Why Financial Independence?

“Money is something we choose to trade our life energy for”

– Vicki Robin

I’ve been listening to and practicing the principles of Financial Independence for a decade now. When I first stumbled upon Mr. Money Mustache’s blog in 2014 it felt like a superpower was unleashed. I binged all the content that I could. Of course, I wanted to share it with friends, family, co-workers, etc.

Everyone listened to what I had to say and they are all on their own individual FI journeys, right? Sadly, no.

Let’s dive a bit deeper into some of the common reasons I hear why Financial Independence doesn’t work for them.

I don’t want to deprive myself.

One of the greatest parts of Financial Independence is that it is personal. In my previous post, 5 Levels of FI – Demystifying the Noise, we talked about how there are many different levels of FI.

One of the earliest FI bloggers, Jacob Lund Fisker, would write for the Early Retirement Extreme. Jacob once wrote about how low his annual budget could be ($7000 back in 2013). Many would immediately write off FI as unattainable and conclude eating nothing but rice and beans is the only way this is possible.

Sadly for my waistline, I’ll tell you I eat much more extravagantly than rice and beans. FI is very attainable if you make a few key choices. As Paula Pant would eloquently say, “You can afford anything, but not everything”. The most common expenses mentioned to get right are the big 3 of Housing, Transportation, and Food.

However, as Ramit Sethi would say “Spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t.” As I wrote in Why I Bought a Tesla – The Balance of Saving and Living, it’s important to enjoy the ride on our journey to Financial Independence and spend on things that make us happy.

If anything I’d say that many practitioners within the FI movement sometimes struggle with spending their money despite having more than enough. Mr. 1500 and MindyOnMoney spoke on this on a number of their episodes.

In short, personal finance is personal and you can live as modestly or extravagantly as you choose.

I don’t make enough money to do that.

I’m not going to lie to you and say that a high income doesn’t make this easier. In principle, to attain FI we would like to increase the gap (or savings) between our income and expenses. If you have a higher income, you have the potential for higher savings.

However, one of the most common things that follows a high income is a high level of expenses. As of this Payroll.org 2023 survey, 78% of Americans live paycheck to paycheck. Living paycheck to paycheck is a phenomenon brought on by lifestyle inflation or the hedonic treadmill. Ultimately, when summarized our expenses rise to the level of our income. In his famous article, The Shockingly Simple Math Behind Early Retirement, Mr. Money Mustache, states that it’s more important to decrease our spending than increase our income. The rationale behind this statement is

  • “It increases the amount of money you have left over to save each month”
  • “And it permanently decreases the amount you’ll need for every month for the rest of your life”

Because of these statements, if you have a lower income and decrease your expenses AND plan to live off those expenses for the rest of your life then you are actually saving a larger percentage of your total income. Decreasing these expenses could then accelerate your time to FI faster than others.

I like my job.

First of all, kudos on finding a job that you like! You are in the 51% according to this poll conducted by the Pew Research Center that are satisfied with their job overall.

But what happens when that job you like begins to have changes that affect your happiness that are out of your control?

The COVID-19 Pandemic changed the work world in many ways. Many of us were sent home to work remotely and it was proven to be very successful both for company productivity and employee happiness. Many workplaces across the globe have moved to full-time remote flexibility such as tiny little companies *cough sarcasm cough* like NVIDIA.

What happens when that job you like decides that instead of being fully remote or even hybrid decides to utter those dreaded 3 letters, RTO (Return to Office)? Maybe you were in that 51% that overall enjoys their job, but in the 41% that are unsatisfied with their commute? Now due to an RTO policy, perhaps your overall satisfaction drops further. There has been a huge trend of employers forcing an RTO policy. However, not all have followed the trend. Forbes writes here about how NVIDIA has ignored the trends of forcing an RTO policy. Perhaps unrelated, but has been wildly successful this year.

Next, maybe you have the most amazing boss, but the absolutely unthinkable happens. They take a new role, get promoted, leave the company, etc. This happens all too frequently, and perhaps the person who is now your boss is not exactly who you’d prefer. This can be a deal-breaker!

Photo Credit: Ed Wolfstein Photo

As seen by the Adam Wainwright, MLB pitcher known for his curveball, photo above, what if the true curveball of a layoff, restructure, downsize, termination etc. occurs and the job that you like no longer likes you? These things can be within your control or completely out of your control. The result is the same. You no longer have agency in the decision and are beholden to someone else’s choice that ultimately affects you.

Becoming FI doesn’t prevent you from having a job at all either. Many would say that it allows you to be work-optional. Allowing you to put your time and effort towards endeavors you enjoy. Importantly, this may or may not be the same work as you currently do.

Convincing enough?

These at least are a few of the reasons why I hear not to pursue Financial Independence, but I’d flip that question around a bit. Why would you like to be financially independent? Would you like to spend time more time with family or friends? Is traveling more a passion? What about having more control over your time?

If money were of no importance to you, what would you do? How would you occupy your time? I think that the answers to these questions help motivate me and others on the path and realize not what are we moving from, but what are we moving to. Remember, even if you don’t go full bore into Financial Independence, is having more money and flexibility something you would regret?

Leave a note in the comment if you found this helpful and maybe one thing you look to move towards in your journey of Financial Independence.

3 thoughts on “Why Financial Independence?”

  1. Nice outline of the excuses people make as to why they don’t follow the path to FI. As a fellow FI blogger, your post made me think about the different stages of people we are trying to reach.

    1. You don’t know what you don’t know: These people are ignorant of FI in the true sense of the word. They simply have never heard of it or its principles. You can’t blame them. They aren’t making excuses. They are simply living their lives the best way they know how.
    2. You don’t get it: These people have been presented with the FI message, but it just doesn’t click. They either don’t understand, don’t care, or don’t believe that FI will change their life.
    3. Heard, understood, but not implementing: I’m a physician and I know a lot of unhealthy doctors. They have been taught about nutrition and exercise and understand the benefits, yet do not make the necessary changes. This is a group full of the excuses you mentioned. There has to be an excuse because there is conflict between what they know and what they are doing.
    4. On the path: This group has heard, understood, and is on the path but wants/needs more information or encouragement.

    Our mission as financial educators is to move people down this path. Your post made me think about what is the best way to accomplish this. It would seem to take a different skill set and passion to move people from stage to stage, like the difference between a 1st and 12th grade teacher.

    I’ve spent a lot of time thinking and writing about FI, but not a lot of time on how the message is being received. Perhaps I need to pay a little more attention to where people are on the continuum and tailor my message to where they are.

    Thanks for the thought-provoking post!

    1. Hey Neill, appreciate the feedback! I totally agree that you really need to meet the audience at where they are. To be most effective in helping people I think that is vitally important and likely a step that FI bloggers may overlook. I agree that my vision is to help others find this path that I find tremendous value in and selfishly get more people to join the party! I appreciate your insightful response and I’ll have to take a look at your site as well! Thanks again, Elliot

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