December 21, 2023

Empowering Financial Independence Through Automation

Introduction

Financial independence is a goal that many people aspire to, but few achieve. It means having enough income to support your lifestyle without having to work for money. It means being able to choose how you spend your time and energy, rather than being constrained by financial obligations. It means having the freedom and flexibility to pursue your passions and interests, without worrying about the bills.

But how can you achieve financial independence in a world that is constantly changing and demanding? How can you save enough money to retire early, or even quit your job altogether? How can you invest wisely and grow your wealth, without taking too much risk or spending too much time?

The answer is automation. Automation involves employing technology to execute tasks that would otherwise necessitate human intervention. Automation can help you streamline your finances, reduce your expenses, increase your income, and achieve your financial goals faster and easier. Automation can empower you to reach financial independence, and enjoy the benefits of a more fulfilling and rewarding life.

In this article, we will look at a case of financial automation that helped a person’s life a lot. We will also explore the basics of automation in finance, the tools you can use to automate your finances, and the best practices to follow to ensure your financial success. Read on to learn more about how automation can help you achieve financial independence.

What is Financial Independence?

Before we dive into the details of automation, let’s first define what financial independence means. Financial independence is a state of being where you have enough income to cover your living expenses for the rest of your life, without having to work for money. This income can come from various sources, such as savings, investments, pensions, passive income, or business income.

There are different levels of financial independence, depending on how much income you need and how much you have. Some common terms used to describe these levels are:

Financial security: This is when you have enough income to cover your basic needs, such as food, shelter, utilities, and health care. You may still need to work for money, but you have more flexibility and options.
Financial stability: This is when you have enough income to cover your basic needs, plus some discretionary spending, such as entertainment, travel, and hobbies. You may still need to work for money, but you have more freedom and enjoyment.
Financial freedom: This is when you have enough income to cover your basic needs, plus all your wants and desires. You don’t need to work for money, unless you want to. You have complete control and independence over your life.
Financial abundance: This is when you have more than enough income to cover your basic needs, wants, and desires. You have excess money that you can use to help others, support causes, or create impact. You have a positive and generous mindset, and a sense of purpose and fulfillment.

The level of financial independence that you aim for depends on your personal preferences, values, and goals. There is no right or wrong answer, as long as you are happy and satisfied with your choices. However, regardless of the level you choose, automation can help you get there faster and easier.

Work Because You Want To, Not Because You Have To

One of the main benefits of financial independence is that you can work because you want to, not because you have to. This means that you can choose a career or a business that aligns with your passions, skills, and values, rather than settling for a job that pays the bills. You can also decide how much you want to work, when you want to work, where you want to work, and with whom you want to work. You can have more balance and harmony between your work and your personal life.

Working because you want to, not because you have to, can have a positive impact on your well-being, happiness, and productivity. You can enjoy your work more, and feel more motivated, engaged, and fulfilled. You can also contribute more value to your customers, clients, employers, or partners, and create more impact in the world.

However, working because you want to, not because you have to, does not mean that you have to quit your job or stop working altogether. You can still work for money, if you enjoy it, or if you want to increase your income or wealth. You can also work for other reasons, such as learning, growing, socializing, or giving back. The key is that you have the choice and the power to decide what you want to do with your time and energy, rather than being forced or pressured by external factors.

Enough Money To Cover Living Expenses For The Rest Of Your Life

Another benefit of financial independence is that you have enough money to cover your living expenses for the rest of your life, without having to worry about running out of money or depending on others. This means that you can live comfortably and securely, without compromising your lifestyle or your values. You can also afford to do the things that you love, such as traveling, pursuing hobbies, or spending time with family and friends.

Having enough money to cover your living expenses for the rest of your life can also give you peace of mind, confidence, and resilience. You can handle any unexpected events or emergencies, such as illness, injury, job loss, or market downturns, without panicking or stressing. You can also take advantage of any opportunities or challenges that come your way, such as starting a new business, changing careers, or relocating to a new place, without fear or hesitation.

However, having enough money to cover your living expenses for the rest of your life does not mean that you have to be rich or wealthy. You don’t need to have millions or billions of dollars in your bank account, or own multiple properties or businesses. You just need to have enough money to meet your needs and wants, based on your personal budget and lifestyle. The amount of money that you need to achieve financial independence depends on two factors: your annual expenses and your withdrawal rate.

Your annual expenses are the total amount of money that you spend in a year, on average, to maintain your desired lifestyle. This includes your fixed expenses, such as housing, transportation, food, and utilities, and your variable expenses, such as entertainment, travel, and hobbies. Your annual expenses can vary depending on your location, lifestyle, and preferences. You can calculate your annual expenses by tracking your spending for a few months, or by using a budgeting app or tool.

