When would you like to achieve money independence? When would you like to retire? Are these two “goal dates” the same?
Let’s examine these two questions.
Money independence vs. not having to work
Do you ever have days when you feel like you just want to quit your job? What holds you back (on being able to quit) is your dependence on the income you get from the job. You absolutely shouldn’t quit, if your savings accounts do not have 3 to 6 months of cash reserve that would allow you to quit and seek another job or even start your own business.
What if you knew that having that reserve was the first step toward long-term money independence? Would it make you more excited to save money, if it wasn’t called an “emergency” reserve, but rather your first six months of money independence?
Money independence vs. working for money
You may be someone (like a lot of people that I talk to), who’d like to work with a nonprofit that aligns with your values. What if you could work with an organization for free because you had enough money in the bank? If that sounds like too much, what if you could work for that organization for a fraction of what you are earning in a for-profit world? Your money independence status can allow you to live the lifestyle you’ve always wanted, but now pursuing a career that you found to be more enriching.
Pursuing money independence not retirement
Listening to a Ted talk by Keith Chen made me think about this viewpoint. Chen’s Ted talk is called “Could your language affect your ability to save money?” He says that as English-speaking speakers we discern time periods. And that we tend to think in terms of the present and the future.
If that’s true, and it makes the future feel like something more distant and more different from the present, that’s going to make it harder to save. But, what if, we choose to speak a “futureless” language, and speak about the present and the future identically. Doing so may subtly nudge you to feel the same about the present and the future, and just may make it easier to save!
Most people think about buying a house or sending a child to college as near-term issues. Retirement is associated with the future. You may also associate some baggage like feeling old, less vibrant, nursing home, etc. What if you viewed money independence as being able to buy your dream house, sending a child to college, and other near-term dream ideas?
As a matter of fact, money independence doesn’t appear to have a deadline age (such as 65), which is often associated with retirement.
You may also associate money independence with being wealthy. You may never see yourself as being in that light, but what if you did? I have worked with a few people who have had dramatic increases in income within a short period of time. As an example, what if you made $50,000 a year and 10 years later we’re making $500,000 a year, would you benefit from money independence? You may if you chose to continue to live on $50,000 and saved all the money above $50,000. If you did not, you would still be dependent on continuing to make more income.
What do you want?
I recommend finding time to answer these questions:
- What is your vision for money independence/financial freedom? Ideally, where would you like to be in 5 years, 10 years, 20 years, etc.?
- What social, moral, or ethical concerns do you have? Do you have time to pursue them? How would you like that aligned to your financial plan?