Eight Reasons You Will Never Reach Financial Independence

Reaching Financial Independence

This post was first published in September 2019 and updated in February 2021.

To say that the financial independence movement has gone mainstream would be an understatement.

Blogs, podcasts, youtube videos, Twitter “experts” – heck, we’ve even had a movie on the topic.

Now, learning from others is one of the best investments of time anyone can make. 

The challenge is, however, is that you also need to understand what NOT to do.

Everyone is happy to showcase their crypto gains. Shouting from the rooftops about their financial mistakes – not so much.

Even those of us who are well equipped to reach financial independence and have tons of momentum on our journey need to watch out for the proverbial iceberg that can sink our FI Titanic just when we are steaming full speed ahead.    

If that is the outcome you wish to avoid, you need to understand the qualities that can torpedo your quest for financial independence. 

Below, I am listing the top eight qualities of people who never reach financial independence. 

If you think you have got any of the traits on the list below, it’s time to take proper remedial action ASAP. 

1. You Simply Don’t Want To

No one really talks about this but the reality is that a lot of people who don’t reach financial independence simply don’t have it on their radar. 

Some aren’t aware of the concept.  Others have a vague awareness of it but file it in the “too hard” or “not interesting” category. 

I personally know quite a few people who have ended up in well-paying jobs and mistakenly assume the good times will last forever.

Whatever the reason is, you simply can’t reach financial independence if you don’t set out to do so.

2. You Don’t Take Ownership And Action

We have all met someone in this category.  This person knows what the problem is and sometimes even understands what needs to be done to fix it. 

But days, months and years go by and nothing happens. 

There is no shortage of excuses.  First, there is no time.  Then parents/spouses/kids get in the way. 

Then they change jobs and their employer just doesn’t recognize their talents.

The list of excuses is endless.  Then you bump into the same person twenty years later and guess what? 

While others have been designing and executing on a strategy to live their best life, these people are still making excuses for not making any progress. 

3. You Don’t Understand The Basic Concepts

The beauty of financial independence is that you don’t need to be a Nobel-prize winning economist to understand it. 

The basic concepts are simple and have been explained ad nauseam. 

However, despite the incredible work everyone has done to dumb down the basics of FIRE for everyone’s consumption, you do need to be able to understand a handful of simple concepts:

  • Importance of budgeting and spending less than you make
  • The basics of investing, including the relationship between risk and return, the importance of compound interest and the concept of inflation
  • The differences between the various asset classes (cash, bonds, stocks, real estate)
  • Importance of diversification
  • Advantages of passive stock market investing over active money management
  • Basics of personal taxation, legal tax-minimization strategies and investing in a tax-efficient manner

I’m sorry to break it to you but if you don’t have a grasp of the concepts above, your chances of achieving FI are slim to none. 

4. Reliance On Cash Savings

This should really be in bucket #3 above but is absolutely crucial, so I wanted to break it out. 

If you keep the bulk of your savings in cash without a good reason, you are probably losing money. 

It’s that simple.  Long-term inflation runs at about 3%.  Interest on cash deposits rarely exceeds 3% (you are lucky to get 2% in the current environment). 

If you have £100k sitting in a cash account yielding 1.5% interest and inflation is 2.5%, you lose £1,000 in real purchasing power every year. 

This is why keeping a significant chunk of your net worth in cash unless you have a great reason to do so (i.e. saving up for a down payment) is one of the worst financial decisions you can make. 

I am supremely focused on making sure my cash sits in high-yielding accounts.

5. You Don’t Take The Time To Educate Yourself

Gone are the days when information was recorded on parchment paper and only accessible to the privileged few. 

Today, there are hundreds, if not thousands of quality resources covering all the information you need to build a prosperous financial future for yourself and your family.

But as with anything in life, you need to invest the time and effort if you want to reap the rewards. 

No one expects you to know and understand all the concepts in #3 above.  Equally, you shouldn’t expect to reach financial independence if you don’t take the time to learn about the basic tools to build your wealth.

