Joys of Compounding Chapter 9: Achieving Financial Independence

2 min readMay 3, 2022


  • The goal of financial independence is to stop depending on others (bosses, clients, a schedule, a paycheck).
  • Financial independence doesn’t mean you don’t work, just that you don’t need to.

The pathway toward financial independence

  1. Work hard, get an education, develop a valuable skill
  2. Use the work career to save up ten times your yearly living expenses
  3. Take some risks and start some business:
  4. At some point, your investments will earn enough passive income to support your living expenses.

Save and Invest

  • The first step to financial independence is to live within your means. Underspend your income to the maximum extent possible.
  • You can build wealth without a high income but have no chance without any savings.
  • Avoid taking on any debt for discretionary consumption.
  • Cook at home.
  • Buy clothes only on sale.
  • Learn to cherish frugality.
  • Always pay yourself first. Spend on yourself only what is left after you have invested.
  • Never depend on a single source of income; invest in yourself and learn a new skill to create a second source.
  • Avoid get-rich-quick schemes.
  • Invest wisely by learning from great investors.

Resist Stepping on the Hedonic Treadmill

  • We want what we want until we want some more.
  • People are constantly running on the hedonic treadmill; as they make more money, their expectations and desires rise in tandem, which results in no permanent gain in happiness.

We buy things we don’t need with money we don’t have to impress people we don’t know. — Dave Ramsey

  • This typically results from not having a strong sense of self and seeking external validation.
  • Don’t confuse pleasure with happiness.

The solution, particularly after basic needs are met, is actively seeking contentment with what you have. — Morgan Housel

Never measure life by your possessions. Measure it by the hearts you touched, the smiles you created, and the love you shared.

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Driven to Learn. Driven to Improve. Driven to Share. Excel and Personal Finance enthusiast.