7 Steps – How To Become Financially Independent

How To Become Financially Independent (FI)

Recently while listening to a podcast, I was reminded about something I’d heard of several years ago when I first started practicing, Parkinson’s Law.

It was developed by English writer Cyril Northcote Parkinson and states that, “Work expands so as to fill the time available for its completion.”

For instance, if you’ve got a project due in three months, then more than likely it’ll be completed in three months. If it needs to get finished in a week, then it will get done in a week.

So true.

But when we apply this law to money, it says that it doesn’t matter how much money we make, we tend to spend the entire amount…and then some.

The more we make, the more we spend. AKA “lifestyle creep“.

In a nutshell, our expenses rise with our earnings.

If we get a bonus, a raise or our income rises, most of us go out and buy a nicer vehicle, take a luxury vacation or buy the doctor house.

This is why it’s so HARD to continue to live like a resident when our training is completed.

No matter how much we make, there never seems to be enough.

For doctors and other professionals searching for how to become financially independent, they must first realize that financial independence comes from violating Parkinson’s Law.

It’s the main reason why we fall into the traps of debt and worry about money.

So in order to get you on the right track to stop trading your time for money, I’ve laid out seven steps to help you become financially free.

I can assure you that you’ve probably heard them all before but it’s always good to review the important things in life.

7 Steps – How To Become Financially Independent

1) Spend less than you make

This is the most important step to becoming financially free and is the opposite of Parkinson’s Law. It’s NOT what you make, it’s what you spend that determines whether or not you’ll build great wealth.

In the classic financial book, The Richest Man In Babylon, one of the wealth lessons taught was this principle, “live below your means“.

Have you ever read The Millionaire Next Door or Everyday Millionaires?

Both books have exhaustively studied the “average” millionaire and guess what the common denominator among them are?

You guessed it, they all spent less than they made even though the majority never had a six-figure income during their working careers.

Whenever you shift your mindset and place a higher emphasis on keeping and investing money instead of spending on frivolous stuff, you’re on your way to FI.

2) Pay yourself first

David Bach’s most recent book “The Latte Factor” is about a millennial, Zoey Daniels, working in New York City living paycheck to paycheck yet making a nice income. She befriends Henry, a barista, who mentors her about her finances.

He teaches her that the single most important key financially she can do is pay herself first. When people start investing, many times they focus on the wrong things.

Until you save up at least $100,000 or more, don’t worry about the interest rate you’re getting. Instead, focus on the savings rate and piling up as much cash as you can.

As Grant Cardone teaches, “keep stacking the cash until it’s big enough to deploy.”

What does it matter if you’re making 10% a year on $10,000? $1000 in interest isn’t too exciting.

But when you’re making 10% on $100,000 which amounts to $10,000, then things start to pick up.

Henry recommended that Zoey save one hour a day of her income into a “pay yourself first” account and to become financially selfish. And by doing this, she can have financial security for the rest of her life.

Think about that. His recommendation is such a simple, yet profound process that hopefully will wake up those of us that aren’t focused on saving on a regular basis.

Why would you work 90,000+ hours of your life and not keep the first hour a day of your income?

It’s a different way to think about money that I challenge you to commit to.

When you pay yourself first, you’re putting yourself first.

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3) Eliminate debt

One of my favorite personal finance books is Dave Ramsey’s The Total Money Makeover. My wife and I used his Baby Steps when I completed training.

I have no doubt that we wouldn’t be in the financial position we’re in today if it hadn’t been for this book.

Dave’s take on debt is straight-forward:

  • If you have it, get rid of it.
  • If you don’t have it, don’t get into it.

Most docs I know (including myself) have had some type of debt during their lifetime. Unfortunately it’s a way of life but we can and should do something about it.

If you want to know how to become financially independent, then get rid of your consumer debt as soon as possible.

Do you have a car payment?

Here’s an example from the book at what having one is costing you:


It seems that most people have a car payment their entire lives.

Average is $495 over 64 months

If instead of keeping the car payment, you invested the $495/month from age 25 to 65 in a mutual fund averaging 12%, you have:

$5,881,799.14 at age 65

I get that finding a fund that pays an average of 12% is next to impossible.

But if you invest in an average index fund that earns half of that, then you could be throwing almost $3 million down the drain to have the pleasure of driving around your whole life in a new car.

In today’s world of “instant gratification,” we want what we want yesterday. I get it. I’ve had car fever before but had to put it off until I saved enough to pay cash for it.

Dave believes you should never leverage debt for wealth.

4) Marry the right spouse

Whenever people discuss how to become financially independent, they miss out on a very important part of life….marrying the right spouse.


It doesn’t matter how much money you make, how disciplined or successful you are, if your spouse isn’t on board with working the financial plan together, you’re going to struggle.

If you’re trying to save and invest for the future whereas your spouse is spending like the government, it’s going to be near impossible for you to achieve financial independence.

5) Build streams of passive income

I’ve talked a lot about passive income in the past with these articles:

Most wealthy people have several streams of passive income. Average people only have one source of income, earned or active income.

Whenever I speak to new members of our Passive Investors Circle, one of the first questions I’ll ask is whether or not they have any sources of passive income.

For the majority that don’t, I suggest that their initial goal is creating that first stream.

Most of my calls are with doctors or other busy professionals. It’s for this reason that I suggest that they invest in multifamily syndications as their first flow of passive income.

The secret is to take this new stream of income and reinvest it so that it snowballs until you achieve FI.

6) Be a giver

One of the common denominators of those with a net worth of over $10 million is that they were givers….BEFORE they were rich.

John Templeton, billionaire and philanthropist said it best, “The secret to life is being a go-giver, not a go-getter.”

It was said that he was tithing over 50% of his income even before he was rich.
Nothing satisfies and brings me joy like giving to others. This is also such an important trait to teach our kids as well.
Even if you feel that you can’t give money at this stage of your life, you can always give back something that you can never get back….your time.

Proverbs 11:25 – “A generous person will prosper, whoever refreshes others will be refreshed.”

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7) Avoid the “get rich quick”

Too many people these days are looking for a shortcut to everything. I’ll admit, I occasionally find myself searching online for shortcuts/cheat codes while playing old Nintendo games from back in the day.Sorry, I still but I STILL love playing Mario, Zelda and Castlevania!


The reason why many investors fail to achieve their goals is due to lack of patience.They’re trying to find the quickest, next best thing which ends up having them sell out of their assets too soon.
One of the secrets to building wealth is buying quality investments and holding them.
Many people believe you need tons of money to one day become wealthy, but it’s simply not true.
When you combine consistent, small amounts of money with time and the power of compound interest, you’d be amazed of how your life can change.

The Story Of Pablo And Bruno

Here’s a video with a simplistic view of how one can achieve financial independence. It’s the story of Pablo and Bruno from Burke Hedges’s book, “The Parable Of The Pipeline.”

It shows the difference between an employee mindset vs an entrepreneur mindset.

I don’t want to say much more and spoil it but I have one question to ask after you watch it:

Are you Bruno or Pablo?

Mindset Shift

There you have it. The seven steps on how to become financially independent.

As I previously stated, none of these steps are anything that you haven’t heard before but too few of us will commit to making a mindset shift to start the ball rolling.

Are you ready to REALLY learn how to become financially independent?

Consider joining our Passive Investors Circle today.