The Powerful Recipe That Will Give You Financial Freedom in 7 Steps


These seven steps to financial freedom are a great guide to help you get ahead financially and set short term and long term money goals.


I rediscovered an old journal of mine this weekend that made me stop and think about how our goals can seem impossible, especially when it comes to finances. The entries went all the way back to 2001. I was only barely out of high school, had nothing but clothes and a stereo to my name, and was three months pregnant.

In almost every entry, I worried that wouldn’t be able provide a good life for my unborn baby. Which makes sense, considering that I had barely graduated from high school and was making less than $20,000 a year!

If someone had told me then that in the years to come I would put myself through college and law school, I wouldn’t have believed them.

Now, I’ve come to realize that most things in life are no different from baking a cake. If you combine the right ingredients in the right order, you get a certain result. And if you have a recipe, a step-by-step guide to help you mix raw ingredients into dessert heaven, things suddenly seem not only possible, but inevitable.


I recently discovered a recipe for achieving financial freedom while listening to a podcast: Afford Anything by Paul Pant.

A couple of weeks ago she featured Joshua Sheets, a fellow podcaster. I had actually stumbled across his podcast, Radical Personal Finance, before and really liked it so I was inclined to listen for that reason alone.

But the subject line also caught my attention: The Seven Stages of Financial Independence. The framework they shared is a great way of thinking about the personal finance journey. I like to think of it as a go-to basic recipe for financial freedom.


We all start out here. As kids, we are completely dependent on our parents to provide for us. Adulting is expensive and even once you get past child labor laws, it’s still hard to find a job that will pay well enough to support yourself when you are a teenager.

Most people start to transition from this stage to the next somewhere in their late teens. We get our first jobs which gives us cash to start paying for some of our own things.

I still remember the first big purchase I ever made using money I earned. I bought my first cell phone, a prepaid blue Audiovox with my first paycheck from The Sports Authority. (Randomly, I also sold Stephie Graff a pair of roller blades while I worked there.) This was back when cell phones were just becoming popular so very few 16-year-olds had them. It felt amazing to be able to purchase one all on my own.

Moving out of this stage is one of the biggest financial transitions we go through in life. The other big one, of course, is retirement (especially early retirement). In both situations, you are completely changing the financial foundation of your life and having to support yourself in a completely different way. In this stage, you move away from your parents supporting you and you start supporting yourself.

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I have affectionately nicknamed this the “Welcome to Adulting” stage. This is when we all realize just how good we had it when our parents were helping us pay for things.

You are financially solvent when you are fully supporting yourself. That means you are paying your own bills, have your own place, etc.

I entered this stage just a few months after my 18th birthday when I enlisted in the military. I was living on my own hundreds of miles away from my parents and supporting myself entirely with the (piddly) pay check I earned as an active duty enlisted Marine. I left home with my clothing, a stereo, and a learner’s permit.

My partner Joseph’s timeline was a bit more typical. His parents helped support him throughout college, including paying some of his living expenses and buying him a car. After college was over, Joseph was expected to start fending for himself.

Though Joseph and I left the nest fairly early, more and more people are opting to live with their parents well into their twenties or even later. With lower living expenses, it makes it easier to save up money. That way when they are ready to start supporting themselves, they have a comfortable cushion of money to ease their transition.


In this financial freedom step, you move from just being able to keep a roof over your head, to starting to be responsible with your money. You are current with your bills and you have started to build a nice emergency savings account.

In other words, you are starting to take control of your money.

Having a budget makes it much easier to transition into this stage. When you have a budget, you know exactly where your money goes. This makes it easier to know what needs to be paid when so all your bills get paid on time. It also helps you trim the fat and free up extra money that you can use for saving and paying down debt.


You’ve reached this step to financial freedom when you’ve gotten rid of all of your bad/toxic debt. This doesn’t necessarily mean that you don’t have any debt at all. But it does mean that you have gotten rid of all of your high interest consumer debt at the very least.

At this point, your monthly budget surplus should be increasing too. This is pretty inevitable if you are managing your money well, making sure you are advancing in your career, and resisting lifestyle inflation.

That’s not to say that moving into this stage is easy, especially if you have already have kids or are looking to get married or buy a house. All of those things take time and money.

While Joseph and I may always have some amount of low-interest debt during the wealth-building stages of our lives, the types of things that we use debt for have changed over time. When I was first starting out, I purchased my $600 Dell desktop on credit. Nowadays, we’d cash flow a purchase like that.