Your withdrawal rate is the percentage of your portfolio that you withdraw each year to cover your living expenses. For example, if you have a portfolio of $1,000,000 and you withdraw 4% of it each year, your withdrawal rate is 4% and your annual income is $40,000. Your withdrawal rate can affect how long your money will last, and how much risk you are willing to take. A lower withdrawal rate means that you need a larger portfolio, but you have a higher chance of preserving your capital and avoiding running out of money. A higher withdrawal rate means that you need a smaller portfolio, but you have a lower chance of preserving your capital and avoiding running out of money.

To calculate the amount of money that you need to achieve financial independence, you can use the following formula:

Portfolio size = Annual expenses / Withdrawal rate

For example, if your annual expenses are $50,000 and your withdrawal rate is 4%, you need a portfolio of $1,250,000 to achieve financial independence.

Portfolio size = $50,000 / 0.04

Portfolio size = $1,250,000

This formula is based on the assumption that your portfolio consists of a diversified mix of stocks and bonds, and that you adjust your withdrawals for inflation each year. It is also based on the historical performance of the stock and bond markets, and the probability of success over a 30-year period. However, this formula is not a guarantee or a rule, but a guideline or a starting point. You may need more or less money, depending on your personal situation, goals, and preferences.

Basics of Automation in Finance

Now that we have defined what financial independence is, and why it is beneficial, let’s look at how automation can help you achieve it. Automation involves utilizing technology to carry out tasks that would typically demand human intervention. Automation can help you streamline your finances, reduce your expenses, increase your income, and achieve your financial goals faster and easier.

There are three basic steps to automate your finances:

1. Set up automatic savings
2. Set up automatic bill payments
3. Set up investment on autopilot

Let’s delve into the specifics of each step.

Set up automatic savings

The first step to automate your finances is to set up automatic savings. This means that you automatically transfer a portion of your income to a separate savings account, every time you receive a paycheck, or on a regular basis. This enables you to save money effortlessly without actively thinking about it or being enticed to spend. You can also take advantage of the power of compounding, which means that your money grows faster over time, as you earn interest on your interest.

To set up automatic savings, you need to decide how much you want to save, and where you want to save it. The amount of money that you want to save depends on your income, expenses, and goals. A common rule of thumb is to save at least 10% of your income, but you can save more or less, depending on your situation. The place where you want to save your money depends on your purpose, time horizon, and risk tolerance. You can save your money depends on your purpose, time horizon, and risk tolerance. You can save your money in different types of accounts, such as:

Checking account: This is the account where you keep your money for everyday spending and transactions. It usually offers low or no interest, but it is easy to access and use. You can use your checking account to pay your bills, make purchases, withdraw cash, or transfer money to other accounts.
Savings account: This is the account where you keep your money for short-term or emergency savings. It usually offers higher interest than a checking account, but it may have some limitations or fees on withdrawals or transfers. You can use your savings account to save for a specific goal, such as a vacation, a car, or a wedding, or to build an emergency fund, which is a cushion of money that you can use in case of unexpected events or emergencies, such as illness, injury, job loss, or car repair.
Online savings account: This is a type of savings account that you can open and manage online, without having to visit a physical branch or office. It usually offers higher interest than a traditional savings account, and it may have lower or no fees or minimum balance requirements. You can use an online savings account to save for the same purposes as a regular savings account, but with more convenience and flexibility.
Certificate of deposit (CD): This is a type of savings account that you can open for a fixed period of time, such as 6 months, 1 year, or 5 years. It usually offers higher interest than a savings account, but it has a penalty for early withdrawal or closure. You can use a CD to save for a medium-term goal, such as a down payment for a house, or to lock in a higher interest rate for a longer period of time.
Money market account (MMA): This is a type of savings account that you can open with a higher minimum balance, such as $1,000 or $10,000. It usually offers higher interest than a savings account, and it may allow you to write checks or use a debit card. You can use an MMA to save for a long-term goal, such as retirement, or to earn more interest on a large amount of money.

To set up automatic savings, you need to choose an account that suits your needs and preferences, and then link it to your checking account. You can then set up a recurring transfer from your checking account to your savings account, either as a percentage or a fixed amount of your income, or as a specific amount that you want to save each month. You can also set up a transfer trigger, such as a certain date, a certain balance, or a certain event, such as receiving a bonus or a tax refund. You can use your online banking app or website, or a third-party app or tool, to set up and manage your automatic savings.

By setting up automatic savings, you can save money consistently and effortlessly, and build your financial independence faster and easier.

