My salary is low, is financial independence an impossible dream for me?

Published: September 16, 2022 at 6:00 am

A reader asks, “I recently read your mutual fund investment journey. I then read similar stories shared by readers about their financial independence. One common feature in all these stories is the high salaries involved. My salary is quite low (I am ashamed to disclose it). I don’t see any immediate prospects of increasing it”.

“From what I have read/seen, I have understood that financial independence gives you options. Is this an impossible dream for me? Without a high salary, is there any point in dreaming about financial independence or other things?”

We can’t sugarcoat the truth:  Yes, a high-paying job; a sought-after skillset, and an impressive CV all make a big difference to the wealth we can build over time. To be precise,

If Income minus expenses minus debt >> 0 financial independnce is highly possible

For example, a salary of Rs. 3 lakhs a month, expenses of Rs. 75,000 a month, and no debt imply an invisible surplus of at least twice the monthly expense. If this entire sum can be earmarked for financial independence, it is possible to achieve this at least a decade before normal retirement.

Sadly, expenses will always look big for those with a low income, and what they can spare for investment will also be small. Even normal retirement (say by age 60) will appear to be a distant dream.


Build a complete financial plan with our Robo Advisory Tool. More than 1000 investors and financial advisors use it!
Get free money management solutions delivered to your mailbox! Subscribe to get posts via email! (Subscribers get exclusive discounts!)


New Tool! => Track your mutual funds and stocks investments with this Google Sheet!

The “usual” thumb rule for normal retirement is to invest at least 75% of monthly expenses (that will continue in retirement) each month. This includes mandatory EPF/NPS/Annuity contributions. See A simple thumb rule for retirement planning.

So what is the way out? Easier said than done, but that is how it always is.

Let us not get bogged down with talk of a corpus equal to 30X or 45X multiples of current annual expenses and redefine financial independence as being able to manage a frugal lifestyle after retirement, even if it is a few rungs lower than our current lifestyle. Then we look for ways to increase our income.

  1. Can you find a way to upskill yourself?
  2. Can you take up additional assignments, impress clients and hopefully open some doors for you?

This means you get to sleep less with no time for leisure. Are you willing to do this? Are you willing to take on some sort of risk to change your life? It is more possible than probable, but you will have to write your own odds and form your own inspiration.

Here is some proof:

Also, see:

Even if you did not do this, you could manage to achieve a reasonable degree of financial independence by age 60-65, provided

  • You “invest” and not “save” whatever you can in a disciplined manner. Your portfolio needs 50-70% equity. You must have the temperament to withstand years of loss to ensure your corpus has a reasonable chance of beating inflation.
  • You do not increase your lifestyle when your income increases.
  • You do not get into debt. Yes, forget about that dream car or even dream house. Sorry, not everyone gets to enjoy everything. When on a budget, dreams will have to be prioritized and re-shaped.
  • You are lucky. Sadly, luck always plays a role, but we must get out and knock on doors (try).

With a “low salary”, financial independence is not an impossible dream, but it cannot be an immediate dream. It will take much longer with significantly higher sacrifice, sweat and toil.

All this said, the sad reality is that many of us are unlikely to be financially independent in our lifetime. This does not mean we give up on it. Earlier, we discussed building wealth across generations by investing right.

Often trying to change the social station of our family may take two to three generations. My parents did everything they could to support me for 13 years after school so that I could get a career and not a job. Their sacrifices changed the social station of our family.

So don’t give up on your dreams. Try to increase income; Take (reasonable) risks with your career and your money; Put your head down and work/invest without expectations – change may take decades. Even if you don’t become financially independent, at least you can set up a pedestal for your children* to soar. And that ought to be just as fulfilling and no less an accomplishment.

* If you don’t have any, you (hopefully) should have more money for yourself!

Do share this article with your friends using the buttons below.

Use our Robo-advisory Excel Tool for a start-to-finish financial plan! More than 1000 investors and advisors use this!
  • Follow us on Google News.
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Join our YouTube Community and explore more than 1000 videos!
  • Have a question? Subscribe to our newsletter with this form.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Get free money management solutions delivered to your mailbox! Subscribe to get posts via email! (Subscribers get exclusive discounts!)
 
Explore the site! Search among our 2000+ articles for information and insight!

About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation for promoting unbiased, commission-free investment advice.
  Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low volatility stock screeners.
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)