4 Simple Steps to Financial Independence

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Today’s guest post is written by Chrissy Kay. She blogs at Eat Sleep Breathe FI and podcasts at Explore FI Canada. Chrissy is passionate about sharing her FI* and personal finance knowledge. In this post, she lists some easy, actionable ways to get your FI journey started.

As many of you know, I’m not a huge fan of the FIRE movement (financial independence, retire early). However, she focuses on the FI part which is about freedom, security, and options—it does not have to include retirement! Now that’s something I can get behind.


Are you new to FI, and overwhelmed by everything you need to learn and do? I’ve been there, and I know that feeling. When it comes your finances, it can take some time to gain confidence, but all it really takes is four steps to financial independence.

4 Simple Steps to Financial Independence spreadsheet

Step 1: Calculate your FI number

Before you begin your FI journey, you’ll first need to figure out your FI number. This is the amount you’ll need in investments to become financially independent.

Your FI number is important because it gives you a target to aim for. It’ll help you track your progress and stay motivated. Thankfully, there’s an easy way to calculate it:

Your annual spending x 25 = Your FI number

For example:

  • $40,000 annual spending x 25 = $1,000,000 FI number
  • $60,000 annual spending x 25 = $1,500,000 FI number
  • $80,000 annual spending x 25 = $2,000,000 FI number

It’s really that easy! To figure out your own FI number, follow the action plan below.

Why 25x?

The 25x calculation is based on the 4% rule*, which states: if you withdraw 4% per year from your investments, you’re unlikely to run out of money. Mathematically, 25 is the inverse of 4%. So, the 25x calculation is how much you need invested to cover your annual living expenses—using a 4% withdrawal rate.

Action plan

  1. Gather your last 12 months of bank and credit card statements
  2. Add up your spending
  3. Multiply that number by 25—that’s your FI number

Note: As you advance in your FI journey, you’ll learn there’s a little more nuance to the 25x calculation. Don’t worry about that for now. At this stage of the game, 25x your annual spending is a good-enough assumption.

Step 2: Save

Now that you have your FI number, it’s time to take your first steps towards it. One of the easiest ways to do that is by saving more money. There are plenty of options to accomplish this, but I’m going to focus on tactics that:

  1. Are relatively easy to implement
  2. Save enough money to actually make an impact

Recurring expenses

  • Revisit recurring expenses every 1–2 years
  • Cancel subscriptions you no longer need
  • Negotiate with your current providers
  • Ask for a discount for annual instead of monthly payments
  • Shop around for better prices
  • Increase insurance deductibles
  • Remove extras from insurance policies (e.g. roadside assistance, which you may already get from a credit card)


  • Cook at home as much as possible
  • Pack a lunch for work
  • Make a weekly meal plan
  • Plan your menu around sale items
  • Make a grocery list and stick to it
  • Buy in bulk
  • Eat less meat and dairy
  • Eat more whole, unprocessed foods


  • Work from home if possible
  • Bike, walk or take public transit—even if it’s only once or twice a week
  • Use a carsharing service instead of owning a car
  • Carpool with a coworker


  • If you work from home, write off a portion of your utilities
  • Minimize energy use (switch to LEDs, hang dry laundry, seal drafts)
  • Negotiate a lower rate when renewing your mortgage

Action plan

  1. Go through the suggestions above and see how much you can save.
  2. For more money-saving ideas, see:
    1. How to Reach FI on One Income
    1. 13 Ways to Reach FI Sooner
    1. My Detailed Flashfood Review (Groceries for 50-70% Off)
    1. FI School Lesson 2: Frugality and saving
4 Simple Steps to Financial Independence cash

Step 3: Earn

Most personal finance experts agree—you can only get so far with frugality and saving. Often, earning more is the faster (or only) way to reach FI. This can be accomplished through passive or active means:

Passive income

Active income

  • Side hustles
  • Getting a raise
  • Working more
  • Being promoted
  • House hacking (hosting homestay students is my family’s favourite house hack/side hustle)

Action plan

  1. See if you can earn more passive income by making your money work harder
  2. Think about the ways you can earn more active income, and start working towards them
  3. For more earning tips and resources, see:

Step 4: Invest

If you save and earn more, you’ll eventually notice something wonderful: a growing pile of extra money! But cash in a savings account won’t get you to FI. It’s time to invest that cash.

One of the FI community’s favourite ways to invest is through the stock market. Here are some popular investing options, starting with the simplest.

Tangerine index funds

While these funds have higher fees than other stock market investments, they’re quick and easy to use. You just need to open an account with Tangerine, deposit your money, then they’ll do the rest.

You won’t have to worry about rebalancing, minimum balances, or trading fees. Read Barry’s Tangerine investment funds review for more info.

Robo advisors

Robo advisors help you invest in low-cost index ETFs and handle all the rebalancing for you. They’re just as easy to use as Tangerine funds, but are cheaper and offer more portfolio options. Some also include additional services, such as financial planning.

Read Barry’s robo advisor reviews to learn more about Canada’s top robo advisors.

