Quitting Your Job: The SECRETS of Financial Freedom

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THINK

“I find no better life purpose than to perish in attempting the great and impossible.”
Friedrich Nietzche

“Good bye corporate world.”

Those were the last words I said to the empty office as I walked out of the building for the final time.

I didn’t know if I’d ever return to employment.

I hoped not.

That was over 8 years ago and I have no intention of going back.

When you get a taste of freedom, it’s difficult to accept anything less. Many people experienced this feeling during Lockdown.

You might love your job and not want to quit. That’s awesome! I’m so happy for you. Sadly, that’s not the reality for most people.

According to Buddhist teachings, ‘Freedom is the only condition for happiness.’

Many people feel trapped in their jobs. They have large financial commitments to uphold, they fear change, see limited alternatives, feel social pressure and have a sense of loyalty to uphold.

So they suffer.

But you can overcome all of these obstacles by understanding:

Why you MUST pursue Financial Freedom today
How much do you need to become Financially Free
REAL investment returns (factoring inflation)
How to NEVER run out of money in early retirement
The variations of Financial Independence Retire Early (FIRE)
How to Become Financially Free FAST
My approach to Financial Freedom

Which is exactly what we’re going to cover in this week’s Newsletter.

Enjoy!

The Importance of Pursuing Financial Freedom

In my late 20s, I felt frustrated by not knowing what career to pursue.

I spent years exploring different options after Uni and coming short on all of them.

And then it hit me…

If I became Financially Free and my investments covered my living expenses, I could do anything.

I could stay in the same job, work less, go travelling, spend time with my friends and family or spend time on my hobbies and passions knowing all my bills were covered.

It was so liberating.

For the first time in my adult life. I KNEW what to pursue.

Financial Freedom gave me unlimited options.

You don’t have to quit your job.

You want the OPTION to.

That changes everything.

How Much Do You Need to be Financially Free?

You’re Financially Free when your investments cover your living expenses.

The 4% Safe Withdrawal Rate (SWR) is a popular estimate for how much money you’ll need to save up to cover your lifestyle in “retirement”.

Here’s a simplified explanation of how it works…

INVESTMENT RETURNS

Historically, the average annual return of the S&P 500 (The 500 largest companies listed on the US stock exchange), has been around 10% before adjusting for inflation.

This figure is an average that spans several decades. Individual annual returns can vary widely. Some years you might get +20% (”WooHoo!”).

Other years -8% (”Boo!”).

And other years +12% (”Nice!”).

But when you put them together, over time, it averages out at roughly 10% a year.

You can earn roughly 10% a year invested in the S&P 500.

INFLATION

The historic average inflation rate in the UK and the US (the % increases of stuff we spend money on) has been around 3% a year.

Once again, individual years can vary widely. We’ve had over 10% inflation in the UK recently, but that’s out of the ordinary. Over time, averaged out, stuff will increase in cost by roughly 3% a year.

You can expect goods and services to increase by roughly 3% a year (UK and US).#

REAL RETURNS

In theory, the stock market will rise by 10% and inflation will pull it back by 3%.

Once you account for stuff costing more over time, you’re left with a total increase of 7% a year (also known as the ‘Real Returns’).

You can expect roughly 7% Real Returns when invested in the S&P 500.

NEVER RUNNING OUT OF MONEY

If you withdraw 4% a year from your stocks to cover your annual expenses, in theory, you’re still left with a 3% increase overall.

7% (Real Returns) – 4% (Living Expenses) = 3% Left Over Gain

In theory, your investment pot will continue to grow over time while you’re withdrawing from it.

Let me run through an example:

£500,000 investment Pot.
4% SWR = £20,000 a year.
£500,000 pot grows by £35,000 (7% Real Returns) = £535,000
You withdraw £20,000 to live on.
Your Investment pot after withdrawal = £515,000
4% SWR (following year) = £20,600 a year.
£515,000 pot grows by £36,050 (7% Real Returns) = £551,050
You withdraw £20,600 to live on.
Your Investment pot after withdrawal = £530,450
And so on…

If your expenses are less than £20,000 a year, you’re Financially Free.

Your pot continues to grow, along with the amount you can withdraw, whilst accounting for inflation.

HOW MUCH DO YOU NEED TO BE FINANCIALLY FREE?

There’s a fast way to calculate how much you’ll need to have invested in stocks to cover your living expenses…

Multiply your Annual Expenses by 25

Examples:

Living on £100,000 a year = £2,500,000 invested
£50,000 a year = £1,250,000
£25,000 a year = £625,000
£15,000 a year = £375,000

THE IMPACT OF LIVING ON LESS

Living on less has a massive impact on the amount of money you need to become Financially Free.