Set up automatic bill payments

The second step to automate your finances is to set up automatic bill payments. This means that you automatically pay your bills, such as rent, mortgage, utilities, insurance, credit cards, loans, or subscriptions, every month, or on a regular basis. This way, you can pay your bills on time, without forgetting or missing a payment. You can also avoid late fees, penalties, interest charges, or damage to your credit score.

To set up automatic bill payments, you need to decide which bills you want to pay automatically, and how you want to pay them. You can pay your bills automatically in different ways, such as:

Direct debit: This is when you authorize your biller, such as your landlord, utility company, or service provider, to deduct the amount of your bill from your bank account, every month, or on a regular basis. You can set up direct debit by filling out a form, or by using your online banking app or website, or a third-party app or tool. You can also cancel or modify your direct debit at any time, if you need to.
Automatic transfer: This is when you set up a recurring transfer from your bank account to your biller’s account, every month, or on a regular basis. You can set up automatic transfer by using your online banking app or website, or a third-party app or tool. You can also cancel or modify your automatic transfer at any time, if you need to.
Credit card autopay: This is when you link your credit card to your biller’s account, and authorize your biller to charge your credit card, every month, or on a regular basis. You can set up credit card autopay by using your online banking app or website, or a third-party app or tool. You can also cancel or modify your credit card autopay at any time, if you need to.

To set up automatic bill payments, you need to choose a method that suits your needs and preferences, and then link it to your biller’s account. You can then set up a payment schedule, such as a certain date, a certain amount, or a certain frequency, for each bill. You can also set up a payment reminder, such as an email, a text message, or a notification, to alert you before or after each payment. You can use your online banking app or website, or a third-party app or tool, to set up and manage your automatic bill payments.

By setting up automatic bill payments, you can pay your bills easily and conveniently, and improve your financial health and credit score.

Set up investment on autopilot

The third step to automate your finances is to set up investment on autopilot. This means that you automatically invest a portion of your income or savings in a diversified portfolio of assets, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), or index funds, every month, or on a regular basis. This way, you can grow your wealth over time, without having to research, analyze, or monitor the market. You can also benefit from the power of compounding, dollar-cost averaging, and diversification, which can enhance your returns and reduce your risk.

To set up investment on autopilot, you need to decide how much you want to invest, and where you want to invest it. The amount of money that you want to invest depends on your income, expenses, savings, and goals. A common rule of thumb is to invest at least 15% of your income, but you can invest more or less, depending on your situation. The place where you want to invest your money depends on your purpose, time horizon, and risk tolerance. You can invest your money in different types of accounts, such as:

Brokerage account: This is the account where you can buy and sell various types of securities, such as stocks, bonds, mutual funds, ETFs, or index funds. It usually offers low or no commissions, but it may have some fees or taxes on transactions or profits. You can use a brokerage account to invest for any purpose or time horizon, but you need to be aware of the risks and rewards of each security, and the influence of market fluctuations on your investment portfolio.
Retirement account: This is the account where you can save and invest for your retirement, such as a 401(k), an IRA, or a Roth IRA. It usually offers tax advantages, such as tax-deferred or tax-free growth, but it may have some limitations or penalties on withdrawals or contributions. You can use a retirement account to invest for your long-term goal of financial independence, but you need to follow the rules and regulations of each account, and the impact of inflation on your future income.
Robo-advisor account: This is a type of account that you can open and manage online, without having to interact with a human advisor. It usually offers low or no fees, but it may have some minimum balance or investment requirements. You can use a robo-advisor account to invest for any purpose or time horizon, but you need to trust the algorithm and the recommendations of the robo-advisor, and the impact of fees on your returns.

To set up investment on autopilot, you need to choose an account that suits your needs and preferences, and then link it to your bank account. You can then set up a recurring transfer from your bank account to your investment account, either as a percentage or a fixed amount of your income or savings, or as a specific amount that you want to invest each month. You can also set up an investment strategy, such as a target asset allocation, a risk level, or a goal, for each account. You can use your online banking app or website, or a third-party app or tool, to set up and manage your investment on autopilot.

By setting up investment on autopilot, you can grow your wealth steadily and effortlessly, and achieve your financial independence sooner and easier.

