It seems like many in the financial independence movement have the same goal – to quit their jobs and travel the world at 30 or 35. Now, there’s nothing wrong with that goal. If that’s what you’re working toward, I encourage you to follow your dreams and go for it. But I wanted to put in a good word for those of us who might have different goals and dreams.
As they say, “personal finance is personal”? It may be cliche, but it’s cliche because it’s true. Personal finance is unique to every single person and family. My financial situation is unique and is different than yours. My goals and dreams are different too. And different doesn’t mean bad, or wrong, or that you don’t fit in to the financial independence movement – it just means different.
Too often, I think, those of us in the financial independence and personal finance community get wrapped up in an “ideal” vision of what early financial independence/retirement might look like. It looks something like living very frugally and inexpensively so you (and possibly a partner/spouse, maybe very young family) can do nothing but travel around the globe all year, seeking out exotic destinations for the rest of your lives.
But what if that’s not what you want? Is that OK? Do you still “belong” in the financial independence community?
I say yes, you do.
Living The Life You Want While Seeking FI
Maybe you don’t want to live on beans and rice, while living in a 500 square foot tiny house. Or biking isn’t really an option where you live unless you want to get run over, and your job is 45 minutes away. Move? Sure, you could move, but then your kids would have to switch schools right in the middle of elementary/middle/high school, and you would have to leave your extended family behind. And homes closer to your job are more expensive. Also, maybe you don’t want to quit your job. You like what you’re doing, you like your co-workers, and you just want to keep on working as long as both those things are true.
To me, the journey toward financial independence is a deeply personal one. You need to balance living the life you want today – making sure it’s an optimal life in alignment with your long-term financial goals – and investing for the future. I posted before about how living on lentils can free you from subservience in your life, but I didn’t mean literal lentils. I mean that you need to experiment to find your personal optimal level of spending, where’s your spending on priorities and still have a financial gap to save and invest for your future goals.
Yes, the lower you can get your spending, and the higher you can get your income, the faster you can reach financial independence. But maybe your life isn’t solely about the pursuit of financial independence. It’s also about other priorities, and sometimes those other priorities cost money. It may sound morbid, but we can all die anytime (and I would know). Once you realize that – truly realize it – you’ll know that a life lived out of whack with your real priorities doesn’t make any sense. Just take a look at this actuarial table and remember that every single number on here was a real person.
Reaching financial independence isn’t just about stopping all living and spending until you reach a goal, and then continuing spending next to nothing so you don’t run out of savings. It’s about getting to know your goals and dreams, and then living your current live aligned with them while setting money aside for the long term.
It’s All About Priorities
In order to achieve the life you want, it’s important that you figure out first what your priorities are. Now, this doesn’t mean that people should just live paycheck to paycheck and buy stuff they can’t afford because YOLO. Nor does it necessarily mean that everything in your current life is a priority – maybe you’re paying for cable, or an SUV, or something else that isn’t really adding value to your life. If so, cut it out and use those extra savings to further your real goals and dreams.
You might decide to spend on something that someone else thinks is a waste of money. Conversely, it means that other people get to decide to spend on things that you think are a waste.
Once you determine what’s a true priority in your life, then you can optimize your spending to achieve your short-term goals, while still leaving financial room to fund financial independence (FI). A dollar can only be spent once – once it’s gone, it’s gone. You need to treat both your money as precious resource that you can either use to get you closer to your dreams, or you can waste and stay stuck where you are.
So what are your real current priorities, and how can you optimize your spending around them? Take some time this week to sit down and really think about what your current priorities are. Health? Family? Career? Starting a business? Then cut activities that don’t align with your priorities. Get rid of spending that doesn’t move you toward the life you want. Then save and invest the gap between your income and your spending for your longer term goals and dreams.
Your Personal Vision of FI – And What Mine Is
When setting your own FI dream, don’t just adopt someone elses dream for your own. Just because “quitting your job to travel the world in your early 30’s” is what other people want to do, doesn’t mean that’s what you want to do. Maybe you don’t like traveling and you’d rather spend your free time around your home. Perhaps your kids wouldn’t do well moving around so much. You could be caring for an aging parent, or a disabled sibling. Or you could want to do a bit of traveling, but not full time. Maybe you’re already well past your early 30’s but you still want to reach financial independence.
You know what? That’s all OK. Our lives aren’t the same, and our goals, dreams, and priorities aren’t the same. That means that our vision of FI won’t be the same either.
What’s my vision of financial independence?
- Being totally and completely debt free. I don’t want to owe a single dollar to anyone. I have no debt right now except the mortgage, and I want that completely gone-ideally before I’m 40.
- Helping my kids with college according to our college compact. I’m not writing a blank check to college. But I had a rough time working full time and going to school full time to get my undergrad, and I have a set amount I’m targeting to fund. My oldest son will start college in just over four years, so this is a short-term goal for me.
- Have enough in retirement fund investments to fund my post-59.5 life – currently maxing out my 401k for this goal. I’ve been investing for a traditional retirement since I was a teenager.
- Once the first two bullets are taken care of, turning my focus to my pre-59.5 life. Once the mortgage is gone, my monthly expenses will go down significantly. Then once college funding is all set, everything that used to go to the mortgage and college investments will go to this goal.
- Once I’ve reached financial independence, I’m going to continue working. I don’t want to leave my job and travel the world permanently, although I do want to do some travel. I like to work in some capacity, and I don’t like traveling all the time.
There are some non-negotiable items for me on this path. I won’t move out of my house, which means that I need to deal with the commute (45 minutes each way) and need to plan to pay off my current mortgage instead of a smaller one. That also means we need two cars (both paid for and will be driven until they die). Our older boys are in Boy Scouts, which costs money for dues, camping trips (sometimes), and summer camp (optional but we like my oldest to go).
We’re also clear on what we don’t need. We don’t need a bigger house, despite having grown from a family of three to a family of five since we moved here. We don’t need SUV’s, expensive cars, or trucks – a Honda Accord and a Ford Focus suit us just fine. We don’t need the boys in a ton of expensive activities that they don’t want to do and that would suck up all our free time. We like hanging out together as a family on weekends better than crazy rushing around. I don’t need expensive hobbies – reading (library), gardening, baking, and writing are mine. The boys don’t need “stuff” – outside of Christmas and birthday gifts, they get a small allowance that they can use for whatever they want (because I’m not buying it).
What Are Your Priorities?
I’m clear on my short term priorities and goals, and what I won’t give up on the path to get there. I’m also clear on what things other people might value (expensive cars, new clothes, etc.) that I don’t care about. How about you – what have you made a priority in your life today? And what have you given up that other people might value, but you don’t care about? Let everyone know in the comments.
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