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For example, if your costs are $50,000 per year and you think you can safely earn five per cent per year, then you would need roughly $1 million in savings.

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Note that there is a bit more nuance than this simple calculation — things such as inflation, life expectancy, your comfort with encroaching on capital, the predictability of earnings, etc. — but the basic formula should be intuitive.

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From this point, the timeline will be laid out, essentially based on how much you can save until you get to your required savings goal. For those with greater earning power or who plan to keep working, this might be a quick timeline. For those who want to put a hard stop to work or have high expenses relative to income, this could be a multi-decade project.

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If the timeline to financial independence looks far too long for comfort, as it will inevitably be for some, then the process of self-negotiation begins.

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This will be unique for everyone, but some common questions may include: What am I willing to compromise on? What do I need now to maintain a healthy balance of savings discipline and daily life fulfillment? Can I increase my income and/or decrease my expenses?

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Get off the (hedonic) treadmill

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In Greek mythology, the sirens lured sailors to their doom with enchanting songs. In our lives, the sirens are things such as luxury homes, high-end goods and vehicles, and vacations. Our ability to save is highly interconnected to our spending habits.

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Over time, you would expect savings to increase as income increases, but there is often a competing lifestyle creep. How do you resist this? By automating savings and adjusting savings with each pay increase before you get used to the extra income.

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The concept of “paying yourself first” ensures that before you even see your paycheque, a portion is tucked away. This way, you make decisions with what’s left, not what’s possible.

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For most people, debt is unavoidable, but not all debt is created equal.

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Mortgages or student loans are often considered good debt because they tend to lead to appreciating assets or increased earning potential. Conversely, things such as high-interest credit cards and payday loans are usually bad debt. They considerably add more to costs than if you were able to simply save enough to purchase the goods outright.

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The goal is to minimize the latter and to responsibly manage the former. Remember that every dollar not spent on interest is a dollar that can grow for your future self.

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Compounding: A critical ingredient

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Once you’ve got your savings map in place, it’s time to put it into action. Invest those savings early and often.

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Albert Einstein famously called compound interest the eighth wonder of the world. The concept is enormously powerful. Imagine planting a single apple seed. It takes a few years for it to grow into a sapling, then more to become a mature tree. Eventually, though, it produces hundreds of apples every season. Before long, you’re planting an entire orchard from those seeds.

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Investments can behave the same way. The earlier you start, the greater the growth. As the adage goes, “Time in the market beats timing the market.” To get to a level of financial freedom, sufficient time spent with compounded returns will be essential.