If you live in the UK and are starting to become interested in Financial Independence, now is a brilliant time to start taking action. This is because there is still over a month left for you to take advantage of one of the UK’s best vehicles for investing for early retirement, the Stocks and Shares (S&S) ISA. On 1 April, a new tax year will start which will mean the beginning of a new allowance of £20,000 across all ISA types. If you haven’t used this year’s allowance, there is still time to open an S&S ISA, if you haven’t already, and to put money in.
I have been working toward financial independence for about 4 years now so consider myself past the “getting started” stage. In this blog post I’m going to share my best tips for people who are curious about financial independence, but not entirely sure where to start.
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What Got Me Started on a Financial Independence Journey
My journey began when my second child was born and I was at the beginning of my maternity leave, with lots of sedentary time on my hands (mostly in the middle of the night). I started binge watching Netflix shows but then money worries started to creep in, as I had changed jobs since my first maternity leave and this time was only on statutory maternity pay which meant money was much tighter.
So I started listening to podcasts about money instead of watching Netflix to pick up tips about saving money and I came across the idea of financial independence through the Choose FI podcast. “Following the breadcrumbs” took me to the book “Your Money or Your Life” by Vicki Robin which completely changed the way that I saw money and the value of my time.
Having one child already, I had already felt the frustration and sadness of missing out on time with my daughter – time I would never get back – because I needed to work. So the idea of having the financial freedom to be able to gain back more time with my family started to get me excited.
I realised though that the answer wasn’t necessarily to try to earn, save and invest as much as possible to be able to retire early, but to make lifestyle decisions that gave me some of that time back now, like working part time while prioritising investing over spending on other things.
Learning about Financial Independence: Good Books, Blogs and Podcasts for Getting Inspired
A common first step is to immerse yourself in books, blogs and podcasts about Financial Independence to understand what it is and what a typical journey could look like. Much of this content will be from the US.
I’ve lost count of the number of people I have heard whose first step was stumbling upon the Mr Money Mustache Blog and binge-reading every one of his articles. This is a great first step as he’s an entertaining writer who puts his own unique spin on very logical ways to approach Financial Independence. By the time he started his blog he had already been financially independent for a number of years, and this credibility and experience shines through. He paints an inspiring picture of what life after early retirement can be like: being able to devote yourself to parenthood and taking on only work or projects that you want to do. Anyone who is naturally frugal and who gets a buzz out of being self-sufficient will immediately relate to him. However, he also started his journey in his twenties so if you are older, you may feel that you’ve missed the boat to follow in his footsteps.
If you are UK-based then it’s important to discover UK-based experts who cover the options that we have here to save for Financial Independence in a tax efficient way.
I’d recommend starting with Pete Matthew’s Meaningful Money book and podcast as he is a qualified and experienced financial planner who covers retirement planning, whether it’s an early or traditional retirement, really well.
It’s also well worth regularly visiting Sovereign Quest, which is a curated list of personal finance-related blogs from English-speaking countries outside the US. Here you can find UK-based bloggers on their own journeys, and identify people that you have something in common with and who can inspire you.
I am also a big fan of The Humble Penny’s YouTube Channel. Ken and Mary Okorafoar have created a library of clear, credible and actionable videos that are a perfect starting point for a UK-based person on their journey to Financial Independence. They are particularly helpful for people interested in overpaying their mortgage and starting a successful side hustle.
One of my favourite UK-based podcasts is Finding Fire, created by two Scottish dentist friends Stuart and Iain. Their rapport and realism is uplifting, but sadly they haven’t recorded a new episode since Dec 21. Do head on over, give them a listen and – if you enjoy it – show them some love. I hope that it will encourage them to start recording again, if they can fit it into their obviously busy lives!
Finding a Community
The benefits of finding a FI-focussed community is that you can get input and inspiration on specific topics, without relying on information from content creators only.
A number of the US-based blogs or podcasts also have free online or in-person communities that you can join, such as the Choose FI Facebook Group and the Slow FI Enthusiasts Facebook group. Both of these have a global reach, but are most active in the US.
If you’d like to ask questions or help people with theirs, the Reddit FIREUK is very active and also includes an RSS feed of FIRE blogs.
A number of cities also run MeetUp groups for FIRE-focussed people where you can meet in person.
If you are looking for some structure and accountability, I would recommend joining the Financial Joy Academy (affiliate link), a membership group run by Ken and Mary Okorafoar, who I mentioned before. Not only can you access a library of courses and masterclasses to help you with different aspects of a FI journey, but you can also turn up every weekday with other members (at 5am) for a structured co-working and co-learning session. The membership also includes monthly masterminds focussed on creating a YouTube channel, Blogging and Property Investing. If you are keen to be financially independent as quickly as possible, this is a fantastic way to turbo-charge your progress in a supportive environment. I’m a member myself and genuinely recommend it. You can get a 15% discount on monthly or annual membership by using my referral link to join.
Tools to help track your progress
Any book or blog about FI will tell you to start by figuring out your FI number – the investment pot that you need to aim for to cover your living costs, based on a “safe withdrawal rate”.
This is the percentage of your investments that you can expect to be able to withdraw each year without diminishing your pot, which is particularly important for early retirees with a longer time horizon. If you divide your annual expenses by your safe withdrawal rate, you get your FI number.
One thing to be aware of if you are based in the UK is that the consensus tends to be that the 4% safe withdrawal rate commonly used in the US would be lower in the UK – 2.5% – based on this research by Morningstar.
Moneyed has a handy FIRE calculator which will figure out your FIRE number and project your retirement age based on your current age, current income, your expenses and the safe withdrawal rate, which you can play around with.
One app I use to track my progress in real time, and also tinker with various scenarios, is Topia, which I reviewed in this post. You can link your savings and investment accounts, then see your projected retirement age change in real time as your investments (or not!). You can also see the impact of different actions, such as making a lump sum investment in your pension versus putting that into your ISA. Topia is free although there is a premium option – Topia Plus – which involves access to weekly group coaching and other content (which I can’t comment on as I haven’t tried it out).
Final Thoughts on Getting Started
While the many US blogs and podcasts are fantastic resources for getting “FIREd” up at the start of the journey, being part of a UK-based network can be invaluable for staying motivated. The combination of more relevant information and more relatable role models can be a huge boost, especially when you are shifting from feeling inspired to taking action.
As always, I’d love to hear which people or resources are helping and inspiring you on a UK-based FI journey – please share your comments below.