Tools for Financial Independence Through Automation

Now that we have covered the basics of automation in finance, let’s look at some of the tools that you can use to automate your finances. These tools can help you save, pay, and invest your money automatically, without requiring much effort or time from you. They can also help you track, manage, and optimize your finances, by providing you with useful features, such as budgeting, reporting, analysis, advice, or alerts. Here are some of the tools that you can use to automate your finances:

Budgeting apps

Budgeting apps are tools that you can use to create and follow a budget, which is a plan that shows how much money you earn, spend, save, and invest each month. Budgeting apps can help you automate your finances by:

Linking to your bank accounts, credit cards, loans, or investments, and automatically categorizing and updating your transactions, income, expenses, savings, and investments.
Setting up goals, limits, or rules for your spending, saving, or investing, and automatically transferring money to your savings or investment accounts, or paying your bills, based on your preferences and behavior.
Providing you with insights, feedback, or suggestions on how to improve your financial situation, such as reducing your expenses, increasing your income, or optimizing your portfolio.

Some examples of budgeting apps are:

Mint: This is a free app that allows you to manage your money in one place, by linking to your bank accounts, credit cards, loans, or investments. It automatically categorizes and updates your transactions, income, expenses, savings, and investments, and provides you with a dashboard, charts, and reports to show your financial overview and progress. It also helps you create and follow a budget, by setting up goals, limits, or alerts for your spending, saving, or investing. It also offers you personalized tips and advice on how to improve your financial health and credit score.
You Need a Budget (YNAB): This is a paid app that helps you create and follow a budget, based on a simple and effective method: give every dollar a job. It links to your bank accounts, credit cards, loans, or investments, and automatically updates your transactions, income, expenses, savings, and investments. It also helps you assign a specific purpose or category to every dollar that you earn or spend, and track your progress and performance. It also helps you plan for the future, by setting up goals, rules, or buffers for your spending, saving, or investing. It also offers you online classes, podcasts, blogs, and forums to learn more about budgeting and personal finance.
Personal Capital: This is a free app that helps you manage your money and grow your wealth, by linking to your bank accounts, credit cards, loans, or investments. It automatically updates your transactions, income, expenses, savings, and investments, and provides you with a dashboard, charts, and reports to show your financial overview and net worth. It also helps you create and follow a budget, by setting up goals, limits, or alerts for your spending, saving, or investing. It also offers you tools and advice on how to optimize your portfolio, reduce your fees, lower your taxes, and plan for your retirement.

Robo-advisors for investing

Robo-advisors are tools that you can use to invest your money automatically, without requiring much knowledge or experience in investing. Robo-advisors can help you automate your finances by:

Linking to your bank account, and automatically transferring money to your investment account, every month, or on a regular basis.
Creating and managing a diversified portfolio of assets, such as stocks, bonds, ETFs, or index funds, based on your risk profile, time horizon, and goals.
Adjusting and rebalancing your portfolio, according to market conditions, performance, or changes in your situation or preferences.
Providing you with reports, analysis, or advice on your portfolio, returns, fees, taxes, or risks.

Some examples of robo-advisors are:

Betterment: This is a low-cost robo-advisor that helps you invest your money for various purposes, such as retirement, safety net, or general investing. It links to your bank account, and automatically transfers money to your investment account, based on your settings and behavior. It creates and manages a diversified portfolio of ETFs, based on your risk profile, time horizon, and goals. It adjusts and rebalances your portfolio, according to market conditions, performance, or changes in your situation or preferences. It also provides you with reports, analysis, or advice on your portfolio, returns, fees, taxes, or risks. It also offers you features, such as fractional shares, tax-loss harvesting, or smart beta, to enhance your returns and reduce your risk.
Wealthfront: This is a low-cost robo-advisor that helps you invest your money for various purposes, such as retirement, college, or home. It links to your bank account, and automatically transfers money to your investment account, based on your settings and behavior. It creates and manages a diversified portfolio of ETFs, based on your risk profile, time horizon, and goals. It adjusts and rebalances your portfolio, according to market conditions, performance, or changes in your situation or preferences. It also provides you with reports, analysis, or advice on your portfolio, returns, fees, taxes, or risks. It also offers you features, such as fractional shares, tax-loss harvesting, or risk parity, to enhance your returns and reduce your risk.
Acorns: This is a micro-investing robo-advisor that helps you invest your spare change, by rounding up your purchases and transferring the difference to your investment account. It links to your bank account, credit card, or debit card, and automatically transfers money to your investment account, based on your settings and behavior. It creates and manages a diversified portfolio of ETFs, based on your risk profile, time horizon, and goals. It adjusts and rebalances your portfolio, according to market conditions, performance, or changes in your situation or preferences. It also provides you with reports, analysis, or advice on your portfolio, returns, fees, taxes, or risks. It also offers you features, such as found money, earn more, or grow later, to increase your income and savings.

