We are all obsessed with money but in a scarcity-driven way, not a smart, strategic one. Our relationship with money is often ruled by fear and a constant preoccupation with the lack of it, rather than by thoughtful planning and intentional growth.
When resources are scarce, people often hyper-focus on short-term needs. Think about it, when you’re broke, every rupee goes to urgent needs. Rent. Bills. Loan EMIs. It’s like trying to stay afloat on a sinking ship. There’s no time to dream of buying a yacht when you’re just looking for a life jacket. This stress can cause individuals to prioritize urgent expenses over wealth-building strategies. The result? A cycle where scarcity leads to scarcity.
Now, either you can sprint toward financial independence or crawl your way there for decades. The choice? It lies in your savings rate and investment strategy. The idea behind financial independence is that your passive income through investments is enough to sustain your life after you stop working.
The truth is that savings are the foundation of financial freedom. Meet Yash and Yashvi—two colleagues with the same job, the same salary, and similar dreams of a comfortable life. But the choices they made about their savings and investments created dramatically different futures.
At age 35, Yash made a decision that would change his life forever. He committed to saving 70-80% of his income, prioritizing investments over immediate gratification. He lived simply, invested wisely, allocating 60% to equities for growth and 40% to safer fixed deposits—and watched the magic of compound interest multiply his wealth. In just 8 years, Yash achieved financial independence before his 44th birthday. He now spends his time traveling the world, pursuing passion projects, and giving back to his community, all without worrying about a paycheck.
However, Yashvi saved only 5-10% of her income. Her small savings left her relying heavily on her salary. The years passed, and by the time she reached her 60s, se had worked for 30 years but still found herself struggling to achieve true financial independence. Retirement was far from the stress-free life she had envisioned.
Thus, the essence of financial freedom lies in shifting from merely making money to making your money work for you. As George Clason noted in The Richest Man in Babylon, “We never sought a measure of wealth.” True wealth should be a tool to enhance your life and enable you to pursue your passion and goals. It should provide you with the freedom to live a fulfilling life on your own terms. Early financial independence lets you leverage your wealth instead of trading your time for money.
Do You Know the Difference Between Wealth and Income?
I once posed this question to a friend: How much do you need to live comfortably in the future?
Without hesitation, she shared her plan. She and her spouse lived in Mumbai with their two children. Their monthly expenses were around ₹300,000, and to her, this was the definition of “enough.” She believed that as soon as they had ₹300,000 in passive income per month, they would be financially independent.
At first glance, it seemed like a reasonable answer. But a closer look revealed some serious flaws in her thinking. I vividly remember discussing this with my behavioral economics professor, who asked me a thought-provoking question in return:
“Do you know the difference between wealth and income?”
My initial response was instinctive.
“Income is the money you earn from working,” I said. “And wealth? That’s what you inherit.”
He smiled knowingly.
“Not exactly,” he explained. “Wealth is what you build with the income you earn. It’s about using your money to make more money, multiplying your resources by investing wisely. True wealth grows over time even when you’re not actively working.”
His words were a revelation. Many people confuse income with wealth, focusing solely on earning more while ignoring the critical step of turning income into assets that generate passive income. Simply matching your expenses with passive income isn’t enough if your expenses grow or if inflation or lifestyle upgrades eats away at your purchasing power.
So, how much is enough?
The answer depends on two things:
1) How much you save and invest today
2) How much your future self will need to live comfortably
According to The Economics Times, 30.2% of Indians consider themselves savers, but 70% live paycheck to paycheck. Why the gap? Because saving is just the first step. Investing is the key to making your money work harder than you do.
The time horizon for financial independence varies significantly depending on the chosen investment. Fixed deposits may take 50+ years to achieve financial independence, while equities offer faster growth potential (11 years) but with higher volatility. Gold acts as a hedge against inflation, with a potential timeline for achieving financial independence of around 17 years. Bonds offer stability but may not keep pace with inflation, potentially extending the timeline for financial independence to approximately 21 years. Real estate can provide rental income but may take 18 years to achieve financial independence. Thus, the key is to diversify your portfolio to manage risks and maximize your chances of achieving financial independence sooner.
Financial freedom isn’t about escaping work; it’s about creating the life you deserve. Most people don’t realize the true potential of their money because they fail to put it to work. Simply saving in a bank isn’t enough, as inflation erodes its value over time. To achieve financial freedom, your savings must grow, outpacing inflation and adapting to economic changes. Keep Investing!