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Financial independence refers to achieving of that stage in life where one doesn’t have to worry about post retirement expenses or any other expense considering unexpected obsolesces. One must draw clear lines between needs and wants, and prioritize accordingly, for the purpose of personal financial management. Palmer suggested the 50/30/20 rule of budgeting. This implies that you are able to allocate 50 percent of after-tax income to needs, including housing and food. And for wants, 30 percent of the budget is dedicated. Also the remaining 20 percent should be going towards debts and financial goals.

Stages to attain financial independence early in life-

  1. Learn to build and leverage credit early in life. Building credit is the first step to creating wealth.
  2. Make a list of achievable goals that you need to achieve by the end of a particular time period. Making a list in writing gives a sense of motivation and confidence.
  3. Invest in real estate or property that gives proper returns. Real estate has one of the greatest returns on investment, whether it is through equity or monthly cash flow.
  4. Make a retire plan that accommodates both needs and wants.
  5. Make use of 50-30-20 rule of budgeting. 50 percent is allocated to needs, 30 percent for wants and 20 percent for financial goals like investment.


Compounding is the ability of generating additional earnings to an asset when invested. Time, reinvestment and original investment are the three factors that accelerate income potential.


Protection plans include life insurance policies, health insurance and other general insurances that are helpful in protection when the time is unfavourable. Every individual should have protection plans that ensure safety of family members in cases of unforeseen circumstances. In the case of commodities, it is a service plan that provides consumers with product coverage beyond the standard manufacturer’s warranty.

Financial independence is a way of attaining a balance of needs and wants. It is needed in everyday lives to manage personal finances through financial stability.


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