Online savings accounts

Online savings accounts are tools that you can use to save your money automatically, without requiring much effort or time from you. Online savings accounts can help you automate your finances by:

Linking to your bank account, and automatically transferring money to your online savings account, every month, or on a regular basis.
Offering higher interest rates than traditional savings accounts, and lower or no fees or minimum balance requirements.
Providing you with easy access and flexibility to withdraw or transfer your money, online or through an app.

Some examples of online savings accounts are:

Ally Bank: This is an online-only bank that offers a high-yield savings account, with a 0.50% annual percentage yield (APY), and no fees or minimum balance requirements. It links to your bank account, and allows you to transfer money to your online savings account, automatically or manually, online or through an app. It also provides you with features, such as buckets, boosters, or surprise savings, to help you organize, increase, or optimize your savings.
Marcus by Goldman Sachs: This is an online-only bank that offers a high-yield savings account, with a 0.50% APY, and no fees or minimum balance requirements. It links to your bank account, and allows you to transfer money to your online savings account, automatically or manually, online or through an app. It also provides you with features, such as recurring transfers, custom goals, or smart suggestions, to help you save more, faster, or smarter.
Varo Bank: This is an online-only bank that offers a high-yield savings account, with a 0.20% APY, and no fees or minimum balance requirements. It links to your bank account, and allows you to transfer money to your online savings account, automatically or manually, online or through an app. It also provides you with features, such as save your change, save your paycheck, or save your bonus, to help you save automatically, effortlessly, or unexpectedly.

How to Earn Money While You Sleep

One of the ultimate goals of financial independence is to earn money while you sleep, which means that you have passive income that exceeds your living expenses, without requiring your active involvement or work. Passive income is money that you earn from sources that do not depend on your time, effort, or skills, such as dividends, interest, rent, royalties, or online sales. Passive income can help you automate your finances by:

Providing you with a steady and reliable stream of income, regardless of your employment status, market conditions, or economic cycles.
Allowing you to diversify your income sources, and reduce your reliance on a single or a few sources of income, such as your salary, your business, or your clients.
Giving you more freedom and flexibility to choose how you spend your time and energy, rather than being tied to a job or a business that you may not enjoy or value.

To earn money while you sleep, you need to create or acquire assets that generate passive income for you, and then maintain or grow them over time. You can create or acquire passive income assets in different ways, such as:

Investing in dividend-paying stocks: Dividend-paying stocks are shares of companies that pay a portion of their profits to their shareholders, usually on a quarterly or annual basis. You can invest in dividend-paying stocks by buying them through a brokerage account, a retirement account, or a robo-advisor account. You can then receive regular dividend payments, which you can reinvest, save, or spend, as you wish. You can also benefit from the appreciation of the stock price, if the company performs well and grows its value.
Investing in interest-bearing bonds: Interest-bearing bonds are loans that you lend to governments, corporations, or other entities, in exchange for a fixed or variable interest rate, and a promise to repay the principal amount at a certain date. You can invest in interest-bearing bonds by buying them through a brokerage account, a retirement account, or a robo-advisor account. You can then receive regular interest payments, which you can reinvest, save, or spend, as you wish. You can also benefit from the appreciation of the bond price, if the interest rate drops and the demand for the bond increases.
Investing in real estate: Real estate is property that you own or control, such as land, buildings, or houses. You can invest in real estate by buying it directly, or indirectly through a real estate investment trust (REIT), a real estate crowdfunding platform, or a real estate robo-advisor. You can then receive regular rental income, which you can reinvest, save, or spend, as you wish. You can also benefit from the appreciation of the property value, if the market conditions improve and the demand for the property increases.
Creating and selling digital products: Digital products are products that you create and sell online, such as e-books, courses, podcasts, videos, software, or apps. You can create and sell digital products by using online platforms, such as Amazon, Udemy, Spotify, YouTube, or Shopify. You can then receive regular sales income, which you can reinvest, save, or spend, as you wish. You can also benefit from the scalability and reach of the online market, if your product is popular and valuable.
Licensing your intellectual property: Intellectual property is property that you create and own, such as patents, trademarks, designs, or artworks. You can license your intellectual property by granting permission to others to use or reproduce your property, in exchange for a fee or a royalty. You can license your intellectual property by using online platforms, such as LegalZoom, InventHelp, or Shutterstock. You can then receive regular licensing income, which you can reinvest, save, or spend, as you wish. You can also benefit from the protection and recognition of your property, if your property is unique and innovative.

