I recently talked with someone about FIRE and suggested a blog that had started me on the journey. The next day, he came back and said it was too overwhelming. “I don’t know any of this stuff and everything I tried to read assumed I did.” It had worked for me because I already had some background knowledge. Not everyone does.
In early education, there is something called a primer: An easy intro
(Note: This post is intended for people entirely new to FI. If that’s not you, I’d recommend you skip this post!)
Rambling Introduction
One advantage of reaching for financial independence in 2018 is the wealth of information available. One challenge of reaching for financial independence in 2018 is the wealth of information available. (Yes, those sentences finish the same.) There are writers, thinkers, and podcasters doing amazing work to help others achieve financial independence.
Unfortunately, some of them have been writing regularly for ten years. It can be hard to dig through the information in a way that is accessible. Others forget what it’s like to be new to the concepts and focus entirely on optimization.
The path to financial independence is simple. Really. It’s so simple that dozens of people have created programs, guides, and/or religions ranging from 3 to 35,000 steps. (Okay, that’s probably an exaggeration
The wealth of information on each concept will be powerful and useful for you – eventually. But sometimes, you just need to understand enough to know where to get started.
The Primer
GOAL
Financial Independence (FI)
You have enough money, or income producing assets, to cover your expenses without working.
This is where we want to be. It’s freedom.
(Note: You will often see the acronym FIRE. This stands for financial independence / retire early. This site focused on the financial independence portion, but FI enables you to choose.)
Key Components

DEBT
This one is really simple: Debt is bad. Having debt prevents you from putting your money to work for you. Even worse, most debt has interest charges. That means you’re actually paying extra for the privilege of having debt. Ouch.
In most cases, if you have debt you’ll want to start with getting rid of it.
A home mortgage is possibly the only exception. (Note: There are two schools of thought on this, but that’s a longer discussion.)

SPENDING
Spending is the factor most in your control. Reducing your spending helps you reach financial independence in two ways:
- It frees up money now that you can put to work
- It reduces the amount of money you need for financial independence
You are spending $100 a day and you cut out $20 of spending. Now, you have $20 extra to work for you AND you need only $80 a day in the future. Win!

This is the reason that some FIRE blogs/podcasts focus on extreme frugality. Reducing spending is a powerful FI lever.
If you spend every dollar you earn you can never reach financial independence.

SAVINGS
If you are saving (spending less than you earn) you are guaranteed to eventually reach FI.
You can think of spending and savings like two kids on the old playground favorite the teeter totter. If your spending is down, your savings is up. If you’re spending is up, your savings will be down.

INCOME
Income is the money you earn. You have some control over this factor, in most cases.
If you can increase your income then it is easier to create savings. Some focus on increasing income to create savings so they do not need extreme frugality to reach their goals.
Four common ways to increase income:
- Work more hours (non-salary position)
- Negotiate a higher wage
- Climb the career ladder to earn a higher wage
- Work a second job
You don’t need a high income to save. However, it is easier to create savings with a higher income.

INVESTING
If you use your savings to put your money to work for you, you are investing. This is better than letting your saved money sit in a low (or no) interest banking account.
Investing can be simple, or complicated. Many people spend a lot of time and money (in fees) to make it complicated. Generally, it’s best to keep it simple and cheap. That’s why most recommend index funds at Vanguard or Fidelity.
Taxes and fees reduce the amount of money you make from investments. You can make choices that reduce the fees and taxes you pay. This is another key concept in the FI community. (I’m trying to avoid going too deeply down the rabbit hole in this primer – but it isn’t easy!)
Investments can lose money. It is important to remember this. Over the long term, index funds have made money. The majority of the FI community assumes they will continue to do so.

TIME
Time is both a variable and a benefit in FI. You don’t control time. (If you do, stop reading this and go do something amazing!)
But, time matters. When invested, money tends to grow over time. Sometimes a lot.
Time is also a measure in financial independence. Depending on each of the factors above and how they are applied, your time to financial independence can be longer or shorter.
How Do These Concepts Go Together?
If you don’t have debt, avoid it. If you do, eliminate it.
Decrease your spending to increase your savings.
and/or
Increase your income to increase your savings.
Invest your savings.
Investments + time = financial independence.
That’s it. The more you do in each area, the faster you reach financial independence.
Simple, right?
Where should I start?

Want to reach FI? You absolutely can! It will take learning about and working each of these key components.
My advice is to start by being clear about why you want financial freedom. This post speaks to that. A clear why is important for the choices you’ll need to make.
If you are ready to jump in immediately, pick one of the areas above and get started.
- If you have debt, start there.
- If you are debt free, then focus on creating savings. (You’ll always want to work on creating a gap between your income and spending. This is the critical lever.)
- If you have plenty of savings, then focus on investing.
There are many great resources on each of the core concepts. A google search will get you to them quickly. You can also contact me and I’d be glad to recommend voices that speak well to a specific topic.
In coming posts, I’ll build from this elementary overview into
Update: Here is the index of the FI Basics Series that followed this post:
- Dealing with Debt
- Sort Your Spending to Speed Your Journey
- Two Powerful Numbers to Track
- Setting Your FI Targets – How will you know when you are financially independent?
- Strategic Savings: Create, Secure, Deploy
- Investing: 5 Keys and 2 Examples
Was this useful? What questions do you still have? Let me know what you want to learn more about in the comments below or here.
I’m new to FI and currently in the eliminating debt face. This series is great! THANK YOU for putting it out there. I started by reading how to set my FI target which is the first time I have done it. You made it super easy. Now I’m reading through the whole series. Good stuff!
I’m so glad it was useful to you! Welcome, and let me know if I can help.
This is such a good introduction to FIRE! It really can be overwhelming to people just starting to get their Fi on. I know for me, investing still stops me cold, even though it really shouldn’t, because it’s the one area of FI that I haven’t had a lot of experience with. I can definitely understand how the whole FI movement at once could overwhelm a person, and simplifying it certainly helps beginners!
I appreciate the feedback! As we learn more it is a challenge to remember how it feels to start from scratch. I know I have to resist throwing in all the nuances when I talk about a new concept.