Can self-employment help with FI?


Self-employment can indeed play a significant role in achieving financial independence (FI). Here are a few insights from Brad Barrett and other experts in the FI community:

  1. Side Hustles and Solo Ventures: Many in the FI community start side hustles or small businesses as a path to financial independence. These ventures often allow for a level of autonomy and financial growth that traditional employment may not offer. For example, the Solo 401K is a powerful tool for self-employed individuals, allowing for significant retirement savings through both employee and employer contributions. Proper planning and establishment by December 31st are key for maximizing benefits 1.

  2. Freedom and Flexibility: Self-employment can provide a lifestyle similar to that of someone who has already achieved FI. According to Diania Merriam, self-employment allowed her to enjoy the benefits of FI, such as flexibility and autonomy, without waiting to achieve traditional financial milestones. Brad Barrett also emphasized that FI is highly personal and individualized, and self-employment is one of many paths to reach it 2.

  3. Adding Extra Income: Even a modest side project generating an additional $1,000 or $2,000 per month can significantly impact one’s FI trajectory. Brad Barrett shared his own experience of starting small with his side projects, which eventually paved the way to financial independence. Building and scaling these small ventures over time can lead to substantial financial growth 3.

    Self-Employment and Retirement

    Sean shares insights on how self-employed individuals can use their business ventures as a path to financial independence. He discusses the benefits of a Solo 401K and the deadline for establishing it. For those who missed the deadline, he suggests a Sep IRA, which has a later deadline and can be a good alternative.


    155R | Year End Tax Planning
  4. Passive Income and Safety Nets: Being self-employed often involves creating multiple streams of income. Paula Pant discussed the importance of building passive income streams as a safeguard against financial instability. These efforts can eventually lead to financial independence by providing stable, recurring income without the need for traditional employment 4.

Overall, while self-employment may not be for everyone, it offers valuable opportunities for reaching financial independence through increased control over one's income and the flexibility to build a lifestyle aligned with personal goals and values.