Financial Independence Is A Byproduct Of Mindset (Part 4)

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Financial Independence Is A Byproduct Of Mindset is a series in which I provide a detailed explanation of what I would tell someone if they asked me “Zach, how do I achieve financial independence?” Throughout this series I make the point that obtaining financial independence is simply a byproduct of having the right mindset. Once you have the necessary mindset, financial independence occurs naturally.

I recommend reading part 1, part 2, and part 3 before you read this post. As the final post in this series I will cover the last step needed to achieve financial independence: investing.


Once you have a personal philosophy, an understanding of human psychology, and an unwavering work ethic, the natural result will be decreased spending, increased earning, and inevitably more money than you need to live on. The final step is to invest this money in the right places to let it grow. This explanation will be fairly short because when people ask me for specifics on how to invest I simply point them to Jim Collins’ stock series. I will give a brief overview of Jim’s philosophy on investing and why I think it makes sense.

The Power of Simplicity

Jim holds the belief that you can’t predict the market(agree), that stocks are only scary if you attempt to trade them frequently(agree), that you should keep management fees to an absolute minimum(agree), and that it is best to buy an index fund that tracks the entire U.S. stock market as opposed to buying individual stocks(agree). Specifically, he advocates buying VTSAX, the Vanguard index fund that tracks the entire U.S. stock market. If you would like to add bonds to your portfolio you can add VBTLX, an index fund that tracks the entire U.S. bond market.

He also points out that since most U.S. companies do business outside of the U.S. as well as domestically that by owning VTSAX you get international diversification as well. Also, the management fee for VTSAX is .05%, which is far less than almost any other fund you can find. Lastly, because it’s impossible to predict the behavior of the market he recommends keeping your money in the market at all times instead of attempting to jump in and out and time the market. Based on all of this criteria and due to the fact that this strategy of holding only two index funds is ridiculously simple and effective, it is a strategy I strongly advocate.

It’s crucial to keep in mind that investing is just another tool to use to gain freedom in life. For this reason I think it’s important to have a simple investing strategy that isn’t a hassle to maintain. Investing shouldn’t be a source of stress. This is why I like Jim’s approach.

At the end of the day you should always be striving to focus your attention on what you can control. When it comes to investing, you can control how much money you invest as well as what you invest in. But you can’t control the returns on your investments. So choose what to invest in, choose how much to invest, and let the rest go.

Connecting The Dots

Now let’s connect the dots between the four steps covered in this series and see how they each work together seamlessly to achieve the common end goal of living a free, fulfilling, meaningful life.

In Part 1 of the series we saw that by asking the question “What do I hope to achieve in life?” you can begin to develop a personal philosophy. This philosophy helps you zero in on what is truly important to you. This helps you identify what meaningful work you should pursue. Part 2 augments this idea by showing that meaningful work is one of the best ways to find happiness and meaning in your life. 

Being aware of your purpose and knowing what brings you happiness will help you become a more mindful person with a clear idea of what you want in life. The natural result of knowing what you want and being driven by your purpose is a decrease in spending simply because you are no longer looking for happiness and meaning in purchases, but rather you’re finding meaning and fulfillment in relationships and your important work. You begin to focus on creating instead of consuming. You find fulfillment in creating so you don’t need to attempt to find it in consuming.

Next, in Part 3 we saw that by developing an unwavering work ethic you can fulfill your purpose more effectively, be resilient to failures, and put habits in place that make success inevitable. Another key point from part 3 is the idea that you must learn to say no to anything and everything that doesn’t add significant value to your life. Once you develop this skill you’ll find that you have more free time to devote towards your meaningful work and towards cultivating your relationships with those you care about most, which are the two most reliable sources of happiness mentioned in part 2. 

When you combine all of these ingredients the result is decreased spending and increased earning – a potent recipe that naturally leads to increased cash flow. The final step to achieving financial independence is to simply invest this money in the right places and let compound interest do the heavy lifting from there. 

How Long Will It Take?

Even once you have implemented the ideas outlined in the four parts of this series, you won’t achieve financial independence overnight. It is a journey that takes many years. Ultimately it will depend on your savings rate, meaning how much money you save relative to how much you earn. The higher your savings rate, the sooner you reach financial independence. But I have great news:

You don’t need to wait until you’re financially independent to start living a free life.

Once you make an effort to find your purpose, understand what uniquely makes you happy, and make the choice to only focus on what is important to you, you’ll find a vast amount of freedom in life you did not have before.

I realize that not everyone is in a position to do work they love as their primary job, but this doesn’t mean you can’t still do work you find meaningful outside of your 9 – 5 job. Entrepreneur Derek Sivers wrote an incredible article on how to do work you love and still make good money. I highly recommend reading it. He points out that it’s okay to have a job where you earn good money and also still work on a meaningful craft outside of your day job that brings you joy. Regardless of whether or not it brings you income isn’t important. If it brings you joy, nothing is stopping you from doing it. By embracing this idea, you can earn good money and still do work you find meaningful.

Ultimately you should constantly be focusing on what truly matters to you in life and ignore everything else. Always be seeking growth. Always be learning, challenging yourself, encouraging yourself to become better. Always be striving to cut out anything that doesn’t add value to your life. Attempt to start creating more and consuming less. Work hard on what you love and make time for the people who are important to you. If you do these things you’ll find that financial independence will slowly inch closer to you more and more each day.

Feature photo credit: bull

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5 Replies to “Financial Independence Is A Byproduct Of Mindset (Part 4)”

  1. I think what’s so difficult for us is trying to live a free life while we’re shackled to the 9-to-5 rat race for at least ten more years (womp womp). But I do like that you’re making the point to live like we’re retired. Too often I come home and watch TV for hours because I’m tired or frustrated after work, but that’s not fair to my future goals.

  2. Keeping it simple is a fantastic idea and one that I’m sure many more of us should follow!

    It’s one of those things they say that is easy although not simple to do 😉

    Keep it up Zach!

  3. Investing shouldn’t be a source of stress. In reality, investing is indeed the source of stress for most of investors. Simplicity is beautiful. Investing is only the process that investors buy and sell their stakes in the right time.

    1. Simplicity is definitely king when it comes to investing. Simply throwing your money in a widely diversified index fund with low fees (~.05%) is the easiest and most effective way for most people to invest, and it takes away the stress of individual stock picking!

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