6. You Are Risk Averse

Everyone’s tolerance for risk is different – and that’s okay.  However, just as you don’t want to be relying on a trip to Vegas to build up your nest egg, you also shouldn’t expect to achieve meaningful results with zero risk.

Stock markets fluctuate by the minute.  Debt markets react to the latest interest rate decisions by central banks.  Real estate values follow multi-decade cycles. 

Let’s face it, there is a high likelihood any investment you make may decline in value – albeit temporarily. 

Ability to tolerate these short-term fluctuations is crucial if you want to be in the game of generating meaningful long-term returns.    

Otherwise, you will end up in bucket #4 above, sitting on a pile of cash while it continues to lose it’s purchasing power. 

7. You Cannot Delay Gratification

 All the good things in life take time.  It takes years to build a comprehensive skill set and a successful career. 

It takes months, if not years of physical exercise to start seeing results.

Financial independence isn’t any different. 

You won’t see meaningful results (other than feeling well organized) after two weeks of saving and budgeting.  A few months in, you may have made a small chink in your mountain of debt or built up a tiny cushion of savings.

It will most likely take at least a few years of diligent saving, investing and educating yourself until your debt is paid off, your emergency savings pot is giving you a proper margin of safety and your investments are generating dividends and capital appreciation at a solid clip.

The famous Stanford marshmallow experiment proved that people who can delay gratification enjoy significantly better life outcomes. 

If you haven’t got the willpower to make the right long-term decisions, you better build it up NOW.  Your future self will thank you every day. 

8. You Lack Consistency

The final item on the list unifies all the other ones. 

You may well be brilliant at what you do but you will never be successful unless your brilliance is underpinned by consistent effort day in and day out.

To use a tennis analogy, flashes of genius will win you points and games but consistency will win you sets, matches and tournaments. 

Is That It?

You will notice the list above has several glaring omissions. 

For example, I didn’t include things like “You don’t have a high-paying job” or “You are too old” or even “You live in a third-world country”.

These omissions were 100% intentional. 

I know people on disability benefits who have a better grasp of their finances than high-flying management consultants. 

I know people who immigrated to a new country at the age of 40 with just a couple of thousand dollars and a family to support. 

Those same people retired at 60 with a paid-off mortgage and a healthy investment portfolio. 

In most extreme cases, there are immigrants born into sheep herding families who don’t even know their birthday – yet go on to become billionaires. 

If there’s one person in the world that deserves your honesty, it’s yourself. 

If you are serious about reaching financial independence, you need to take a long, hard look in the mirror. 

If you see any of the traits above, you need to take remedial action today to start living your best life now. 

Otherwise, the tomorrow you are hoping for will never come.   

About Banker On FIRE

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Banker On FIRE is a London-based M&A (mergers and acquisitions) investment banker.  I am passionate about capital markets, behavioural economics, financial independence and living the best life possible.

Find out more about me and this blog here.

If you are new to investing, this is a good place to start.


    • Thanks Travis. You’ve got to learn to walk before you can fly, but too many people still try. No wonder they fail.

  1. Great post! How about “you grew up poor and spend your life trying to escape that scarcity lifestyle”. Kind of hard to save with that type of mindset (but I personally see this alot).

    • Thanks!

      The scarcity mindset would make a great addition. Think it impacts even those who are well off. My family invested in the stock market so I was very comfortable with that, but it took me much longer to get into real estate as we didn’t have that “habit” in the family.

      In contrast, I know some brilliant people with great real estate portfolios who just won’t dip their toe in the stock market.

  2. I love how this article is inclusive of all incomes and is instead a set of universal rules which we can all relate to! Sometimes it can be easy to reduce our finances down to our income, but really our mindset is a much bigger influence on our financial independence. Great post!

    • Circumstances play an important role, but your mindset is key.

      I know people who literally started a new life in their 40s and ended up far ahead of the game by the time they hit 60.

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