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9 Financial Independence Problems and How to Avoid Them


Everything in life has its own unique set of challenges, and that includes financial independence. Here are some of the problems people face in their journey towards financial independence, and what you can do to avoid them.

1. Thinking more money or quitting your job equates to happiness.

A common fallacy for those striving to achieve financial independence is that they will only be happy when they’ve reached their FI number or can leave traditional, full-time employment. If you feel this way, please recognize that your self-worth is in no way tied to your net-worth. Your value is not derived from your employment status, your income, or your savings rate. Finding joy, peace, and fulfillment in your life will not magically occur once you clock out for the last time, and physical, emotional, or mental health challenges aren’t going anywhere either. Financial independence is not a magic bullet.

Becoming financially independent is all about freedom: it’s about the freedom to choose how to spend your time, freedom to choose where to spend your time, and freedom to choose who you spend your time with. Those factors can and should play a part in your happiness, but they won’t give you happiness. You create your own happiness. If you experience debilitating health challenges, financial independence won’t cure them, but it might give you space to take care of yourself more fully than you have ever been able to, or to work through trauma or instability. If you hate your job, financial independence won’t suddenly hand you a job you are over-the-moon about, but it might give you time to determine what types of work satisfy you and make your heart sing.

To refrain from thinking financial independence is a cure-all, develop a financial independence manifesto. Ponder deeply about why you want to achieve financial independence and what financial freedom looks like to you. Write it down and refer to it often. As you continue on your journey, practice gratitude. Seek professional help for any health challenges you are experiencing. Discover what inspires you, and make it a point to sprinkle your everyday life with it.

2. Having an unrealistic savings rate.

A critical component to achieving financial independence is to increase your savings rate. But increasing your savings rate is only one tool in your handy dandy FI tool belt, and you’ll only get so far using one tool to build a house. In addition to increasing your savings rate, it’s critical to increase your income, invest strategically and simply, decrease your cost of living, earn new skills, and more.

When searching the internet for financial independence advice, you might have come across a blanket savings rule to follow in order to achieve FI, such as saving 70 percent of your income. While having a high savings rate is important, not everyone has or needs the same savings rate. Someone who is making $30,000 a year and saving $5,000 has a 16 percent savings rate, while someone who is making $100,000 a year and saving $5,000 has a 5 percent saving rate, even though they are both saving the same amount of money. Similarly, someone who has a 70 percent savings rate earning $30,000 is saving $21,000 while someone making $100,000 with a 70 percent savings rate is saving $70,000. Person A (making $30,000) might not have enough to live off of, even with a 70 percent savings rate, while person B (making $100,000) might have almost double what they need, depending on their yearly expenditures. Trying to apply a blanket savings rate doesn’t always work, and needs to be considered carefully based on your individual costs, income, timeline until FI, and FI number.

If you try to have an unhealthy savings rate, you might find yourself much more miserable than you were before. Some amount of sacrifice (typically delayed gratification) is necessary to achieve financial independence, but you should not compromise you or your loved ones’ health just to get a 5 percent higher savings rate. To avoid experiencing an unrealistic savings rate, make sure to define your priorities. Think about what actually brings you joy. If you were much happier getting Saturday brunch than you are now without any discretionary expenditures, bring it back and see how it affects your spending rate! Experiment with your spending and figure out the difference for you between uncomfortable and miserable. Becoming FI is just as much about the journey as it is about the destination.

3. Living other people’s dreams.

You have probably heard and been inspired by tales of financially independent people and their journeys towards that financial freedom. It’s comforting to read content by or talk with those who have made it to “the other side” of the financial cavern and to help build your own map. But it can be easy to fall into the pitfall of keeping up with the Joneses, even when it comes to financial independence!

Your financial future is for you and your loved ones. You shouldn’t slash your spending simply because you see a blogger do it. You shouldn’t triple your savings (at the cost of your health or wellbeing) because someone tweeted you need to. And you shouldn’t quit your job after reaching financial independence just because you think it’s the next step.

To combat this, take the time to build your financial independence manifesto, like mentioned above. Define why you want to become financially independent as well as the boundaries you are and are not willing to cross on your pathway there (such as eliminating eating out, having roommates, not going on vacation, etc.). Think about what you would do if money were no object. If that includes laying on the beach all day every day, do it! But if that looks a little more like teaching kindergartners in a low-income school district, make a plan to get there, and be content with your financial independence.