By reducing your annual expenses from £25k to £15k, you’re not only saving £10k a year, you need £250,000 less invested to be Financially Free.

I’m not here to convince you to cut your spending. I just want to highlight the impact your spending more has on your freedom. So you’re fully aware of the consequences.

You can reverse-engineer every expense this way.

If you spend £50 /month on something…

It’s not just £50 /month or £600 /year you’re saving.
You’ve reduced your retirement pot by £15,000 (£600 x 25).

That thing might be worth £15,000 to you (ie. a gym membership), which is great.

But if it’s something that doesn’t provide you value (ie. Sky TV), you can question whether or not it’s worth keeping or exchanging it for a cheaper alternative (Netflix at £5 /month).

Netflix (£5 /month) = £1,500 in retirement
Sky TV (£50 /month) = £15,000 in retirement

“I’m Fcking miles away! What’s the point?!*”

When I share the ‘4% SWR’ and ‘25x’ calculations, I’m often met with despondency.

If you haven’t started investing yet or it’s taken you years to get to £10,000, the thought of building a £1,000,000 portfolio to live on £40,000 a year seems next to impossible and not particularly exciting.

I get it.

But there’s more than one way to achieve Financial Freedom and there are a couple of significant contributors that many people overlook.

FIRE variations

FIRE stands for ‘Financial Independence Retire Early’. I use the term ‘Financial Freedom’ but they have the same meaning. To clarify:

Your investments cover your living expenses, meaning you don’t have to work.

Consider the ‘4% SWR’ and ‘25x’ calculations as the standard vanilla ‘FIRE’.

Some people LOVE vanilla, whilst others think it’s boring.

Let’s move away from vanilla and consider the other FIRE varieties on offer.

Lean FIRE

This is a more aggressive form of FIRE.

Definition: Individuals aim to achieve Financial Freedom faster by living a more frugal lifestyle, cutting unnecessary expenses, and saving aggressively.
Key Strategy: Focus on reducing living expenses as much as possible. Saving a high percentage of income, and investing it to build wealth quickly. In extreme cases, people will sell their homes and most of their belongings and move into a Van/Boat.

This is a strategy for minimalists, living off-grid or frugal folk. They reject social norms, care deeply for the environment or have no desire to make more money to survive.

This was my initial strategy. I think it’s a great place to start but it has its downsides. It ignores the unlimited potential of earning more, which can dramatically speed up your time to financial freedom.

You might live on £5,000-£10,000 a year, meaning you only need £125,000 or £250,000 to be free.

Fat FIRE

FIRE on ‘roids’.

Definition: In contrast to Lean FIRE, Fat FIRE allows for a more comfortable lifestyle and a less frugal existence. The goal is to accumulate a larger nest egg to support higher spending levels.
Key Strategy: Accumulate a larger portfolio through higher income, higher savings or both. This may involve pursuing higher-paying careers or entrepreneurial ventures.

If you want to ensure that you can afford the finer things in life, Fat FIRE might be for you. This involves earning more money to build a bigger investment portfolio, so you don’t have to live frugally in retirement.

You might live on £50,000-£100,000 a year, meaning you need £1,250,000 or £2,500,000 to be free.

Barista FIRE

A great alternative to FIRE.

Definition: Barista FIRE involves reaching a point where your investments can grow without additional contributions, even if you stop actively saving for retirement. You may not fully retire immediately but instead take on part-time or lower-stress work, such as being a Barista.
Key Strategy: Front-load savings early in your career, allowing your investments to grow over time, and then transition to a less demanding job before full retirement.

People who follow Barista FIRE aim to save more now so they can work less later in life. But the goal is not to retire at an early age.

I like the balance of this approach. You work 2-3 days a week or minimal hours and your investment portfolio covers the rest of your living expenses. You still work, but the reduced hours and stress make it easy, and you’re left with substantially more free time.

Don’t get hung up on working in a coffee shop. The idea is to supplement your portfolio shortfall with easy, low-frequent work – it can be anything you want, preferably something you enjoy.

You might live on £20,000-£40,000 a year, but you earn £10,000-£20,000 a year working part-time, meaning you only need £250,000 or £500,000 invested to be free. (Adjust accordingly)

Coast FIRE

A more passive variation of FIRE.

Definition: Coast FIRE is similar to Barista FIRE but focuses on reaching a point where you no longer need to actively contribute to your retirement savings. You let your existing investments grow to cover your retirement needs without further input.
Key Strategy: Front-load savings early in your career, allowing compound interest to do most of the heavy lifting over time.

This version of FIRE requires you to have enough invested or saved so that, even without additional contributions, your portfolio will grow to support your retirement. These people typically still work, but only to cover their current costs, using their savings to coast into retirement.

