If you told me when I was 23 that I’d be financially free at 36, I would not have believed you.
I just got married, graduated college, and started my engineering career. I was on a good track. But I had no idea what my career and income trajectory would look like. Or how well my investments would do.
Now, as I look back on my path, I can see the things that set me up for Financial Independence (FI). Even as a fresh college graduate, I had already done several of them. The earlier you start, the better!
Here are 10 things that helped me become financially free early in life. They’re all things that you can do too! And my goal with Pathway to FI is to help you get there faster than you ever imagined.
1 Get a Good Degree
My engineering degree gave me a skill set that employers pay well for.
I stayed with the same company for 15 years. But my degree made it possible for me to get a job almost anywhere in the world. So my employer had to pay to keep me! And I used that fact—and an offer from another company—to get a raise and bonus in the middle of my career.
A degree in a high-demand, high paying discipline such as engineering, accounting, law, healthcare, or IT is as good of a guarantee for lifetime employment as you can get. The rest comes down to your own efforts.
2 Work Hard
I was focused at work. I didn’t waste much time with lunch breaks or water cooler conversations, though I also understood the value of building relationships with coworkers. I tried to use my time efficiently so I could get home for family.
When you’re in a career that has room to grow, hard work is rewarded. It doesn’t always come right away, though. Sometimes it takes patience for the next opportunity or promotion to come along. But your boss knows who’s working hard and providing the most value to the company.
3 Invest in Yourself
I got a master’s degree and took every training program I could early in my career. None of it was required to do my job. But it helped me stand out among my coworkers and get bigger roles and promotions.
The master’s degree came after I started my career and knew where I wanted to specialize.
The training programs were mostly along the lines of leadership. They boosted my resume and helped me perform in bigger roles when they came along.
Investing in yourself is often the best investment you can make. This is particularly true early in your career when your income is your biggest tool for building wealth. Later in life, if you’ve invested well, your investment portfolio becomes a bigger tool.
4 Invest Early
I started investing in stocks while I was still in high school. I also invested in real estate early, and even became a landlord to my college roommates.
My early investments had their ups and downs. But over time, they became some of my best. And the ones that didn’t do as well also became a learning experience that helped me with future investments.
The earlier you start the compounding machine the better.
So if you’re young now, use time to your advantage!
5 Invest Aggressively
I basically invested everything in stocks and real estate until I was financially free. My safety factor was an emergency fund, not bonds or gold.
When you’re on the Ascent, accumulating wealth for the future, you need your investments to be in productive assets with a high expected return.
Bonds and gold are great for the Descent, when you’re already financially free and are more concerned about your safe withdrawal rate than growth in your portfolio. But when you’re building wealth, you don’t have to worry about volatility in your portfolio. Volatility is actually a gift because it can allow you to buy more assets on sale!
6 Invest in What You Understand
I understood real estate (I lived in it) and index funds (I studied them for years). So that’s what I stuck with.
I could have branched off into day-trading. I could be speculating on crypto today. But I don’t understand those things as well. And that’s okay.
You don’t need to invest in something just because someone got better returns than you one year. Or one decade. All you need to do is understand something well and invest in it wisely.
Understand the risk/reward tradeoff. Understand historical performance. Understand why it makes money and goes up in value over time. That will give you confidence to stick with it—and invest even more—during the bad times. And that’s the best path to financial freedom for you!
7 Choose a Partner Wisely
One of the most important things I did was not a financial decision. But it had a big impact on my financial trajectory. I married someone who was responsible with money.
She kept her spending under control and worked with me to budget our money wisely. But she also had the first 2 things on my list covered: a good degree and good work ethic. As a team, we built wealth through our careers and by renovating a few homes that have become our best investments today!
If your spouse doesn’t work with you toward becoming financially free, then it’s very difficult to get there in your 30s. You could do all the right things, but your spouse could spend too much and leave you with little to invest.
Make sure you have the tough financial conversations with your partner before you get married. And if they don’t behave well with money, it isn’t hopeless. They might be able to work with a financial counselor and turn their financial life around before you make the marriage decision.
Divorce is also devastating for your finances. So when you marry someone, make sure it’s for life!
8 Stay Out of Consumer Debt
I paid off my credit card every month. And bought every car with cash after high school. These two things were non-negotiable. And they kept my lifestyle under control so that I could put my money toward investments every month instead of debt payments.
As I explained in Get Out of Debt Now, credit card debt is bad news. It makes you poor and the banks rich. Even 0% financing might make you buy more expensive things than you would have otherwise.
If you keep going into debt, you’ll have less room to invest and build wealth.
9 Don’t Upgrade Your Life Just to Show Your Success
I didn’t have a flashy car. I drove a Prius for 12 years and 200,000 miles.
And I didn’t build a custom home after a certain level of success. I’ve always lived in a comfortable middle-class home that cost much less than the bank would lend me.
I was a real-life example of The Millionaire Next Door.
Some of my friends built their dream homes as soon as they could. They drive new luxury cars. And they’ll be where I am financially in another 20 years.
10 Program Rest and Recovery into Your Day
I took martial arts for 10 years to exercise and get rid of stress at work. Then I added morning motion stretches and evening yoga to my routine. These things, plus regular walks with my wife and weekend runs before my family awoke, kept my mind sharp and my energy high.
Most people don’t appreciate how much regular exercise and stress reduction routines can do to improve your performance at work and your financial life overall. Without these things in my life, I would have burned out more often and taken much longer to recover. I fully believe that I avoided a clinical diagnosis of depression and antidepressant medication by simply moving my body, breathing deeply, and getting into nature on a regular basis.
This article gives data that supports what I’ve experienced in my own life.
If you’re struggling with a stressful job or symptoms of depression and anxiety, start here!
Summary
I hope this list helps you find something you can do differently to become financially free even faster.
Which of these things will you start doing or working toward today?
- Get a good degree
- Work hard
- Invest in yourself
- Invest early
- Invest aggressively
- Invest in what you understand
- Choose a partner wisely
- Stay out of consumer debt
- Don’t upgrade your life just to show your success
- Program rest and recovery into your day
If you’re ready to unlock your wealth-building potential, you can also get my 22 Secrets to Building Wealth for free here.
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