My Step-by-step Plan To Financial Freedom using the FIRE method

I started as a noob in finance. Now I’m on my way to financial freedom. How? I persevered and started learning all I can about money management (Read: 10 Baby Steps to Financial Literacy). I read books and blogs, spoke to experts, and did a lot of reflection.

All the knowledge that I’ve gained, I took action. My spending decreased, my income and savings increased, and I invest the extra money. But there weren’t any concrete plan (that has proven results) that I believed and could follow. 

Then, I came across a classic finance book ‘Your Money Or Your Life’. That helped me put together all my thoughts and efforts that I’ve been doing to manage my finances. Finally, I have  a concrete plan for my FIRE goal!

This article is an introduction to FIRE and an overview of my journey to financial freedom. It is a 9 Step Plan which I will cover in details in the upcoming articles.

The book that inspired me to strive to be financially free AND have a life at the same time


  • What is Financial Independence
  • Why retire early?
  • 9 Steps to Financial Independence:
  • STEP 1: Know Your Lifetime Earnings & Your Net Worth 
  • STEP 2: Track Your Life Energy
  • STEP 3 Convert Money Spent into Life Energy
  • STEP 4  Find out how much satisfaction you get from your spending
  • STEP 5 Draw and display a graph of your totally monthly income and life expenses on a wall chart
  • STEP 6 Minimize spending hence increase savings
  • STEP 7 Maximizing your income 
  • STEP 8 Put another line (monthly passive income) on the wall chart
  • STEP 9 Investing For Financial Freedom

What is FIRE?

FIRE stands for Financial Independence, Retire Early. It is an idea that was developed 25 years ago by two financial gurus who achieved financial independence in their thirties. 

If I have to summarise it: understand how much you need, save aggressively (25 times of your annual expense is the goal), and invest the money which will give you 4% interest to sustain your lifestyle.

Once your passive income covers your expenses, you are financially free. At that time, you can but don’t have to work for money for a living.

The FIRE (Financial Independence, Retire Earlymovement is a lifestyle movement whose goal is financial independence and retiring early. Those seeking to attain FIRE intentionally maximize their savings rate by finding ways to increase income or decrease expenses. The objective is to accumulate assets until the resulting passive income provides enough money for living expenses in perpetuity.  –Wikipedia 

What is financial Independence?

While retiring early is not my goal (I love what I do and I would do it even if I’m not paid for it), I like the idea of being financially-free.

Wikipedia explained Financial Independence as:

Financial independence is the status of having enough income to pay one’s living expenses for the rest of one’s life without having to be employed or dependant on others – Wikipedia

In short, financial independence is when you have enough money from your investments to pay for your living without having to work. 

I love my work and I do not want to retire early. But I do want the choice to retire if I ever want to one day.

Why Retire Early?

I like the freedom to KNOW that I don’t have to work if I want to (and still be able to enjoy the comfort that I have now). 

Even if you love your work, there are many advantages of not having to depend on your job for a living. For example, my friend, a banker, who is financially secure is able to negotiate with her boss for a better package: flexible working hours so that she can have time for her two kids.

Financial independence to me means a choice and time to do what I love. I work because I enjoy it and I have the power to turn down work that I dislike. I can go on a holiday anytime and for however long without reservation, and dedicate time on hobbies and causes that matters to me.

While I am lucky to be able to do all that already (because I am financially secure), I want to be financially-free so that I can continue to enjoy this lifestyle for a long time.

There are many advantages of not having to depend on your job for a living

9 Steps To Financial Independence 

This is a 9 step plan in ‘Your Money Or Your Life’. There is a summary in page 321 of the book. I’ve simplified it and explained what I did:

(Note: I am not a purist. I am following the method loosely and according to my needs. I am not penny pinching nor am I rushing for financial independence. But I am working slowly towards it)

STEP 1: Know Your Lifetime Earnings & Your Net Worth 

What you need to do:

  • A) Count what you’ve earned. From your first part-time job to your last salary. 
  • B) Create a sheet to record all your assets (everything you own) and liabilities (everything you owe).

What I did:

  • This is difficult for me as I never had a fixed salary (I’ve had part-time job while in school, won awards and grants, and I’ve been doing business and freelance work since I graduated). But I do know that I saved most of what I’ve earned. So I just made a rough calculation from my savings.
  • I did a balance sheet (long before I read the book) in an excel sheet. I record what I have in all my bank accounts. I also calculate my valuables that can be sold for cash e.g gold jewellery. In it, I also wrote my fixed expenses e.g insurance payment. 

What’s the benefit of doing this?

  • To know your earning capabilities. Most people do not realise that they had earned more than they think. But unfortunately it is not reflected in their savings. 
  • To know your networth Knowing how much you have and how much you owe helps with your financial freedom plan. How much more do you need to reach your financial goal? 


If there’s one thing to take away from this book, it is the idea of life energy. “Money is something we choose to trade our life energy for” said Vicki Robins. In short, Life energy = Time you spend on getting money. 

In this second step, the goal is to see how much your life energy (hour) is worth. To put it simply: what is your real hourly wage? 

