Financial Independence is a Lever
Financial Independence is a Lever
Do you love your job? My bet is that most people answer no to this basic question. Yet, one of my parent’s financial legacies to me is that they not only like their jobs, they love them. My mom is an accountant and spent most of her career helping build small businesses. If not for health related issues, I think she would do this forever. She still helps me run my medical practice. My step-father was a healthcare executive and parlayed his C-suite success into a busy consulting practice that keeps him on the road even still today. For them, early retirement was not even part of their thought process. Neither was financial independence. Their W2 wages provided enough. Thinking in these terms, it seems that financial independence is a lever rather than a destination. A tool rather than a goal.
In many ways, the meaning of financial independence really depends on not just your source of income (ie your employment) but also your feelings about your job.
If You Love What You Do…
If you love your job and financial independence is a lever, than maybe you don’t need to exercise that lever. You don’t need to use the escape hatch or to move to Plan B. In this situation, it is more than OK to imagine financial independence as a distant goal that you are in no hurry to reach. I’m not saying to forego all frugality or fail to invest. That would be down right silly.
But the urgency is no longer there.
As I said in a previous post, money is an intermediary that allows us to exchange goods and services for other goods and services. If you enjoy providing your goods and services to your employer more than you enjoy whatever you would be doing in early retirement, than keep working.
If You Feel Meh About Work…
If you don’t love it, but you don’t hate it either, then financial freedom becomes more important. You might want to start building a bridge to FI sooner. Financial independence is a lever and you are itching to pull that lever when possible. Since you don’t hate work, you don’t have to grind it out immediately.
But all things considered, you would rather not be working if you had the choice.
This allows for a retirement glide path. You can take your sweet time planning the ideal asset allocation, stuffing those IRAs or 529s, or waiting for a child to mature. And when the tea leaves read right, you can make the jump.
And If You Despise Work…
Then you are going to want to pull that financial independence lever as soon as possible. You are going to want to frugalize, invest aggressively, and save your heart out. This is the time to develop those side hustles, take advantage of geoarbitrage, and pretty much use every hack and trick in the FIRE playbook.
Spending as little time doing things we despise should be the ultimate goal of our financial journey. Whether that means quitting your job and entering a new profession (even lower paying) or pushing towards FI as fast as humanly possible, something needs to change.
In Conclusion
Financial independence is a lever. It is a tool to be toggled to your specific needs. For those who love their careers, it may never need to be used or attained. For those who are hating every moment on the time clock, it should be pulled quickly.
For the rest of us, it remains a viable pathway to early retirement when all ducks are in order.
Even if you love your job I think it should be a priority. Things can change. Your opinion, your health, or even your opportunities can all change. The lever allow you to decide.
Yes. But does it eventually change? Does it have to stay a priority?
I actually agree. Jobs can always change. Decisions can be made by administrators that change a job from one category to another. You might love it one day, be forced to do something new that you despise, and then start hating your job.
FI should be an early priority so that you have the autonomy to decide what to do with your job no matter what. It may also give you a seat at the table with those administrators because you have that freedom.
TPP
Over and over again we come to the same thing. FI creates autonomy and power. It creates freedom.
Having money (nest egg savings) gives you options in later life.
A good argument for front loading.
Loving what you do is important, but so is everything in between and respectfully managing what you reap . It’s a unified plan so we can weather the light rains as well as, the heavy storms. An umbrella of our own making.
An umbrella of our own making. I like that.
Me too! Though I did feel my inner Mary Poppins show up when I wrote it!
I agree that “financial independence” is a lever and a tool. And I agree that for people who love their jobs, it may not matter quite so much. But a part of me wonders whether the “thought of” financial independence makes us love our jobs less and less. And if we were meh about our job, the thought may make us despise our jobs even more.
For instance, I’m sure people reading FI bloggers who are always writing about being on the beach living the good life or traveling off to exotic locales may feel envious and think “Man, my job sucks.”
Comparing ourselves to others, going on social media, and reading glamorous FI blogs can sometimes diminish our self-esteem and destroy our sense of worth in the workforce. Just a thought.
With your history and training, would lying out on the beach all day feel like living your best life?
I loved my job for over 30 years and would not change a thing given the opportunity so I did not pull the FI lever even though I could have much earlier than I did. But eventually things changed and I changed and I was tired of it and I left it. Now I consult at things I enjoy, only as much as I want to, and life is the best it has ever been, and it was always pretty great! FI did give me the opportunity to get out but it also increased my dissatisfaction level when things started to go south. My ability to put up with nonsense was suddenly greatly diminished. In a real sense FI ended my 9 to 5 career, not that I am sorry about it.
I feel like you and Gasem have the same perspective here.
Anything in life can happen. Frivolous lawsuits, disability, burnout, etc. It’s good to have an escape hatch even if you don’t need it today. FI is that lever you can pull in case you need to.
I think people like us are lucky. We mostly like our jobs.
FI is a product, like a car or a house, you purchase it typically on a payment plan, and then own it once it’s paid for. The product is designed to provide future security for your family. Once you leave W2 land. If you purchase one that fits your lifestyle you’re set. If you purchase one too small you struggle. If you purchase one realistically designed for 30 years and try to make it last 50 years you’ll likely be sucking wind. I never saw it as job related because it was something I was purchasing on the lay away plan, year in and year out. It wasn’t till 65 I realized I had it. The mortgage was paid. For me I’m glad it worked out the way it did. I maximized my FI purchase but still never bothered with frugality. I lived a full rich working life and now I live a full rich retired life. The reason I never bothered with frugality is I wasn’t in some damn race to be FI firstest with the mostest. Neither was I extravagant. I was right sized. My main gig paid well so I maximized my purchase with main gig purchase power and though I tried a few, I didn’t waste my time with gigs that paid 1/10th of my main gig. Eventually I got old and tired and then retired and I live a near approximation of the beach life so popularized by the media, but I lived that life before I retired as well. I didn’t love it, I didn’t hate it, I lived it and I was grateful for the opportunity.
I had a chance encounter with a nurse I spent 25 years of my life with and came away with a sense of how totally divorced I am from my previous life. I like them both. I liked my working life and now I like my not working life. I think too much is made of making the dichotomy focusing on either/or instead of both/and.
I think the younger generations are much more either/or. I think your and Steve’s generation did a good job of being both/and. I think the both/and paradigm is better.
I love your analogy of FI as a lever. It’s truly a personal choice when that lever is pulled.
The cool part is that even if you love your job you can still focus on achieving FI in a way that brings you joy. I know my husband will retire from the fire department and he would never want to be in another field. He truly loves his job. Myself, I enjoy my job a great deal but do look forward to FI when I can maybe work in an area of nursing that may not pay well but where I’m helping a greater number of people.
FI isn’t necessarily about retiring early, but about having the option to do things with no financial tie. To do them out of passion and betterment of yourself and others. I think a lot of “millennials” are chastised for their goal of FIRE, but many of them go on to contribute to society on a completley different level once FIRE is achieved.
For sure a lever that anyone may pull at any time in their lives.
A fireman and a nurse. A hearty thanks to both of you for all you do. We are lucky that you are using financial Independence as a lever and contributing even when you may not have to.