Cut Costs Without Effort

Another way to automate your finances and achieve financial independence is to cut costs without effort, which means that you reduce your expenses without sacrificing your quality of life or your values. Cutting costs without effort can help you automate your finances by:

Increasing your savings rate, which is the percentage of your income that you save or invest, rather than spend. A higher savings rate means that you can achieve financial independence faster and easier, as you need less money to cover your living expenses for the rest of your life.
Reducing your debt, which is the money that you owe to others, such as credit cards, loans, or mortgages. Debt can be a burden on your finances, as it can reduce your cash flow, increase your interest payments, and lower your credit score. Reducing your debt can free up your money, improve your financial health, and increase your financial flexibility.
Optimizing your taxes, which are the mandatory payments that you make to the government, based on your income, assets, or transactions. Taxes can be a significant expense on your finances, as they can reduce your net income, savings, and investments. Optimizing your taxes can lower your tax liability, increase your after-tax income, and boost your financial performance.

To cut costs without effort, you need to use tools or strategies that automatically or easily reduce your expenses, without requiring much effort or time from you. You can cut costs without effort in different ways, such as:

Using cashback or rewards apps: Cashback or rewards apps are tools that you can use to earn money or points, by making purchases or completing tasks, online or offline. You can use cashback or rewards apps by linking them to your bank account, credit card, or debit card, and then using them to shop, pay, or play, as you normally do. You can then receive cashback or rewards, which you can redeem, save, or spend, as you wish. You can also benefit from the discounts, deals, or offers, that the apps provide you with.
Using comparison or negotiation apps: Comparison or negotiation apps are tools that you can use to find the best prices or rates, for various products or services, such as insurance, utilities, subscriptions, or travel. You can use comparison or negotiation apps by entering your information, preferences, or needs, and then letting the apps search, compare, or negotiate, for you. You can then choose the best option, or accept the best offer, that the apps provide you with.
Using automation or optimization apps: Automation or optimization apps are tools that you can use to automate or optimize various aspects of your finances, such as savings, investments, bills, or taxes. You can use automation or optimization apps by linking them to your bank accounts, credit cards, loans, or investments, and then letting the apps do the work, for you. You can then enjoy the benefits, such as higher interest, lower fees, lower taxes, or higher returns, that the apps provide you with.

Real Stories of Financial Independence

To inspire and motivate you to achieve financial independence, let’s look at some real stories of people who have achieved or are on their way to achieve financial independence, by using automation and other strategies. These stories can show you that financial independence is possible and attainable, regardless of your background, income, or circumstances. They can also show you the benefits and challenges of financial independence, and the lessons and tips that you can learn from them. Here are some real stories of financial independence:

Mr. Money Mustache: Mr. Money Mustache is a pseudonym of Pete Adeney, a former software engineer who retired at age 30, with a net worth of about $600,000, along with his wife and son. He achieved financial independence by living frugally, saving aggressively, and investing wisely. He now runs a popular blog, where he shares his philosophy and advice on how to achieve financial independence and happiness, by adopting a lifestyle of minimalism, efficiency, and self-reliance. He also advocates for environmental and social causes, such as reducing carbon emissions, promoting cycling, and supporting local communities.
The Frugalwoods: The Frugalwoods are a pseudonym of Liz and Nate Thames, a former journalist and a former software engineer who retired at age 32, with a net worth of about $1,000,000, along with their two daughters and a dog. They achieved financial independence by living frugally, saving intensely, and investing smartly. They now live on a 66-acre homestead in Vermont, where they practice homesteading, homeschooling, and blogging. They also run a popular blog, where they share their journey and tips on how to achieve financial independence and a meaningful life, by embracing a lifestyle of simplicity, creativity, and generosity.
Millennial Revolution: Millennial Revolution is a pseudonym of Kristy Shen and Bryce Leung, a former computer engineer and a former software developer who retired at age 31, with a net worth of about $1,000,000, along with their cat. They achieved financial independence by living modestly, saving diligently, and investing strategically. They now travel the world as digital nomads, where they explore different cultures, cuisines, and experiences. They also run a popular blog, where they share their story and advice on how to achieve financial independence and freedom, by rejecting the conventional path of home ownership, debt, and consumerism, and choosing the alternative path of renting, investing, and traveling.

Kids and Money

If you have kids, or plan to have kids, you may wonder how to teach them about money and financial independence. Kids and money can be a challenging topic, as you want to educate them, empower them, and prepare them for the future, without spoiling them, stressing them, or overwhelming them. Kids and money can also be an opportunity, as you can use your own experience, knowledge, and values, to inspire them, guide them, and support them, on their financial journey.