As we move towards transitioning out of this stage completely, we now use debt only for larger purchases like cars and major home repairs. And when we do take on debt, it’s at very low interest rates (below 3%). Eventually, we will reach the point where we have enough cash on hand to make those purchases (even if we choose to use low interest credit).


This stage is a big one. You’ve reached this step to financial freedom when you have enough investment income to cover basic, bare bones living. That means if you lose your job or just want to quit your job, you can support yourself and your family indefinitely.

In other words, you are financially secure.

The amount of money you’d need to reach this stage is different for everyone. But a good rule of thumb is that you need $1 million for every $40,000 of income you need to replace. So if your bare bones budget is just $20,000, you’d only need $500k.

Joseph and I have set our target for this stage at $1 million. It’s not enough to cover our current lifestyle (which is skipping ahead to Stage 5 anyway), but it is enough to support us in a lower cost of living area. Since our jobs are the only things keeping us in one of the most expensive cities in the country, it makes perfect sense for us to plan to move if we no longer had those jobs.

If you happen to be really frugal, your financial journey might end here. You may quit your job, kick back, and call yourself retired.

Joseph and I have talked about doing this, but we know that we would not be happy in early retirement if we weren’t also able to travel.

We have about eight more years before we hit this milestone. After that, we will continue working towards the next stage.


You’ve hit this step to financial freedom once you have enough investment income to cover your current lifestyle. Again, this amount will vary wildly depending on what your current lifestyle looks like.  The lower you can keep your living expenses, the easier it will be to hit this stage.

If you’ve seen our budget, you know that our annual expenses clock in around $67,000. Add in about $10K a year for travel, and we are looking at about $80,000 if we round up. Using our $1 million per $40k need rule, we’d need $2 million to maintain our current lifestyle. At our current savings rate, we will hit that number in 15 years!

It’s also quite possible that we will hit that milestone a lot earlier than 15 years.

Our current lifestyle includes living a high cost of living area for the sake of our jobs. That $2 million nest egg covers the cost of our $3,100 a month mortgage. We could cut that in half by moving to a lower cost of living area and buying a cheaper house. If we did that, we’d only need $60k per year and a $1.5 million nest egg. That one small change would mean that we could retire three years earlier and just 13 years from now!



For most people, Stage 5 is plenty, but some may want to continue on to even bigger goals. They will then start working towards to next step to financial freedom. In Stage 6, you have enough money to cover your big dreams, things like traveling a lot or buying a lake house.

The only way to reach this stage (assuming you don’t inherit a wad of cash) is to keep working even after you have enough money to be financially independent. Now this doesn’t mean continuing to work in your current job or doing work you hate. In fact, many of the early retirees I’ve come across are actually continuing to work towards this step by generating income through their own businesses. That is exactly what Joseph and I plan to do.

For us, the draw of early retirement is not to stop working altogether, or to quit jobs we hate. The point is to spend more time doing the things we love. Luckily, there are many ways to generate income from passion projects.

For us, financial freedom would include things like:

  • Having a lake house.
  • Regular travel on a generous budget.
  • Being in a position to help our children with things like college tuition for their children and hopefully even graduate school. We would be ecstatic if we could gift that to our family. Of course, we’d expect them to pass that gift on to future generations too.


This is the final stage of financial freedom.

You’ve reached this stage when you have more money than you could spend (within reason). I like to think of this stage as having amassed enough wealth to leave a substantial estate for our children when we are  gone.

We also hope to gift a substantial sum to Yale Law School, in appreciation of the generous financial aid programs that made it possible for me to go there.

These seven steps to financial freedom do a great job of breaking down the path from total dependence to having enough money to live your big dreams and leave a legacy for your descendants. Of course, the how is a lot more complicated but having a road map makes it a lot easier to chart a course through each stage.



The Powerful Recipe That Will Give You Financial Freedom in 7 Steps

  1. Ashley Gonzalez says:

    Absolutely loved this article! Thank you for sharing!

  2. India Thompson says:

    Great information and very inspiring!


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Your extraordinary life is within reach. It's the life where financial security meets personal fulfillment, where your work resonates with your values, and where each day brings new opportunities for growth and happiness.

My journey from single teen mom to Yale Law graduate, from U.S. Marine to successful attorney and entrepreneur, has taught me invaluable lessons about resilience, growth, and the power of intentional living. Now, as a business owner, author, wife and mother of two, I've made it my mission to empower others to design lives they truly love.

Creating an extraordinary life isn't about following someone else's blueprint—it's about intentionally crafting a path that's authentically yours. It's about making conscious choices, embracing challenges as opportunities, and consistently taking steps towards your vision of success.

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