Financial Independence (FI) is not just a distant dream for millionaires; it is an achievable goal for anyone willing to plan and act with discipline. Imagine waking up every morning without the pressure of an alarm clock, devoting your time to passions, travel, or family instead of a job that doesn’t inspire you.
In this article, we’ll explore what financial independence is, why it matters, and how you can achieve it step by step. If you’re tired of the corporate hamster wheel, keep reading.
What Is Financial Independence?
Financial Independence (FI) is the point at which your passive or investment income covers your living expenses without relying on a salary. It doesn’t mean “never working again,” but rather having the freedom to choose what you do with your time: work because you want to, start a business, study, travel, or simply live with greater peace of mind. 🌿
A key concept is the FIRE movement (Financial Independence, Retire Early), popularized by bloggers such as Mr. Money Mustache and by Vicki Robin in her book Your Money or Your Life. The idea is simple: save aggressively, invest wisely, and cut unnecessary expenses so you can “retire” in your 30s, 40s, or 50s instead of waiting until 65.
What FI is and what it isn’t 🤔
It is:
- Having a safety cushion and a plan that lets you live without money anxiety.
- Flexibility to choose projects, schedules, and lifestyle.
- A multi-year process built on consistent decisions—not a sprint.
It isn’t:
- Automatically becoming a multimillionaire 💰.
- A forced or permanent retirement.
- Just saving without investing.
- Something you achieve overnight.
Why do so many people pursue it? 🌟
- Time for what matters (family, health, hobbies) 🧡
- Financial security against surprises 🛡️
- Autonomy to choose jobs, clients, or cities 📍
- Peace of mind: less stress at month-end 😌
In a world where work-related stress leads to burnout and health problems, Financial Independence (FI) offers freedom. According to Gallup surveys, more than 50% of U.S. workers are dissatisfied with their jobs. FI allows you to:
- Explore hobbies or start a business without financial risk.
- Travel the world or spend more time with loved ones.
- Contribute to social causes without worrying about a paycheck.
In addition, in times of economic uncertainty—such as inflation or recessions—having a financial cushion is an invaluable safety net.
Pillars of Financial Independence. Image generated with Microsoft Create (Designer), 2025.
How it’s built (simple view) 🛠️
Think in three pillars:
- Intentional spending: know where your money goes and cut what doesn’t add value. ✂️
- Assets that work for you: diversified investments, skills that boost income, businesses. 📈
- Time + consistency: automatic contributions, patience, and periodic adjustments. 🗓️
Practical rule: a common FI target is 25× your annual expenses (based on a ~4% annual withdrawal). It’s a guideline, not a guarantee; your reality may require adjustments for taxes, healthcare, inflation, and lifestyle preferences. 🧮
The 4% Rule: Your Magic Formula
One golden rule is the 4% Rule, based on studies such as the Trinity Study. If you calculate your annual expenses (say, $40.000.000 CLP per year), multiply that number by 25 to get your “FI number” ($1.000.000.000 CLP). When invested in a diversified portfolio (such as index funds), you can withdraw 4% annually (adjusted for inflation) without depleting your capital over 30+ years.
For example:
- Monthly expenses: $3.000.000 CLP
- Annual expenses: $36.000.000 CLP
- FI number: $36.000.000 CLP × 25 = $900.000.000 CLP
This assumes an average investment return of 7–8%, net of inflation.
This number may seem unreachable or unrealistic, but with the power of compound interest and consistency, it can be achieved. Also, each FI number depends on each person’s individual reality.
Calculate your “FI number” with our calculator: https://gastomiga.com/en/tools/fi-number-calculator
Remember that investing is a marathon, not a sprint. Along the way, you can reach different types of FIRE or achieve other equally meaningful goals—such as generating passive income that covers part or all of your fixed expenses—even if you haven’t yet reached your ideal “FI number.” This can be done through passive income sources like stock dividends, rental income, and more.
Types of FIRE 🔥
- Traditional FIRE
- Lean FIRE
- Fat FIRE
- Coast FIRE
- Barista FIRE
- Slow FI
- Flamingo FIRE
(We’ll dive into each in separate articles.)
Practical steps to start today ✅
- Map your spending (monthly average + big annual expenses). 📊
- Emergency fund (3–6 months of expenses). 🚨
- Pay off high-interest debt first (credit cards/consumer loans). 🧹
- Automate investing monthly into diversified instruments. 🤖
- Increase income (new skills, projects, salary negotiation). 💼
- Protection: key insurance and health planning. 🛡️
- Quarterly review: adjust goals, contributions, and budget. 🔁
Common myths and realities 🧠
- “You need huge salaries” → Not necessarily; the key is savings rate + time + investment strategy.
- “It’s quitting work forever” → It’s choosing when, how, and what to work on.
- “Just save and you’re done” → Saving is the base, but investing builds real independence.
- “It’s not for families or people with high expenses” → It adapts by stages and across different FIRE types.
Pitfalls to avoid ⚠️
- Delaying investing “until you have more” (time in the market matters).
- Relying on a single asset or not understanding your risk.
- Ignoring real costs (taxes, healthcare, maintenance, inflation).
- Changing strategy every month without a plan.
Closing: FI is a journey, not a single destination 🗺️
Financial Independence isn’t a mold; it’s a framework for building a life with more control and less stress. It adapts to your values, family, and context. Start with small steps, stay consistent, and design your own map. 💪
(Note: This article is for informational purposes only and does not constitute financial advice. Always do your own research.)