To teach your kids about money and financial independence, you need to use tools or strategies that are appropriate for their age, personality, and interests. You can teach your kids about money and financial independence in different ways, such as:

Giving them an allowance: An allowance is a fixed amount of money that you give to your kids, every week, month, or year, for them to spend, save, or invest, as they wish. Giving your kids an allowance can help them learn about money and financial independence, by:
- Teaching them the value of money, and the difference between needs and wants.
- Encouraging them to save for their goals, and to spend wisely and responsibly.
- Introducing them to the concepts of budgeting, investing, and compounding.

To give your kids an allowance, you need to decide how much, how often, and how to give it to them. You can also decide whether to link it to chores, grades, or behavior, or to keep it unconditional. You can also use tools, such as apps, jars, or envelopes, to help them manage their allowance.

Playing games with them: Games are fun and engaging ways to teach your kids about money and financial independence, by:
- Simulating real-life scenarios, and exposing them to the consequences of their decisions.
- Developing their skills, such as math, logic, or problem-solving.
- Sparking their curiosity, creativity, and imagination.

To play games with your kids, you can choose games that are suitable for their age, level, and taste. You can also choose games that are relevant to your goals, topics, or lessons. You can use games, such as board games, card games, video games, or online games, to teach them about money and financial independence.

Reading books with them: Books are powerful and informative ways to teach your kids about money and financial independence, by:
- Providing them with stories, examples, or role models, that they can relate to, learn from, or emulate.
- Expanding their knowledge, vocabulary, or perspective, on various aspects of money and finance.
- Stimulating their interest, passion, or motivation, to achieve their financial goals and dreams.

To read books with your kids, you can choose books that are appropriate for their age, comprehension, and preference. You can also choose books that are relevant to your themes, messages, or values. You can use books, such as picture books, comic books, novels, or non-fiction books, to teach them about money and financial independence.

Stay Safe While You Automate

While automation can help you achieve financial independence, it can also expose you to some risks or challenges, such as:

Security breaches: This is when someone hacks or accesses your accounts, devices, or information, without your permission or knowledge, and steals or damages your money, data, or identity. Security breaches can happen due to weak passwords, phishing emails, malware attacks, or unsecured networks or websites.
Technical glitches: This is when something goes wrong or fails with your accounts, devices, or tools, due to errors, bugs, or updates, and disrupts or delays your transactions, transfers, or payments. Technical glitches can happen due to software issues, hardware issues, or network issues.
Human errors: This is when you make a mistake or oversight with your accounts, devices, or tools, due to ignorance, negligence, or confusion, and cause or miss a transaction, transfer, or payment. Human errors can happen due to lack of knowledge, lack of attention, or lack of verification.

To stay safe while you automate, you need to use tools or strategies that protect and secure your accounts, devices, and information, and prevent or resolve any issues or problems. You can stay safe while you automate in different ways, such as:

Using strong passwords: A strong password is a combination of letters, numbers, and symbols, that is long, unique, and hard to guess or crack. Using strong passwords can help you protect your accounts, devices, and information, from unauthorized access or use. You can use tools, such as password managers, password generators, or password checkers, to help you create and manage your strong passwords.
Using two-factor authentication: Two-factor authentication is a security feature that requires you to provide two pieces of evidence, such as a password and a code, to verify your identity and access your accounts, devices, or information. Using two-factor authentication can help you protect your accounts, devices, and information, from unauthorized access or use. You can use tools, such as authentication apps, text messages, or email codes, to help you enable and use two-factor authentication.
Using encryption: Encryption is a process that converts your data or information into a code that can only be read or decrypted by authorized parties, such as you or your recipients. Using encryption can help you protect your data or information, from unauthorized access or use. You can use tools, such as encryption software, encryption services, or encryption keys, to help you encrypt and decrypt your data or information.
Using backups: Backups are copies or duplicates of your data or information, that you store in a different location or device, such as a cloud, a hard drive, or a flash drive. Using backups can help you protect your data or information, from loss or damage. You can use tools, such as backup software, backup services, or backup devices, to help you create and restore your backups.
Using alerts: Alerts are notifications or messages that inform you of any important or unusual events or activities, such as transactions, transfers, or payments, that occur with your accounts, devices, or tools. Using alerts can help you monitor and manage your accounts, devices, or tools, and detect and correct any issues or problems. You can use tools, such as email, text, or app alerts, to help you set up and receive your alerts.

Keep Growing Your Wealth

The final step to achieve financial independence is to keep growing your wealth, which means that you increase your income, savings, and investments, over time, without compromising your lifestyle or your values. Growing your wealth can help you achieve financial independence by:

Providing you with more money to cover your living expenses for the rest of your life, and to do the things that you love, such as traveling, pursuing hobbies, or spending time with family and friends.
Allowing you to reach higher levels of financial independence, such as financial freedom or financial abundance, and to enjoy more benefits and opportunities, such as creating impact, helping others, or leaving a legacy.
Giving you more security and confidence to handle any unexpected events or emergencies, such as illness, injury, job loss, or market downturns, without panicking or stressing.

