How a regular 9-to-5 employee earns passive income for financial independence
Why Most People Fail to Reach Financial Independence (And How to Avoid It)
If you spend enough time in personal finance communities, you’ll hear the same dream repeated: “I want to achieve financial independence.” Yet, if you look around after 10, 20, or even 30 years, you’ll find that most people never get there.
I don’t say this to discourage you. I say it because I’ve lived through the same starting point most people have — a traditional job, a monthly paycheck, bills that never seem to stop coming, and I’ve seen firsthand why so many give up before reaching the finish line.
The truth is, the path to financial independence (FI) is simple in theory but emotionally and mentally challenging in practice. From my own journey, starting in late 2015 with zero passive income to building a dividend portfolio that produces over USD $36,000 per year in passive income by 2024 – here’s what I’ve learned about why most fail, and how you can avoid making the same mistakes.
1. They Don’t Define What FI Means to Them
Most people talk about FI as if it’s one fixed number – a mysterious point where life magically becomes easier. But without a personal definition, you’re aiming at a moving target.
When I started, my goal wasn’t to retire with millions in the bank. My goal was simple: cover my family’s living expenses with passive income, so we could choose how we spent our time. For me, that meant building a dividend portfolio to cover at least $3,000 a month.
If you don’t define your “enough,” lifestyle creep will keep pushing the goal further away. You’ll keep earning more but also spending more and suddenly FI feels impossible.
Avoid it: Sit down and calculate your personal “FI number.” Then make every financial decision with that number in mind.
2. They Wait for the “Perfect Time” to Start
I’ve met countless people who say, “I’ll start investing when I have more money,” or “I’ll start once the market is safer.” Years pass, and they’re still waiting.
When I began in late 2015, the market wasn’t “perfect.” In fact, I made plenty of mistakes, including buying high-yield stocks like AT&T for the wrong reasons. But here’s the thing: starting taught me far more than waiting ever could.
Time in the market beats timing the market. Those first steps, even if imperfect, are what get your snowball rolling.
Avoid it: Start now, even if it’s small. You can adjust as you learn.
3. They Can’t Stick Through Market Volatility
One of the most painful moments in my journey was during the COVID-19 crash. My portfolio dropped by 50% in a matter of weeks. That’s enough to make most people panic-sell and swear off investing forever.
But I remembered something Charlie Munger said:
“If you can’t react with equanimity to a market price decline of 50% two or three times a century, you’re not fit to be a common shareholder.”
Instead of selling, I kept buying. That decision alone accelerated my passive income growth when the market recovered.
Avoid it: Expect downturns. Mentally prepare for them now so you don’t make emotional decisions later.
4. They Confuse High Income with Wealth
You can earn $200,000 a year and still be broke if your spending matches (or exceeds) your income.
I’ve seen colleagues upgrade cars, buy bigger homes, and spend bonuses before the money even arrives in their accounts. It looks impressive from the outside, but inside, they’re trapped in the rat race.
My family and I made a conscious choice to live below our means. That freed up more money to invest and investing consistently over nearly nine years is what allowed me to grow my dividend portfolio to over USD $36,000 per year in passive income by 2024.
Avoid it: Focus on your savings rate, not just your income. The gap between what you earn and what you spend is the engine that drives you toward FI.
5. They Don’t Have a Clear, Repeatable Strategy
Without a plan, investing turns into gambling. Many beginners buy whatever’s popular in the news or on social media. That works sometimes… until it doesn’t.
I avoided this trap by adopting a clear, rules-based system for stock selection. I use The Intelligent Investor’s checklist and stick to quality dividend-paying companies. I also track my portfolio with tools like getquin and my valuation tracker, so I always know where I stand.
Avoid it: Pick a strategy you understand, and stick with it through market cycles.
6. They Underestimate the Role of Patience
Nearly nine years might sound like a long time, but that’s the reality of building sustainable, lasting passive income. The first few years felt painfully slow, dividend income came in small amounts, sometimes less than $50 a month.
But like a snowball rolling downhill, momentum built over time. The small wins added up, and before long, the passive income covered a significant chunk of our living expenses. By 2024, it had grown to USD $36,000 annually, enough to give us true freedom of choice.
Many people quit in those “boring” early years before compounding really kicks in.
Avoid it: Trust the process. You don’t see a tree growing day by day, but years later it provides shade.
The Bottom Line
Most people fail to reach financial independence not because the math doesn’t work, but because they let impatience, fear, lifestyle creep, or lack of planning get in the way.
My own journey wasn’t perfect – I made mistakes, faced doubts, and watched my portfolio get cut in half during downturns. But I stayed the course, kept investing, and kept my definition of “enough” in sight.
Financial independence isn’t reserved for the lucky or the ultra-rich. It’s achievable for ordinary people but only if you commit to starting, staying disciplined, and thinking long term.
Your Next Step:
Don’t just read about FI. Define your number. Cut your expenses. Invest consistently. And when the inevitable downturn comes, remember – the people who stay the course are the ones who cross the finish line.
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