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June 29, 2020

The Progressive Levels of Financial Independence

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Are you interested in financial independence? Do you follow people in the FIRE movement? It’s easy to feel intimidated when you’re first getting started. However, a better understanding of the levels of financial independence makes this money journey feel much more manageable. 

To learn more about the pursuit of financial independence and something called Slow FI, I sat down with Jessica from The Fioneers. The Fioneers is a blog about enjoying life’s adventures today while on the path to financial independence. Jessica and Corey are a married couple living in a high cost-of-living area pursuing FI and sharing their experiences along the way. 

Rather than the hard-charging path that lines the journey of some FIRE walkers, The Fioneers are taking a slower approach. 

Learn more about Jessica's story and Slow FI to see if this path is right for you.

Jessica's Quest for Financial Independence

For Jessica, she knew she wanted to do work that would have an impact. The pursuit of financial independence came a bit later.

After undergrad, she and Corey taught in Nicaragua. Their return back to the States coincided with the Great Recession. So, Jessica says that she knew she needed to figure out what came next with the limited options that existed. After applying for any nonprofit opening she saw, she landed a job as a street canvasser in New York. Then, she transitioned to Americorp, where she earned a salary of $11,000. Eventually, she moved into another nonprofit role, where she worked for several more years. 

About three years ago, Jessica and her husband realized that despite their nonprofit work, they were still living conventional lives. They earned more money to have more stuff. Jessica and Corey found themselves living for the weekends and for vacation time. It was about that time that Corey introduced Jessica to the concept of financial independence

Finding FI

Reading a book

Jessica dove in headfirst. She devoured Your Money or Your Life, saying she appreciated the book for two reasons.

  • First, it helped her understand the mechanics of finances, which she had previously left to Corey.
  • More importantly, though, Jessica realized the value of lifestyle design. In the book, she was exposed to people who were figuring out what they wanted in life and finding ways to pursue it. 

That knowledge, coupled with her work situation at the time, brought Jessica to a turning point. When Corey said that they could reach financial independence in ten years, Jessica wanted to be thrilled. But she actually recalls thinking that there was no way she could do her job for another decade.

After suffering from serious burnout and panic attacks, she found herself needing to take medical leave. That’s when she realized the traditional path wasn’t going to work for her. 

Leaning into Lifestyle Design

She’s in good company. In fact, some of the most prominent people in the FIRE space actually caution fellow FIRE walkers to walk, not run, to FIRE. Jessica recalls stories from people saying they went too fast and learned the hard way that early retirement doesn’t fix problems; it simply exposes them. 

As much as Jessica is excited about the pursuit of FI, she realized that it wasn’t just possible, but that it was necessary for her to make some changes on the path to financial independence. While she was on her leave, she started to ask herself what her options were.

She and Corey already had a healthy emergency fund and enough FU money where Jessica knew she could buy herself some extra time. But that didn’t change the fact that she wanted to design a life she could look forward to now.

That lifestyle design led her to her current work as an HR manager. She works Monday-Wednesday for a nonprofit and savors her four-day weekends. This balance allows her to focus on work, and also keep self-care, health, relationships, and passion projects at the forefront of her life. While she doesn’t know if or when she will make the leap to entrepreneurship, she is enjoying running her blog and her coaching business on the side. 

Reflecting on her journey so far, Jessica says that life feels infinitely better and completely different from just a few short years ago. While the process doesn’t look the same for everyone, she does think that understanding Slow FI and the levels of financial independence can help. 

What is Slow FI?

Walk on Path with daughter

Slow FI is an alternate pathway to financial independence. Jessica defines it as intentionally using financial freedom to build a life you love on the way to FI. The goal is to balance long-term financial freedom with right-now lifestyle design. 

For different people, Slow FI means different things. This lifestyle design might mean moving more slowly on the path to FI to allow you to splurge a bit more on things you love. It could also mean saving aggressively to allow yourself to pivot to passion project work later. Ultimately, the focus should be spread between building a secure financial future and enjoy life’s adventures today. 

