How a regular 9-to-5 employee earns passive income for financial independence
The Three Stages of FI: Survival, Stability, Abundance
When people think about Financial Independence (FI), they often imagine it as a single finish line: once you cross it, you’re free forever. But in reality, FI is more like a journey with stages – each with its own challenges, lessons, and mindset shifts.
From my own experience, I see FI in three stages: Survival → Stability → Abundance. Knowing where you are on this path not only helps you avoid common traps, but also shows you what to focus on next.
Stage One: Survival
What it looks like
Survival is all about keeping your head above water. You’re working mainly to cover expenses, worrying about bills, and maybe juggling debt. At this stage, every financial decision feels heavy because the margin of error is thin.
When I first started working after university, I was in this mode without even realizing it. I had some savings but no real plan. Every month felt like starting over. There wasn’t much thought about investing because I was focused on paying for daily life.
Key challenges in Survival:
- Living paycheck to paycheck.
- No (or very small) emergency fund.
- Carrying debt that eats into income.
- High stress over money, little bandwidth to think long term.
How to move forward:
- Track your income and expenses closely. You can’t fix what you can’t see.
- Cut down non-essentials and plug financial leaks (unused subscriptions, impulse buys, etc.).
- Build a basic emergency fund – even one month of expenses makes a huge difference.
- Attack high-interest debt first.
- Explore ways to increase income: side hustles, overtime, or upgrading your skills.
Personal note:
For me, breaking out of Survival started when I began saving consistently. It wasn’t a lot in the beginning, but it created momentum. The turning point came when I realized I couldn’t just work harder; I had to get my money working for me.
Stage Two: Stability
What it looks like
Stability is when you finally breathe easier. You’re no longer panicking over every unexpected bill. Your emergency fund is in place, high-interest debt is gone, and you’ve started investing. Passive income is still small, but you can feel the foundation forming.
I hit this stage around 2015. By then, I had already worked close to 20 years. My savings habit was strong, and I started actively investing in dividend-paying stocks. I remember my first few dividend payouts – they were small, but the feeling was priceless. It was the moment I realized money could flow in without me trading hours for it.
Key features of Stability:
- You save and invest regularly.
- Debt is minimal and manageable.
- Passive income covers part of your monthly expenses.
- You have more control and flexibility in your budget.
- Your mindset shifts from “surviving” to “building forward.”
How to optimize Stability:
- Increase your savings and investment rate.
- Diversify your income streams (for me, that meant building a dividend portfolio while keeping my 9-to-5 job).
- Optimize your spending so that it reflects your values, not just convenience.
- Protect your progress with proper insurance. Think of it as plugging holes in your sailboat – one big leak (like healthcare costs) can sink years of effort.
- Set clear milestones: e.g., passive income covering 30%, 50%, then 100% of expenses.
Personal note:
During the COVID-19 market crash, my portfolio dropped nearly 50%. It was nerve-wracking, but because I was in Stability, with a strong foundation and conviction in my strategy, I didn’t panic. In fact, I kept buying. That decision accelerated my journey toward FI.
Stage Three: Abundance
What it looks like
Abundance is when passive income covers all your essential expenses. Work becomes optional. You’re no longer driven by financial survival; instead, you have the freedom to choose.
I reached Abundance under 10 years after starting serious investing. My dividend portfolio now generates enough to cover my family’s living expenses. Even though I still choose to work, I do it with a completely different mindset. The stress of “needing the paycheck” is gone.
Key features of Abundance:
- Portfolio and income streams cover all essential costs.
- You can spend more freely without fear.
- You have the option to leave your job, pivot careers, or take sabbaticals.
- Financial surprises are manageable, not devastating.
- Focus shifts to purpose, impact, and legacy.
How to live in Abundance:
- Continue to preserve and grow your portfolio. Don’t let complacency undo years of effort.
- Give back whether through family, community, or mentoring others on the same path.
- Focus on meaning rather than just money. Abundance is not about luxury; it’s about choice.
- Revisit your goals often. Abundance gives freedom, but direction is what makes freedom fulfilling.
Personal note:
For me, abundance isn’t about luxury cars or big houses. It’s the small, powerful freedoms: choosing how I spend my mornings, being present with my family, and not worrying about a boss dictating my every move. It’s the ability to say “no” without fear.
Final Thoughts
The three stages of FI – Survival, Stability, Abundance are not just about money. They’re about mindset. Each stage demands a different focus: discipline in Survival, consistency in Stability, and intentionality in Abundance.
Wherever you are, remember: it’s not about rushing to Abundance. It’s about progressing stage by stage, building resilience and freedom along the way.
So I’ll leave you with this: Which stage are you in right now and what’s the next small step you can take to move closer to the next stage?
Find out more:
Discover why one paycheck is never enough → Multiple Streams of Income: Why One Paycheck Is Never Enough
Discover more from BOSS OF MY TIME (BOMT)
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