Sometimes there is pushback against the idea of financial independence. For the unaware, it’s easy to shrug it off as “too good to be true”.

For others, it all seems like an uncertain journey with a long road ahead. Life can also throw obstacles in our way, making the goal seem further than it once was.

Poor investment performance. A spike in expenses (like overdoing Christmas!). Personal issues that cause a loss of income. All can cause us to become disheartened for a period of time.

But rather than letting things get us down, let’s flip the script. In this article, we’ll discuss how to frame our goals in a way that not only feels more attainable, but that makes them damn near inevitable.

Why you’re probably doing better than you think

Even if things aren’t going amazingly right now (for whatever reason), here’s a few reasons why you should cut yourself some slack. Granted, I‘m making a few assumptions here, but I think there’s a strong chance they’re accurate!

• You’re saving. It doesn’t matter if your savings aren’t perfectly consistent (after all, we're not robots). The very act of saving is a positive habit and a gift to your future self.
• You’re investing. Using money to buy investments, when there are countless other things you could spend it on, is admirable in itself. This creates wealth and a source of passive income. Another big win for Future You.
• You’re learning. The fact that you’ve taken a few moments from your day to read this article is actually a big deal. It shows you’re dedicated to learning and becoming better in an area that’s important to you. As a result, your knowledge will continue to improve.
• You have a goal. Most of us save and invest because we have a goal. It could be a house deposit, financial independence, or something else entirely. If you don’t have a goal, I suggest making one. Something that excites you, yet feels achievable. You can start with smaller, short term goals at first. Then, when you show yourself that you can hit these, give yourself a bigger, more motivating goal to work towards.

By the way, you can set up goals in your Pearler dashboard and watch your progress as you draw closer!

What I’m getting at here is that, with these simple actions, you’re already doing better than much of the population. Each of these things fuels progress in its own way. So even if the results aren’t immediate, we need to remember the incredible trajectory this puts us on.

While there might be some uncertainty in the moment, there’s no doubt that these actions help drive a better outcome.

How to make financial independence inevitable

We all experience times where we feel frustrated by our lack of progress. But don’t fall into the trap of thinking your goal of FI is too big or unrealistic - or worse still, giving up on your goals entirely.

If you don’t save and invest, then sure, wealth and freedom will remain elusive. The reality is, though, provided you’re saving and investing, it’s basically inevitable that you become financially independent at some point.

That’s not a bold claim either, by the way. It’s simple logic. If you are consistently piling up cash, and it earns a return, eventually that return becomes enough to live on. It’s just a matter of how soon you want that to be, and what you’ll do to make it happen.

Of course, our timeframe to FI isn’t locked in because we can’t guarantee investment returns. But if we’re investing for the future, we’re guaranteed to be wealthier and have more freedom than if we didn’t. And if we keep learning, we’re sure to end up wiser and more skilled than the lazier version of ourselves!

The way you make your goal inevitable (or as close as you can get to it) is by persisting and pushing through the harder times. You do this by focusing on what you can control. I firmly believe that the outcomes and achievements in our lives are overwhelmingly driven by the actions we take (and don’t take) rather than external circumstances.

And when it comes to wealth creation and financial freedom, the largest force within our power is our savings rate. Yes, investment returns and compounding matter. For the first 10 years of our journey, though, they matter less than you might think.

Savings drives progress

Let’s take a person saving consistently and building a portfolio of shares. They have a target of $1 million. We’ll assume they’re saving $2,000 per month and earn a strong return of 9% per annum. And we’ll start them off with $5,000 to get the ball rolling.

In this scenario, after 10 years they amass a total of around $400,000. Of this wealth, $240,000 came from their regular savings, and the remaining $160,000 was from investment returns.

Here, the investor benefitted from a 10-year timeframe and a solid rate of return. Even then, the effect of compounding was still not as powerful as their savings habit. Put another way, their regular savings contributed 60% of the end result.

While some folks find this disappointing, I actually think this is empowering. Why? Because the main driver of progress is something we can control. If this investor simply keeps saving and adding to their portfolio, they’re moving closer and closer to their goal.

It’s just a matter of time before they get there. And if they want to speed it up, they can work on their personal finances and bring their goal forward (potentially by years).

Remember, as of 2023, the traditional retirement age for the pension is 67. As soon as we begin investing, we can retire earlier than this. And the more we save and invest, the earlier it becomes. Then we’ve got superannuation, which increases our future passive income stream and reduces our need to work even further.

So it’s really all about timeframes. To worry that it’ll never happen or that it’s not possible just isn’t true. It’s losing perspective and letting our fears get the better of us.

And remember: it doesn’t matter if you’re a barista earning $45,000 or a surgeon earning $450,000. Your savings rate - the percentage of your take-home pay that you save - is what counts towards financial independence.

What about when life gets in the way?

One thing to remember is that your progress won’t be linear. That is, it’ll fluctuate, rather than being a perfect straight line up, year after year.

There will definitely be times where things don’t go according to plan. During these periods, maybe you won’t be able to invest as much as you’d like. But zoom out and look at where you started, compared to where you are now. And even if you’ve only just begun, learn to put hiccups and stumbles into perspective. A bad month won’t mean much in the fullness of time, if you continue to move forward and take action.

So, remember the positive things you’re doing and don’t take the setbacks to heart.

Depending on the cause, there may even be something you can do about it. For example, if your housing costs have jumped while your wages haven’t moved, aim to get a pay rise. If you’re good at your job, it’ll be cheaper for your employer to give you a wage increase than hire someone new and get them up to speed. It’s like how it’s cheaper for companies to give existing customers a discount than spend money to attain new ones.

But maybe your investments aren’t going well. The interesting thing about markets and performance is that returns tend to even out over a period of time. So, a strong period is usually followed by a weaker patch, and a slow market is eventually followed by another upwards march.

If your portfolio isn’t going anywhere right now, rest assured that it won’t always be this way. Try your best to maintain that savings rate and you’ll be back on track in no time.

Final thoughts

The more passionate you are about a certain goal, the easier it will be to achieve. This is because you’ll have the internal motivation to do whatever is necessary to make that goal a reality. Hurdles are shrugged off and making changes becomes easy.

So, all of this is up to you. How fast you want to build wealth, how committed you are to your goals, and how much you can save. It doesn’t mean you have to become a maniac and obsess over financial independence (though you can if you like, and I’m guilty of doing that back in the day).

But it’s all flexible. Whether you opt for a slower or longer journey, it’s only the timeframe which differs. Both simply require you to follow the winning recipe of saving and investing to make FI a future reality.

The key is to remain consistent in our approach and committed to our goal.

I wish you a year of progress in 2023! Until next time, happy long term investing.