If these intro posts struck a chord and you’re now interested in FI, I guarantee you’ll have no regrets. But for now, get ready to work very, very hard – for a while, anyway – because you need to buy your freedom. Where are you going to get the money? Go look in the mirror. Because whether you know it or not, right now your biggest financial asset is you, and your earning potential over your career. This is called human capital. See your cousin Ed over there, sleeping until noon, binge-watching season after season of Game of Thrones, and goofing off with his buddies, with no education or training, and no job prospects? His human capital needs work, and he will struggle through life unless he does something about it. But your cousin Emily that just graduated with a Master’s Degree in computer engineering? Her human capital is excellent, and she already has a few job offers with great starting pay. She had to work hard to get here, but hard work pays off, and her human capital will give her a good life with options.

What Did I End Up Doing?

I was a clueless 18-year-old kid when I went to college, not entirely sure of a major. No different than most of us. But I was inclined towards math and science, so after a few false starts in physics and chemistry, I finished with a degree in geology. Another few years and I had a Master’s Degree in ground water geology. I was also able to finish my schooling with no student loans. I went to a relatively inexpensive in-state school, and between me and my folks, paid for school out-of-pocket. Most applied science Master’s programs offer a tuition waiver and monthly stipend for research or teaching assistantships (RA/TA), so I was able to cover grad school expenses as a TA. I took my sweet time getting through school (five years undergrad; three years grad), mostly because I enjoyed it. Once I graduated, I got a job in the environmental consulting field in 2001, with a modest starting salary of $30,000/year. I worked hard and between cost-of-living and merit pay increases, my salary grew at an annualized 9% per year for the next 13 years. Education and hard work (and, as always, some good luck and good timing) was the engine behind reaching FI at age 43.

You Need Human Capital

Human capital is where it all starts, and it will have a huge influence on the rest of your life. Without it, you’re going to struggle. So, build and optimize your human capital. It’s priority #1. And the earlier, the better. Because when you save for FI, what you’re doing is converting your human capital into financial capital (i.e., your investment portfolio) during your working years. Once you’ve built up enough financial capital, it will provide a stream of income during retirement. Instead of slogging away to earn income at your job, your financial capital is doing the work for you. It will provide you an income stream while you’re having a picnic or hiking in yonder mountains.

The Lesson

First, work hard in a practical field and maximize your income, then live modestly, save and invest during your working years starting on day one, and learn investing fundamentals (we’ll cover all this in later articles). Keep in mind that no one will do this for you – it’s up to you to build human capital and save and invest for FI. Don’t put yourself in a position where you’re 60 years old with no retirement savings. No one will come to your rescue, and you’ll find yourself working into old age.