Your emergency fund should consist of 6 months of your typical expenses. This is a buffer to ensure you are covered if any of life's surprises decides to rear it's ugly head (expensive car repair or emergency surgery). You want to be sure you won't be throwing this type of expense on a high-interest credit card. Keep this money in a high-yield savings account (HYSA) or money market account.
Next is to eliminate any high interest debt. For simplicity's sake, this is anything higher than 7%. We can get into a separate discussion about what to do with interest less than this but it is a no-brainer to pay debt with interest this high off as quick as you can.
It isn't how much you make, it is how much you spend. Frugality is the surest path to financial independence.
It seems so easy to just spend less but I get it, we have to live our lives. A new car, a relaxing vacation, our favorite artist in concert, or even just another streaming service. I am not saying you have to rent a box and eat ramen every night. You need to understand every purchase has the opportunity cost of moving you further from your goal. Find ways to trim back your expenses and avoid making the BIG mistakes. Focus on the large purchases such as your house, car(s), and education for your kids as these are likely to be the biggest expenses of our lives.
Pay off your credit card every month. Don't carry a balance. If you don't feel like you can manage them, don't sign up. A debit card will allow you the same ability without paying the interest rate.
Learn to budget or at the very least, track your expenses. I started doing this with a spreadsheet and looking at my monthly credit card statement. I now use an app on my phone which automatically categorizes it for me. However you choose to do it, check in on it once a month just to understand where your money is going.
So I just mentioned frugality being essential to retiring early and then immediately tell you to maximize your income? Yeah, I know, but with expenses there is only so much you can cut before you're living in a box, eating , and leftovers you dumpster dived for, and cursing my name (I have feelings, too, ya know?). If you're looking to dig a hole, a shovel will get the job done but it is certainly easier if you have an excavator.
Depending on your career path, there are different ways to accomplish this. Invest in yourself to get certifications or additional training to increase your salary/hourly rate, get a side gig, or even think about getting a new career. We may not all be able to be CEO but you may be surprised where you can make six figures.
If only there was some sort of site or a financial advisor who could help you understand how to invest and develop a strategy that is unique to your needs. Wait a minute, I think I know a guy.
Whether you are a do-it-yourselfer or want someone to take the burden of developing a plan for you, be sure it is based on sound fundamentals, a healthy asset allocation, low expenses ratios, and a rebalancing schedule.
A plan is no good if you don't follow through with it.
Be cautious about making the big mistakes like selling during a market downturn. Don't get lured into the latest hot stock or newest trend. My experience has been that if you are learning about a investment that has seen recent high returns, you have already missed the boat. Consistent returns don't come from chasing waterfalls (shoutout TLC). Don't allow yourself to fall into your bad habits.
Your "why" for wanting to be financially independent needs to be stronger than your urge for spending your money on other things. It really is that simple. It is not, however, easy.