You want financial independence to get freedom. Makes sense, I got you.

But there’s more than one way to skin a cat.

Here’s a thought about how the other four types of capital can all be used in your financial independence campaign.

Financial, intellectual, human, social

Those are the four types of capital.

I can’t actually give you a concrete source for this, but even a quick internet search will confirm this information.

A guy from PwC set these out for me. He works in private wealth planning and forecasting, and the speech was about big macroeconomic forecasts.

If a “Big 4 accountancy firm”, whose only goal is to make money knowing about money, thinks this – I’m pretty comfortable.

The sum is greater than the parts

You can definitely go heavy on any one form of capital and make financial independence work.

A banker whose superpower is just making tons of money as a salary can get to financial independence purely by investing. Anyone can do that, but the banker can accumulate fast.

Similarly, the hermit who lives in the wilderness in a hut they built themselves and surviving off hunting and fishing will hit financial independence really quickly. Anyone can be frugal, but if you’re a survivalist legend with huge amounts of human capital (skills in this case) then money is a secondary concern and you can hit the kind of frugality that astounds and amazes.

Those are two extremes and there are downsides to going so hard on either route.

For the banker: sure, they’ll have lots of money and/or income-generating assets. However, can they fix the kitchen tap? Can they maintain their house? Probably not. They’ll need to pay someone every time. The lack of diversification in their intellectual and human capital raises their overall freedom number. Blogger Banker on Fire had hit £1m in net worth by 2022 and is still going, so this isn’t just me riffing on nothing.

For the grizzly survivalist: daily survival is great, but the costs are that they lose flexibility and social connections to live this way. If they change their mind, they’ll need money to buy back into society – money they don’t have – and there’s a huge risk that they lack the social skills to reintegrate.

My point is that if you combine a bit of everything you don’t need to go so hard on any one form of capital.

I’m going to have hit my goals a long way before I’ve accumulated £1m in assets!

Financial capital

This is the easiest to understand: if you have enough capital in financial assets, you can generate an income for life.

It also takes the least amount of thought. Hell, you can use a robo-investor to do this without any strenuous thinking on your part. Just keep on earning, live below your means, put spare cash into investments.

There is no excuse for not developing your financial capital. Harsh, but true.

Intellectual capital

Your ideas, doctrines, knowledge, and the way you think.

When you know more, you gain more options. You have the knowledge to make things happen. Opportunities become visible.

This is a tradable commodity like anything else. If it wasn’t, why would anyone pay a consultant for anything?

The most basic way to build this up is to read the news and follow your curiosity. Falling down a Wikipedia rabbit hole isn’t as big a sin as you’d think, but if you’re serious about turning this information into capital then your best move is to reflect on the articles and consider how that information can be put to use.

There are loads of training courses available on the internet. Even YouTube, if you find the right places.

You’ll know you have developed intellectual capital when you can put an idea to use or see how it could work.

There’s a lot more to this, but that’s the summary.

Benefits to financial independence

  • Identify opportunities
  • Maximise any opportunities you have and allocate your time and energy effectively
  • Knowing what you’re asking for when you need to deal with professionals and providers of services
  • Looking in the right place when you need to develop human capital
  • Having value to contribute to social capital

Human capital

You’re probably aware that for an organisation this means warm bodies you can get to do stuff you need done.

For an individual, we’re looking at your motivation. Your skills and capabilities. Energy, even.

Regular readers will know that I attend training courses all the time, so that I’m always learning. In my own campaign, I’ve learned how to build a WordPress blog (this one!), skills for renovating houses that saved me money, how to sail my floating home and how to do simple boat repairs.

A lot of human capital means transferable skills. I don’t blog for my employer, but now that I’m used to writing on the internet it’s easier for me to write those puff pieces that law firms push out.

Benefits to financial independence

  • Increased self-reliance and lower expenditure on maintenance or practical tasks
  • Flexibility in case career field becomes obsolete or economy changes

Social capital

Your esteem, standing, connections, reputation.

Those dorks who say “YoUr NEtwoRk is yoUr NeTWOrth!” On LinkedIn have a point. Not a complete point, but there is a point.

Knowing a ton of people is only one way to build this, but ironically hanging out at the pub and meeting people in your community is a way of building social capital (at the cost of a lot of other things).

You could develop your leadership skills, or become recognised as an expert in your field. You might build a reputation for integrity in your dealings. Perhaps your craftsmanship and professionalism would become known through consistently improving at whatever you do.

If you build social capital, however you do it, you can usually influence others. This could be by empowering them with praise and guidance, or it could be by dissuading them from negative courses of action. It could even be as basic as being a platform to showcase an idea you’d like to see happen.

Benefits for financial independence

  • Opportunities in your network may find you
  • If you need to get something done to make an opportunity work, you can ask around and find out how to do it
  • Persuasion is easier if people already know that you’re good at what you do – perhaps that pay rise negotiation would go more smoothly!

Final thoughts

It’s totally achievable for anyone to slog away and just invest for 30+ years consistently until they become a pension millionaire.

So boring.

Look, anyone could tell you that. Any personal finance advisor, blogger, YouTuber, TikToker or Instagram influencer could tell you that.

But what gets missed is that you don’t need to turn yourself into a battery chicken until you magically hit financial independence.

If you can find ways to build up your intellectual, human and financial capital as well, you can have a bit more fun on the way and you can definitely reduce the amount of financial capital you need before your financial independence is secured.

Better yet, you can do some of this for free.

Think broader. Be more open-minded. I believe in you!