The Levels of Financial Independence 

Jessica sees financial independence as a continuum. While she spends time analyzing five stages of financial independence, she also points out that there are more stages in someone’s money journey before stage 1. She also acknowledges that it’s likely that there are stages beyond the fifth stage as well. 

This is how she sees the progressive levels of financial independence.

Stage 1 – Debt Freedom 

As with most terminology in the financial independence community, the definition of debt freedom varies. For Jessica, debt freedom meant that she and Corey were debt-free other than their mortgage expenses.

From their perspective, carrying a mortgage makes sense as long as the interest rates are low. Plus, they know that they would need to factor in housing expenses regardless. However, Jessica points out that you can define debt freedom however you like. She acknowledges that for many people, debt freedom might mean being mortgage-free as well.

The important thing about the debt freedom stage is what it unlocks in terms of your cash flow. All of the money that you previously put toward debt is now free to flow through your budget.

That means that you can beef up your emergency fund or funnel more money toward investing. You can also choose to make less money through a career change or by scaling back your workload. Simply put, fewer financial commitments means more control over your time. 

Stage 2 – FU Money

The next level of financial independence is FU money. Again, the amount depends on the person. Being able to set aside enough money to cover your expenses for several months or several years is powerful. It’s enough to get you out of a bad situation or to allow you to take advantage of an opportunity. 

To know what your level of FU money should look like, Jessica suggests walking through some different scenarios in your mind. If you lost your job, how would that impact your finances? How long would your savings be able to sustain you? That will help you determine how much money you want to set aside. 

Stage 3 –  Coast FI


Coast FI means that you already have enough money invested in your retirement accounts for a traditional retirement, so you don’t need to continue adding more. That doesn’t mean that you have a million dollars saved either. Instead, it means that you have enough money invested that can go untouched and grow through compounding for several decades. Then, if you leave the workforce at 62 or 65, you can support yourself with your investments.  

The benefits of being Coast FI mean that you don’t have to contribute anything else to your retirement accounts. Instead, you only have to cover your current expenses. Someone who lives on $40,000 a year only needs to earn $40,000 after taxes. That means that you could make drastic changes to your career and your life if you wanted to or needed to, as was the case for Jessica.

Stage 4 – Semi-Retirement

Semi-retirement is the next level of financial independence. Jessica defines semi-retirement as when someone has enough invested that they only need to cover a portion of their living expenses with active income. That means some income is generated passively.

That could mean that you are earning income through real estate investments or pulling money from your investment portfolio. You could also have other streams of passive income. In semi-retirement, though, you still need to have some type of active income. 

Stage 5 – Financial Independence

The final level of financial independence that Jessica explored is financial independence itself. In short, that means that someone can fully live off their passive income without needing to work again.

Of course, debates rage online over what this looks like in practice. Some people believe that someone who is truly retired won’t generate any income actively ever again. Jessica points out that the main thing about financial independence is that there is no need for more work. What someone chooses to do with their free time and passion projects is up to them.

Key Takeaways on Levels of Financial Independence & Slow FI

Are you ready to move through the levels of financial independence? Does Slow FI make sense for you?

One of the most confusing parts of any money journey has to do with getting started. That’s why it is so critical to figure out your “why”.

What drives you? What would you do with your day if you didn’t need to work? As you begin to pursue financial independence, make time to incorporate those passions into your life today. 



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Today’s ‘best practices’ lead to dead ends; the best paths are new and untried.

Peter Thiel

What level of financial independence are you on?

Please let us know in the comments below.

Andy Hill

Andy Hill is the award-winning family finance coach behind Marriage Kids and Money - a platform dedicated to helping young families build wealth and happiness. With millions of podcast downloads and video views, Andy’s message of family financial empowerment has resonated with listeners, readers and viewers across the world. When he's not "talking money", Andy enjoys being a Soccer Dad, singing karaoke with his wife and watching Marvel movies.

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