I tell my kids the rules for financial independence are as follows:

1. Stay in school. Complete as much higher education and vocational training as you can while you are young (and preferable single). This rule is critical because there is a direct correlation between education level and long term earning potential. For me it was better to forgo the money I could have earned between the ages of 19-22 so I could finish college with good grades and then earn a higher salary the rest of my life.
2. Find a career (not just a job). I was always good at math and the business world fascinated me so I decided to be an accountant I choose to also get my CPA license because I thought it would help me land a good job with one of the clients I was auditing. It worked and now I am the CFO of a small high-tech company.
3. Make a long term plan. Before I married my wife we had a heart-to-heart talk about our future. It turned out that we both sought after the same things. We wanted to own our home (no renting), to raise kids, to have one of us stay home with the kids and to retire early enough to travel the world. To accomplish these goals we decided to buy a modest size house, put off starting a family for a few years to pay down the mortgage and to never go into debt for any purchase (excluding the house of course).
4. Save, Save, Save. I have always been a saver. When I was 15 and bused tables I was paid in cash. I spent very little of the money and soon accumulated thousands of dollars, which I kept in wooden box at home. Over the years my dad would borrow money from me is small increments ($20-$40 at a time) and would give me an IOU that promised to repay that amount with interest. I don’t believe my dad needed the money (I think I was more convenient than going to the bank) but the lesson of saving money and having your money work for you to earn more money stays with me to this day.
5. Always work hard. I learned early on that if your boss offers you more responsibility to always say sure and worry about the compensation part later. With few exceptions, I was compensated fairly later on and on the rare occasions I was not, I simply found a new job. The respect that developed between my boss and I because of this philosophy also help my career because he/she trusted me with the most critical future assignments.

So... where have these rules gotten my me? My wife and I are in our early forties (our kids are 7 and , she has been a stay-at-home mom for 8 years, we own our home, we have no debt of any kind, our net worth is $1.2MM, I have the career (and salary) I always wanted and I am on track to retire by 50 (if I want to).

I can’t guarantee these rules will work as well for other…but they have served me well.

Wow, those are almost exactly the rules we have followed! We have no kids and my wife also has a career. We are in a little bit different circumstance but followed the same rule - decide what you want, develop a plan, then work hard to achieve.

We both have Phd's, earned mostly while working full time, and I am almost finished with an MBA in finance. My interest in finance came from learning as much as I could about finance and investing so that I could make the best possible decisions with my own money.

Our net worth is similar to your, about $1MM.

We probably took slightly different paths but we followed the same process. I honestly believe anyone can get there if they have the discipline to plan and work toward the plaan and if they are willing to work hard.

For me, it is only a matter of discipline. When you teach yourself on spending for something that is only needed. Saving is an important goal to become financially independent.

After rereading my original post, I thought I would add one more thought on our journey to financial independence:


6. Our $350 dollar rule. My wife and I learned early on to ask each other before we spent more than $350 on any one item. This had two effects. The first was it made the buying person realize the pending purchase may be a bit impulsive. I can still remember the conversation with my wife where I was explaining to her why we “needed” a new larger TV. Needless to say, we ended up keeping our old TV for 8 more years. The second effect was it made the buying person do the research for the purchase (i.e. selecting the right brand, checking competitor pricing, looking at on going maintenance costs). To avoid looking foolish for suggesting a purchase, this rule made me research and understand what I was buying well enough to explain it to my naturally skeptical wife.