DIY investing

While DIY investing requires the most time and knowledge, it’s the FI community’s favourite option. That’s because it’s low-cost, easy enough for most people to learn, and it offers a high level of control.

I recommend DIY investing in index ETFs through a discount brokerage like Questrade. To learn more about DIY investing, see the resources in my free FI School curriculum.

Action plan

  1. Learn about each of the investing options.
  2. Pick the option which you feel most comfortable with.
  3. Get your money invested.
  4. Continue building your investing knowledge with these resources:
    1. FI School Lesson 6: Index investing
    1. FI School Lesson 7: Investing

Summing it up

When starting your FI journey, it’s easy to feel overwhelmed. By breaking down the steps and starting with easier tasks, you’ll gain motivation and momentum. Before you know it, your FI journey will be well on its way!

I hope this article has given you some ideas to help you start working towards FI. When you’re ready to further expand your FI knowledge, check out the rest of FI School, my favourite books, and my favourite podcasts.

Let me know in the comments if you have any questions—I’m happy to help!

About Guest

Money We Have is one of Canada's most trusted sources for all things related to personal finance and travel.


  1. Chrissy @ Eat Sleep Breathe FI on July 13, 2020 at 10:38 AM

    Thanks again for the opportunity to guest post for you, Barry!

  2. drplastickpicker on July 14, 2020 at 1:48 PM

    Wow. This is an amazingly approachable way to begin a journey to financial independence. I’m in complete agreement with Barry in that I’m not a huge fan of the the idea of FIRE, but financial independence and peace of mind is huge. We have reached our number already and still continue to work, but I love how clear your financial lessons are. I will refer some young doctors who need some help this post. Doctors in generaly are the WORSE AT PERSONAL FINANCE.

    • Chrissy @ Eat Sleep Breathe FI on July 16, 2020 at 7:17 PM

      Thanks for reading, Dr. Plastic Picker. I would love for everyone to reach FI at some point in their lives. You’re right that the peace of mind is what’s so important.

      It’s funny how doctors can be so unbelievably smart, yet so shockingly bad with their finances!

  3. Court @ Modern FImily on July 15, 2020 at 4:31 PM

    Pow pow pow what a great action packed post Chrissy! I truly hope more and more people read your FI School Series – it’s wonderful and a great resource for anyone looking for more information about financial independence, especially those new to the concept. You clearly spent a TON of time on it and you already know how big of a fan of it I am 🙂

    • Barry.Choi on July 16, 2020 at 6:11 AM


      If people even followed just one of these steps, they’d likely be in a better financial position.

    • Chrissy @ Eat Sleep Breathe FI on July 16, 2020 at 7:20 PM

      So glad you enjoyed this post, Court! I dream of the day when FI concepts are mainstream. (It’s pie in the sky, but I can hope!) Until then, I’ll keep writing content to get the lessons out there!

  4. Maria @ Handful of Thoughts on July 15, 2020 at 11:42 PM

    I love how simply you have laid this out Chrissy. Lots of actionable steps that people can start taking right now. It may seem overwhelming at the beginning but once you take a few steps it gets easier and eventually goes on autopilot making it even easier (from a setup perspective).

    • Barry.Choi on July 16, 2020 at 6:14 AM


      Chrissy’s steps are so easy to follow. Even if people take action on one of these steps, they could improve their finances in so many ways.

    • Chrissy @ Eat Sleep Breathe FI on July 16, 2020 at 7:22 PM

      Hey Maria, it’s so true that once you get past the initial steps, a lot of it goes on auto pilot. The important thing is to just get started. Then everything else eventually falls into place. 🙂

  5. Emma Vinson on August 19, 2020 at 7:54 AM

    Thank you for this article Chrissy. I totally agree with Barry.Choi and Maria, you present things so simply, and by taking it slow, I think that one can definitely implement a lot of steps that you mentioned. I thought about other things that may help.
    For the passive income of step 3 (“earn”), one can also think about renting thinks like a room in his/her apartment, a car or a bike that is not being used so much. Also, it is only a short-term solution, but selling belongings instead of throwing them or having them laying around is a good way of generating incomes semi-passively.
    In step 2 (“save”), one can also think about buying second-hand products like for clothes or electrical appliances.

    • Chrissy @ Eat Sleep Breathe FI on August 22, 2020 at 4:15 PM

      Hi Emma,

      Those are great suggestions! We rented rooms in our house (pre-COVID) to homestay students. It’s a nice way to make a little bit of extra income from home.

      I can also vouch for the benefits of selling unneeded items and buying used. Sounds like frugal types like us think alike!

  6. Jacqueline on August 23, 2020 at 5:23 PM

    This is just what the Dr. ordered (pun intended ) great info and no Chrissy I’m not stalking youI’m just clicking on random FIRE info and it always somehow gets to you…PS I dm’ed you on Twitter.

    • Chrissy @ Eat Sleep Breathe FI on August 23, 2020 at 11:26 PM

      Hi Jacqueline, that’s funny that you keep bumping into me online. I guess I must be doing something right as a blogger!

      I replied to your Twitter DM. Let me know anytime if you have more questions. I’m always happy to help!

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