I’ve written about financial independence multiple times on this blog. Clearly I’m a fan of the concept despite my admitted occasional struggle in actually pursuing it. I’m not just a writer behind the screen though. I daydream about financial freedom in real life, and I discuss these concepts with friends who read the blog. Some find financial independence appealing, however others don’t. Honestly- I think both sides are valid. There are wonderful benefits of pursuing financial independence, but also understandable hesitations and concerns. I wanted to turn these discussions into a post and talk about both sides.
Pour yourself a coffee, curl up on the couch, and let’s pretend we’re good friends talking about life & money.
Briefly- what is financial independence?
Technically speaking, financial independence is having enough money or assets that you never have to work again. There’s many ways of achieving this: rental properties, investments, passive businesses. The central premise is that you no longer require a job to pay your bills and maintain your lifestyle. You’re financially free to spend your time how you please.
Many associate this with FIRE (financial independence retire early) and that’s where many of the critics come out. The internet has strong opinions about retiring early. This article will focus on just FI (financial independence) since I feel it gives you the ultimate power: options. What you choose to do with your FI is up to you.
Let’s rip off the bandaid and get to the negatives first.
What possibly could be the downside to pursuing complete freedom?
The truth is there is a cost to every path you choose to follow in life; FI is no different. Automatically, if you choose one thing you’re deciding NOT to choose the other. Pursuing FI does require you make hard choices and sacrifices, particularly in the early years. You will have to spend significantly less than you earn; there’s no way around that piece. You have to ask yourself whether that is a price you’re willing to pay. Ultimately I think the pursuit is worth it, but I actually do agree that some of the drawbacks sting a bit.
The top concerns have I heard (or felt) about pursuing financial independence are:
-You don’t know how much time you have on this planet, so you should live in the moment.
-It’ll make you socially strange.
-You have to live like you’re poor now to continue to live on a tiny amount forever. Why bother.
-You’ll end up bored and unmotivated once you have enough money to not work. (Ahem, let’s cross this one off right away. No one said you have to stop working. But, how amazing would it be to get to choose what you work at without worrying about what it pays?).
-Did I mention how much you’ll need to sacrifice?
Hardcore FI folks may disagree with all of these statements or say they’re invalid. I don’t agree with that.
Pursuing financial independence DOES take sacrifice.
We do not live in a culture where it’s considered normal to spend less than what you earn. People want what they want, and they want it now. Can’t afford it? Put it on credit or a payment plan. If you want instant gratification a company will be more than happy to hand it to you (with an added cost, of course).
Pursuing financial independence demands you to be different.
You’ll need to wait until you can actually afford things before you get them. Future you needs to be considered just as much as present you. You’ll have to be a little abnormal. Honestly, it can feel like trying to swim upstream when everything around you wants you to go the other direction.
Every day you log onto social media and see images of people “living their best life”. It’s so easy to get wrapped up in thinking that every day should feel like a party. If it doesn’t, maybe you’re doing something wrong? Ordinary has become a bad word.
Those day to day choices add up though. Big time. When you spend money you don’t have you might enjoy that purchase or experience for a brief moment. However, when the bill comes due and you’re in so much debt you cannot breathe that carefree attitude can quickly escalate into panic.
The problem with “living normally”? The bill always come due. When it does, hopefully you can pay it. You’re banking on future you being in a better position to handle the cost than current you, and that’s not always the case. You’ve locked future you into a commitment so that you can please current you today. What if you change your mind or something happens?
Being financially vulnerable is a massive part of how our society operates, and that is not a feeling I enjoy or want to live with.
Thus far one of my favourite articles I’ve written is my snarky “If you follow the herd you’ll step in poop“. Follow the masses if you choose, but don’t do it blindly.
I strongly feel consciously choosing your own life path is worth it, EVEN if you ultimately decide you don’t want to change how you’re living at all. Live “normally” if that’s what you want, but put consideration into doing so.
On the flip-side, I also disagree with staying in a life or job that makes you miserable all in the pursuit of FI. Not knowing how much time you have on this earth is the #1 argument against FI that resonates with me. Nobody has a crystal ball. Short term sacrifice is fine, but FI typically takes double digit years to achieve. Enjoying your life during that time is just as crucial as the end goal (in my opinion). Take the time to ask yourself if you’re happy during the journey. If you’re pursuing FI to travel full time but don’t allow yourself any adventures in the decade (or more) of pursuing it, you might be missing the point.
Benefits of pursuing financial independence:
Now that we’ve discussed the negatives, let’s talk about the three reasons why I think the pursuit of financial independence is worth it.
The keyword is the PURSUIT. Many of the benefits of FI are available long before you “arrive”.
1. Getting very clear on what matters most to you.
For most people to even consider pursuing financial independence there needs to be a clear WHY. You will be making sacrificies, so why do it? What are you hoping to achieve?
The ability to travel full time? More time with your family? A fully funded career transition?
Everyone’s reason will be different, but there’s typically something fueling your decision.
Something very interesting happens if the first few years however.
You will likely get so into the concept and wanting to speed it up that you try to slash every cost you can, and earn as much money as you can. It’ll feel great, until it doesn’t.
Slowly you will feel deprived and realize there’s some things you really miss.
You just realized what’s truly important to you; what’s worth the money or time it costs. These are likely the things in life that bring you the most joy so fully recognizing them is invaluable.
They say you don’t know what you have until it’s gone. You just learned this lesson about what’s important to you, and the best news is you can add it back! This will slow your timeline to FI a bit, but you’ll do it with the knowledge of who you are and what you need.
2. A whole different kind of security.
Job loss is not something any of us like to think about. We might believe we’re completely safe, until we’re not. I personally work in health care so I expect stability. However, our union is heading into re-negotiations. Job & wage cuts will likely be on the table. The truth is you just never know what’s coming, and choosing a job only for the perceived security it provides can be a weak reason.
During your pursuit of FI you will inevitably increase your savings and lengthen your financial runway. This makes job security less necessary since you can provide your own security.
Maybe a very appealing job offer comes up that isn’t completely “safe”…. if you have a few years worth of expenses in the bank you’ll feel much more comfortable taking a chance knowing you have massive reserves to fall back on.
Maybe you decide to open your own business, or down shift to part time work.
Knowing that without a stable paycheck you can still have a roof over your head and food in the fridge in 1, 6 or 12 months is a whole different kind of security.
It takes your power back. It gives you enough security to permit you to ask “what do I want to do” versus what do I have to do.
That leads into my third and favourite benefit of pursuing financial independence:
3. It gives you options.
The worst thing to me is feeling trapped. That you have no where to pivot, and HAVE to keep doing what you’re doing.
As discussed, every month that you pursue FI it leads to a longer and longer financial runway.
This gives you the ultimate gift: options.
Are you in an unhealthy living situation? Leave.
Are you in a toxic job? Quit.
Want to stay home when your kids are young? Enjoy that time (financially) stress free.
Do you want to take off and travel the world for awhile? Book that ticket.
Money in the bank lets you wake up one day and decide to change your life. It’s truly the golden ticket. The best thing money can buy: freedom to choose.
So, do I think the benefits of pursuing financial independence are worth it? Absolutely.
I don’t feel humans were made to sit at a desk 9-5. To get vacation a couple weeks a year when your boss says you can. Watch lives on Netflix rather than living our own. To feel like any aspiration you might have can never come true, so squash them down.
Financial independence gives you the means to dream a bit bigger.
There’s a quote I printed and have hung on my bedroom wall:
Give yourself the financial flexibility to breathe and pivot.
Thanks for the coffee & chat.