4. Not building a safety net for emergencies.

Just because you are on the road to or are financially independent doesn’t mean life will stand still around you! A common problem you could run into when becoming financially independent is failing to have built a safety net for emergencies, apart from the money you plan to live off of (i.e. your investment portfolio). I know you just spent some time thinking about the wonderful things you want to do with your financially independent self, but take a moment and imagine the exact opposite: what is the worst thing (monetarily) that could happen to you after reaching FI? Maybe it’s developing an illness (such as cancer) right during an economic downturn. Maybe it’s financing a family member’s funeral or assisted living costs right after starting your own business.

With those scenarios in mind, calculate how much money you would need aside from your normal yearly expenditures to cover the unexpected bill. Start now to build an emergency reserve to cover any unforeseen experiences you might encounter, especially if you plan to step away from full-time work (and if this is you, also take the time to research appropriate insurance for you and your dependents if you won’t have that offered as part of your employment while FI). By being mindful of the worst-case scenarios, you can be prepared to handle all the bumps – and very large, rain-filled potholes – on the road to financial independence.

5. Failing to live in the present.

Many fall into the trap of failing to live in the present while working towards financial independence. So much of FI is learning to delay gratification, but not to the extent that you are miserable! Similar to many of the other items on this list, finding balance between your happiness now and your happiness later is a very personal matter. No blog post is going to be able to tell you whether or not giving up your morning beverage of choice everyday will affect your wellbeing.

To avoid feeling like you are trapped digging an unhappy hole to find the well of financial independence, be deliberate about making time to enjoy your life. You can do this without spending a dime! Take a Saturday morning hike, rent a book from the library and read it in a local park, or spend the evening catching up with a friend. Learn to reward yourself for a job well done without spending money. And most importantly, make sure your physical, emotional, and mental health is in tact.

6. Breaking social norms and not knowing how to handle them.

Another financial independence problem you might face is breaking social norms and dealing with social pressures. This is especially challenging for younger people pursuing FI because it can look radically different from the traditional path people tend to follow in their 20s, 30s, and 40s. Instead of buying a single-family home, you might continue renting or house hack a duplex. Instead of getting an advanced degree, you might start your own side hustle. Instead of buying expensive cars, you might buy (with cash!) a reliable, used model. All of these habits can appear strange, and some people might wonder or ask you why you’re going against the grain. Don’t be deterred by this! Instead, find a safe place to discuss your financial goals, whether that’s with a close friend, partner, therapist or counselor. Explain to those around you that you are saving and investing in your future, and find solace and community with like-minded people online. Always be kind and conscientious, but it’s okay to do things differently than those around you.

7. Believing financial independence equates to retirement.

Financial independence is not the same as retirement (check out this article to learn more about how they differ). For many, financial independence is simply a transition from one type of work to another (i.e. from full-time employment as a nurse to full-time employment as an author). The latter type of work is usually, but definitely not always, self-employment or entrepreneurship. Financial independence for you might include an even more rigorous working schedule! Work is important to our well-being. Though the idea of sipping lemonade on the beach everyday for the rest of your life sounds appealing, chances are you would find yourself feeling rather unfulfilled.

If you truly want to retire when you become FI, make sure you are planning to have enough in investments, savings, and passive income to live off of indefinitely without needing to return to work. You will need money for the rest of your life, and becoming financially independent doesn’t change that! Don’t equate FI with retirement, and be prepared to pay for yourself and your dependents for the rest of your life.

8. Not being honest with yourself about your money situation.

Money is one of the hardest things to talk about, and that can include talking to yourself about it! One of the issues you might face while striving to become financially independent is thinking you can do more than you can. If you’re a parent of four small children who wants to decrease your cost of living and increase your savings rate, and you read about a blogger with a 70 percent savings rate living off of $20,000 a year out of a camper van, you might be tempted to try and implement something similar. But living off of $20,000 a year out of a vehicle might be completely unfeasible for your situation. It is essential that you take a step back and examine your circumstances without bias. Learn to be honest with yourself about your individual needs, and find ways to achieve your goals that fit your lifestyle, rather than trying to do something irresponsible and potentially harmful.

9. Thinking your monetary past dictates your financial future.

If you have hundreds of thousands of dollars of student and consumer debt, you might feel you are up against a gum-covered brick wall when it comes to financial independence. But tomorrow is always a clean slate, and the you today is not the you of yesterday. Be patient and kind with yourself. Break down your goals into smaller, attainable ones, and begin tackling them one at a time. Examine your spending and saving habits and learn as much as you can! With time and hard work, your financial future will begin to materialize.


By being thoughtful and planning ahead, you can avoid many financial independence problems and lead a healthy financial life.

Climb on, FinBase.


Picture of Bethany


Bethany works in technology when the sun is shining, but when the stars come out, she writes about personal finance, financial independence, and holistic living. She enjoys cooking, playing tennis, skiing, and floral design.
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