What to do:

What I did:

  • This is how I count my hourly wage: (average earnings + expenses related to work) / hours I spend working
  • I’ve been keeping track of my expenses and income though an app call Money Lover (Apple iTunes)

What’s the benefit of doing this?

  • Understand that your job cost you money and that what you truly earn is less than that
  • Know how much my time is accurately worth. This makes me value my time and money a lot more.
Life energy = time/energy you spend on getting money.  This reminds me of the movie ‘In Time’; people use money to buy time to live.

STEP 3: Convert Money Spent Into Life Energy

Now that you know what you truly earn in an hour, convert all your expenses to Life Energy. In short, find out how much time you need to work to spend on that spending/category.

What to do:

  • Put your total expenses in that month different categories (everyone is different) e.g shopping, food, car, rent, alcohol
  • Cover the money in that category into “hours of life energy” using your hourly rate.

READ: How are you spending your money & Life Energy


If your transportation cost (loan repayment, petrol, car maintenance, road tax) is RM 1000 and your hourly rate is RM 50, you need to work 20 hours to maintain your car.

Life energy on transportation = Money spend on transportation / your real hourly wage

What I did:

  • There are fix categories for everyone e.g food, transportation. I thought about my lifestyle and create categories that are important to me (e.g self-improvement, entertainment with/ gifts for family and friends)
  • Then I calculate how much I spend working for certain things. For example, I spent 4 hours Life Energy on ‘Friends & Lovers’ last month.

What’s the benefit of doing this?

  • You know how much something cost in terms of your time Now whenever I buy something, its not just x amount of money that I’m spending. I see money in terms of hours. A dress that cost RM X, also cost X hours of my time working for it.
  • Makes you realise what you really think is worth your money I had wanted to buy a new pair of shoe. When I convert the cost of that shoe to my Life Energy, I realise that it is not worth working for 2 hours for. But I am wiling to spend 6 hours working to buy a ticket for the upcoming musical and have a good nightout with a dear friend.
When I see things I want to buy in terms of Life Energy, it makes me think whether the purchase is worth my money and time

STEP 4: Find out how much satisfaction you get from your spending

What to do:

  • Look at how much Life Energy each category cost and ask these three questions: 
    • Did I get fulfilment?
    • Does my spending reflect my values/purpose?
    • How would it change if you didn’t have to work? 
  • Then see whether you should decrease/increase spending/time on that

What I did:

I asked myself these questions:

  • Did I get fulfilment? In my twenties, the bulk on my spending was on clothes. It became a habit. Even until now, I do like buying a new pair of shoe or a new pretty dress. When I reflect upon my spending on different categories, I realise I get a lot of satisfaction from going out with my friends and family (e.g spending on meals, gifts, entertainment) and not so much from clothing
  • Does my spending reflect my values/purpose? One of my values is relationship and despite the fact that I really love pretty clothes I don’t believe in vanity (i.e excessive care over one’s appearance). After reflecting on what is important to me, I allocate more money on activities with family/friends and be more mindful of my shopping.
  • How would it change if you didn’t have to work? I’m lucky that I have already found my dream job and it does not cost me much e.g I love my job so I don’t spend on entertainment to relieve unhappiness.
I realise I find more fulfilment in eating out at different restaurants with my family and friends than shopping for clothes

STEP 5: Draw and display a graph of your total monthly income and life expenses on a wall chart

Honestly, this is the step that I did not do until I decide to share my FIRE journey publicly. Maybe I thought that my finances is quite good and I didn’t need a reminder. Or it was too troublesome. Or I am secretly scared that I am not doing as well as I think.

But this book also have a motto “No blame, no  shame”. Once I did it, I feel like I conquered my (innate) fear of graphs and numbers. This step is life-changing.

What to do:

  • Create a chart on a piece of paper and put your total monthly income and expenses in form of a chart. Paste it somewhere you will see daily.

READ: How I created a Wall Chart of my Monthly Income & Expenses

What I did:

  • I took an A4 paper and created a graph on my monthly income and expenses (using data from my records on an app and excel sheet). Then I pasted on my dressing cupboard as I open it every morning to dress up and its discreet enough.

STEP 6: Minimize spending hence increase savings

I like this book’s many philosophies; it’s not about saving blindly, but rather finding out what is important to you and spend only on what truly matters to you.

We minimize spending because we value our Life Energy, not because we are a scrooge or don’t know how to enjoy life.

What you need to do to do:

  • “Learn and practice intelligent use of your life energy (money), which will result in lowering you expenses and increasing your savings.” – Vicki Robins, You’re Money Or Your Life (page 384).
  • In short, spend only on what is important to you and save the rest.

