, kids and mortgage yet. You have loads of free time you can invest in building a business or save money to invest instead of spending it on liabilities. So if you read this and you are near twenty without any attachments yet, this is the biggest opportunity in your life to get started.

But also remember it’s not all or nothing. You can also aim for a 70% - 30% positive return in free time. Work two days a week and have five days of free time. Most people find it very difficult to switch their lifestyle around.

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