To keep growing your wealth, you need to use tools or strategies that automatically or easily increase your income, savings, and investments, without requiring much effort or time from you. You can keep growing your wealth in different ways, such as:

Increasing your income: Increasing your income is the process of earning more money, from your work, business, or other sources, such as passive income, side hustles, or online platforms. Increasing your income can help you grow your wealth by:
- Providing you with more money to save or invest, and to accelerate your financial independence.
- Reducing your dependence on a single or a few sources of income, and diversifying your income streams, to increase your financial stability and flexibility.
- Enhancing your skills, value, or impact, and advancing your career or business, to increase your financial potential and satisfaction.

To increase your income, you need to use tools or strategies that help you find, create, or leverage opportunities to earn more money, such as:

Asking for a raise or a promotion: This is when you request or negotiate a higher salary or a better position, from your employer or manager, based on your performance, skills, or value. You can use tools, such as salary calculators, market research, or negotiation tips, to help you prepare and justify your request or negotiation.
Starting or growing a business: This is when you create or expand a product or service, that solves a problem, meets a need, or satisfies a desire, for a target market or audience, and generate revenue or profit from it. You can use tools, such as business plans, market analysis, or online platforms, to help you launch and grow your business.
Creating or monetizing a blog, podcast, or YouTube channel: This is when you create or share content, such as articles, audio, or video, that educates, entertains, or inspires a niche or a mass audience, and earn money from it. You can use tools, such as WordPress, Anchor, or YouTube, to help you create and distribute your content, and tools, such as Google Ads, Patreon, or Affiliate Marketing, to help you monetize your content.
Selling or renting your skills, assets, or space: This is when you offer or provide your skills, assets, or space, such as your knowledge, expertise, time, products, or property, to others who need or want them, and receive money from them. You can use tools, such as Fiverr, Etsy, or Airbnb, to help you sell or rent your skills, assets, or space.
Increasing your savings: Increasing your savings is the process of keeping more money, from your income, rather than spending it. Increasing your savings can help you grow your wealth by:
- Providing you with more money to invest, and to accelerate your financial independence.
- Reducing your expenses, and increasing your financial stability and flexibility.
- Enhancing your habits, mindset, or values, and improving your financial health and happiness.

Conclusion: Final Thoughts

Automation is a powerful and effective way to achieve financial independence. Automation involves utilizing technology to carry out tasks that would typically demand human intervention. Automation can help you streamline your finances, reduce your expenses, increase your income, and achieve your financial goals faster and easier.

In this article, we have discussed:

What is financial independence, and why it is beneficial.
How to automate your finances, by setting up automatic savings, automatic bill payments, and investment on autopilot.
What are the tools that you can use to automate your finances, such as budgeting apps, robo-advisors, and online savings accounts.
How to earn money while you sleep, by creating or acquiring passive income assets, such as dividend-paying stocks, interest-bearing bonds, real estate, digital products, or intellectual property.
How to cut costs without effort, by using cashback or rewards apps, comparison or negotiation apps, or automation or optimization apps.
How to keep growing your wealth, by increasing your income, savings, and investments, using tools or strategies such as asking for a raise or a promotion, starting or growing a business, creating or monetizing a blog, podcast, or YouTube channel, selling or renting your skills, assets, or space, using robo-advisors, dividend reinvestment plans, or tax-advantaged accounts.
How to teach your kids about money and financial independence, by using tools or strategies such as giving them an allowance, playing games with them, or reading books with them.
How to stay safe while you automate, by using tools or strategies such as using strong passwords, two-factor authentication, encryption, backups, or alerts.
What are some real stories of financial independence, such as Mr. Money Mustache, The Frugalwoods, or Millennial Revolution.

FAQ

To conclude this article, let’s answer some frequently asked questions (FAQ) about financial independence and automation. These questions can help you clarify some common doubts, misconceptions, or challenges, that you may have or face, on your financial independence journey. Here are some FAQ about financial independence and automation:

Q: How much money do I need to achieve financial independence?
- A: The amount of money that you need to achieve financial independence depends on two factors: your annual expenses and your withdrawal rate. Your annual expenses are the total amount of money that you spend in a year, on average, to maintain your desired lifestyle. Your withdrawal rate is the percentage of your portfolio that you withdraw each year to cover your living expenses. To calculate the amount of money that you need to achieve financial independence, you can use the following formula: