This article is by staff writer Lisa Aberle.

When will you declare your independence? Your financial independence, that is.

What is financial independence?

Ah, financial independence — the freedom to work only if and when you want to (because you no longer need the paycheck you earn from your job).

Even typing the word “freedom” makes me sit up a little straighter.

I am sure you can think of amazing things to do when you no longer need to punch a clock.

Still want to punch a clock? Think how rewarding you will find your job if you want to work but don’t have to.

How can you become financially independent … more quickly?

  • Spend a lot less than you make and invest the difference in something

  • Earn more at your traditional job, keep your expenses low and invest the difference in something

  • Work more hours at your day job or side job and invest the difference in something

See the common thread there? No matter how you do it, you need to widen the gap between what you make and what you spend — and then leverage that gap so it explodes into something more.

Review the basics of personal finance

If you are reading this personal finance site, I assume you know how to spend less than you make (also known as cutting your expenses). But just in case you need to sharpen your personal finance skills (and I know I do!), here are a few ideas:

Improve your financial situation

In just 30 days, you can cut your monthly expenses and improve your overall financial situation. But once you slash your expenses as much as they can be slashed, it is time to look elsewhere. That gap is just begging to be widened. So?

  • Earn more. Earn more at your day job. By asking for a raise, you can increase your income without ostensibly increasing your hours or your responsibilities.

  • Get promoted. And of course, you can always try for a promotion. You can also work more hours, if possible, at your current day job.

  • Get a second job. Or you can always pick up a second job, even just a few hours a week.

If I were playing a record for you, this is where I would drag the needle to stop. Music over. Let’s talk.

The problem with spend less, earn more, work more

Once you have widened the gap as much as you possibly can, you are probably doing something really smart with the extra money. But what if your attempts to pay off debt or build savings or whatever have totally burned you out?

You worked 60 hours a week instead of 40. Or you picked up extra stressful responsibilities (along with the extra moolah) in your paycheck. Or maybe, you just really miss your weekly dinner out.

Whatever the reason, you’re working as hard as you can and financial independence is still out of reach. You’re tired.

What if you could do something different to widen that gap? Something that puts your efforts on steroids? Something that ignores the relationship between hours spent and money earned?

Scalable income — six sources for sustainability

In order to maximize your income-earning potential, find a way to earn money that is independent of the hours you put in.

Why? When you only have 168 hours per week, you can’t work all those hours. You can’t even work half of those hours sustainably.

What do I mean? Here are some examples:

  1. Rental properties. When you use your gap to build savings for a down payment on a rental property, you can earn the same amount of money from rent, no matter how many hours you put in each month.

  2. Income from investments. Investments take some time to build up before giving you significant monthly, scalable income — but this income source is the most hands-off method I can think of.

  3. Laundromats or vending machines. In addition to rental properties, you could own laundromats or vending machines. While not completely hands-off, they do earn money for you even when you aren’t present.

  4. Royalties from inventing something. While most of us don’t think of ourselves as inventors, maybe more of us should be. My very hard-working-but-otherwise-ordinary brother-in-law owns a spray-foam insulation business. He noticed that a modification to an existing tool would improve their product. After meeting with a local tool-and-die maker, he now has a product that he ships all over the world. Is there a similar need in your area of expertise?

  5. Royalties from selling something. The Internet has leveled the playing field for many things. Can you leverage your current experience to create online courses, e-books, or how-to guides to help others learn what you already know?

  6. A business you own but don’t run. After you have established a business and have found a great manager, you may be able to step back from the day-to-day operations of running the business yourself. This, again, scales your efforts.

The pros and cons of scalable ways to earn money

All the ideas I have mentioned so far take time. This is Get Rich Slowly, after all. If this were easy, everyone would be doing it. But here’s what I see as the pros and cons of investing time to build scalable sources of income.

Pros of Investing Time

  • Investing time up front can pay big dividends later

  • Allows you to be paid independent (or somewhat independent) of the time you put in

Cons of Investing Time

  • Investing time up front takes, well, time before you earn big dividends later

  • Acquiring the skills (whether it’s through your day job, current business, or taking classes and doing research) also takes time

Your first steps to financial independence

So all of these activities still take time, but all journeys start with the first step. What is the first step in your journey to financial independence? Here are some ideas…

  • Pay off consumer debt first

  • Build your savings account

  • Research your method(s) of achieving financial independence

Continue the journey

Once you’ve determined the path to take, it is time to take action. You may fail, but you may also succeed. Always measure your actions and estimate your return on investment when working to determine whether these actions will help meet your goal of financial independence.

Years ago, I read something that stuck with me:

We overestimate what we can accomplish in one year and underestimate what we can accomplish in 10 years.

Where do you want to be in 10 years? If you want to be financially independent, even if you aren’t there yet, you can almost certainly be well on your way to your goal. Just get started.

If financial independence is one of your goals, are you trying to scale your income using one of the methods above? How far do you have to go to reach financial independence, and how do you avoid burnout?