You might live on £20,000-£40,000 a year, meaning you need £500,000 or £1,000,000 to be free. You invest £6,000 a year from age 20-30 and then stop investing (£60,000 total). At 7% Real Returns, your portfolio will be worth £500,000 at 55 and £1,000,000 at 65.

I like front-loading progress and delaying gratification, but this approach needs to include investing in the peak income years (40-59). Why not continue to benefit from compound interest, even if you were to maintain or reduce the contributions?

Side Hustle FIRE

The fastest way to FIRE. My favourite!

Definition: Side Hustle FIRE is something I made up. It’s similar to Barista FIRE but rather than supplementing your investment shortfall with employment, you do so with a business. This option provides many more possibilities. A small solo business could more than cover the cost of your living expenses and you have the option to outsource the parts you don’t like or the whole thing and oversee the operation on 2-4 hours a week. You could also sell the business in exchange for your FIRE number.
Key Strategy: Build your business to a point where it brings in 4x your living expenses (LE), to account for tax, business expenses and drawings. Outsource and automate large portions of the business and you’re essentially Financially Free.

It’s far easier and quicker to build a side hustle you can live off than it is an equivalent investment pot:

Living Expenses = £2,000/month
- Side Hustle = £8,000/month
- Investment Pot = £600,000
Living Expenses = £5,000/month
- Side Hustle = £20,000/month
- Investment Pot = £1,500,000

I got to over 5x LE’s within 12 months with my publishing side hustle.

Now, I have two meetings a week with my team. They last around an hour each. I might do an hour or two max outside of that, and more often than not, nothing.

A legit 4-hour work week.

Is it passive? No.

Is it easy? Yes.

Building a stocks and shares portfolio takes years and can seem insurmountable.

Building a side hustle that brings in 4x your LE’s is achievable for anyone in less than a year (not easy).

I like the options the ‘4x LE’ metric presents. When you get to that point:

You can legitimately cover your living expenses by doing something you enjoy (at least more than your job).
You can afford to outsource elements you don’t want, like or need to do. Freeing up time.
You can work minimal hours a day/week and prioritise other areas of your life.
Getting from 0-4x is harder than scaling to 5x-10x. It took me 7 months to 1x and 5 months to 5x.
You can consider selling the business to receive a sum of money close to your retirement pot amount.
You can start a passion project or another side hustle.

True Freedom is Choice

There is no single way to achieve Financial Freedom.

There are several variations of the FIRE movement and almost infinite ways to get there.

It’s up to you to decide which one you find most appealing and pursue that for now. You can always change it later on.

If I were starting over again, this is the approach I would take.

Lean FIRE – I would start by questioning EVERY SINGLE expense and living as cheaply as possible. It’s far easier to collect water when you’ve plugged the holes in your bucket. Once I had a firm grasp on my expenses, I would turn my attention to making more money.
Side Hustle FIRE – With my expenses under control, I’d start a Side Hustle that would utilise my knowledge, experience, passion and curiosity. All of the extra income could be invested, which would rapidly increase my timeline to Financial Freedom. Side Hustle FIRE also gives me the most options to increase income or work less. FIRE is now months, not years away.
Fat FIRE – Once I’d learned how to operate a simple online business, I’d continue to expand my income and living expenses to experience the best life has to offer. You don’t NEED more money to enjoy life, but it helps! I would use my additional income to make more money, create memories, buy me time or make me healthier. The Lambo’s, Boats and Ho’s will never do it for me.

What about you?

Which FIRE approach do you find most appealing?

Reflect and share this with someone.

ASK

“How much do you need to become Financially Free?”

“How long will it currently take you to get there?”

“Which FIRE variation could you use to get there faster?”

Write down what comes to mind.

TRY

Do you know how much you need to become Financially Free?

Most people don’t.

Calculating this is the first step towards Financial Freedom. It’s the weight loss equivalent to jumping on the scales.

If this seems like too much work, the Financial Freedom Planner can help you get there.

Once you have your number, you can work out how long it’ll take, based on what you’re currently investing each year.

How does that feel? Are you happy with the timeframe?

If so, great!

If not, you can manipulate the variables (spend less and earn more) to accelerate the process.

It doesn’t have to be any more complicated than that.

I found the pursuit of Financial Freedom liberating. It gave me a sense of purpose.

1. Calculate your Financial Freedom number.

2. Calculate how long it’ll take you to get that number based on what you’re currently investing.

3. Consider what you can do to get there faster.

HIT REPLY and let me know how you got on.

I read and reply to every email, and remember, I’m rooting for you!

Remember: Little by little, a little becomes a lot.

Reply to this email and share how it went for you. Let me know if you’d prefer to remain anonymous.