What I did:

  • Continue spending wisely. This step is the easiest for me. While I was not (and still not very) good with numbers – I was very good at saving. I saved most of what I’ve earned. A few years back, I got interested in philosophy (stoicism) and minimalism (Read: How to deal with annoying people like a stoic and 10 Ways Marie Kondo’s Minimalism Makes me Happier). Stoicism teaches us not to fear losing material things and Minimalism advocates having less of them. So my spending had dropped tremendously since about 5 years ago.
  • Cut down on spending that does not increase my fulfilment. So having a very good base already, I just cut down on spending on things that does not increase my fulfilment by a lot (e.g clothes). But honestly, I cannot save more than I can now without compromising my comfort and happiness. So my financial freedom plan focus more on increasing my income and find better investments. Which lead us to…

I have been spending very little since I follow the Marie Kondo method of only buying/keeping things that spark joy.

STEP 7: Maximizing your income 

I was never too into money. Perhaps I always have enough and I think it’s greedy/vulgar to want too much. Maximising our income is not because we are greedy, but because we know what we are worth. And it is something doable.

What you need to do:

  • “Money is simply something you trade your life energy for. Trade it with purpose and integrity for increased earning” says Vicki Robins. In short, money that your earned = your Life Energy. Understand that we want to increase our earning because we value our life/time.
  • Think about what other things you can do for extra income. What can you offer (services or things) that people are willing to pay for?

What I did:

  • My main income comes from my cooking classes. As my school is quite new, my fee was amongst the lowest. After reading this book, I increased my fees. But I also ensured that it is worth my guest’s money e.g providing breakfast and coming up special menu like Hainanese Chicken Rice. I realised that people are still willing to pay for it. I also started to think of more ways to other income such as writing more books and blogging.

Why is this important:

  • The more you earn, the more you can save, the more you can invest, the nearer you are to financial freedom. Do not fall into the trap of spending more when you earn more. Maintain your lifestyle while increasing your salary is the way to go.
  • This gave me the courage to increase my salary and creativity to find other source(s) of income. In the book, there were a lot of examples of how people did it (e.g a carpenter who increased his charge and realise that his customers are still willing to pay for it)

Read: How I Increased My Income & Get Most Value For My Work

I increase the fee of my cooking class and at the same time provide more value i.e breakfast. I also create special menus which people are willing to pay for.

STEP 8: Put another line (monthly investment income) on the wall chart

What you need to do

  • Every month, make a calculation of your monthly investment income and put it on the wall chart:
    • monthly investment income = capital x currently long term interest rate/ 12 months
    • For example, you have 50,000 Fixed Deposit in your bank. The interest that you got is 4 %. 
      • Your monthly investment income is = RM 100 000 (capital) x Interest rate (4%)/ 12 = RM 333

What I did:

  • I have already made this calculation long ago. And I know the minimum amount of investment I need for the interest returns to be financially free. But I never see it as a monthly ‘investment income’ in the sense that it pays me monthly. The chart also shows clearly how much more I need to work to reach financial independence (the crossover point where the ‘investment’ meets ‘expenses’)
I make a wall chart like this. It’s nice to see my financial situation and knowing that I am on the right track.

STEP 9: Investing For Financial Freedom

This step is to invest for a consistent income that is enough for your expenses. So there is a unique number for your lifestyle. Roughly put, you need 25x your annual expense. If your monthly expenses is RM 5000, you will need an investment of RM 1.5 million with 4% interest rate.

So if you can lower your spending, then you will need less. E.g if your monthly expenses is RM 2500 a month, you will need RM 750 000 to be financially free. 

What you need to do:

  • Learn about investments and how/when to invest your money. Look at your money this way:
    • Capital: Know your monthly salary 
    • Cushion: Have enough cash in your bank to cover six months of your expenses
    • Cache: The extra money that you have (from practicing the steps above)

What I did:

  • Capital: I have consistent income from my earnings as a cooking instructor, and other income e.g food consulting projects, book royalty, advertising.
  • Cushion: This is something that I always have (and I was shocked to find that many people who seem to be living quite lavishly didn’t)
  • Cache: I always have extra cash sitting in my bank – I just never did anything about it. Now, a large chunk of them are in my Fixed Deposit with 3.8% – 4.3% interest. I am also looking for other forms of investments. Currently considering blue chip stocks and ETF. 
I’m looking to invest my money in blue chip stocks or ETF. No, luxury bags are NOT investments.

FINAL THOUGHTS: Talk more about money & learn more about managing it

So that is my financial plan. I’m glad to find that I am already at STEP 9.

I was initially reluctant to share it on my blog; I was taught to never talk about money, sex, or religion in public. But there lies the problem: we will never learn about money management unless we talk about it.

Money is just something you trade your life energy for. Too many people tie their self-worth to how much they earn hence refuse to talk about something that may hurt their ego.

Having said that, money – in our capitalist society – is important. We need to learn to manage our finances properly for a good life. And it starts by thinking more in depth and talking more about money with people around you.

Even if you have zero knowledge (like I was), I encourage you to think and learn to be more financially-savvy. Do read ‘Your Money Or Your Life’. Follow the steps above. Or if you are scared to face it, don’t. “No blame, No shame”. Get it sorted before you get into bigger financial trouble.

We need to learn to manage our finances properly for a continuous good life


I have spoke to almost all my close friends who are willing to speak finances with me. I’m interested to learn more and hear about your financial journey.

Keep in touch with me at Facebook page and Instagram. See you there!

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