Happy birthday, America. Wishing all of you in the U.S. a happy holiday, and a belated happy Canada Day to our northern friends!
Like we did last year, we’re spending this year’s independence day reflecting on the meaning of financial independence. (Last year’s post is full of gratitude to the historical figures who make modern retirement possible — worth a read if you want to brush up on the history.)
Though a lot of horrific attacks have occurred around the world in recent months, which can make the world feel like an unsafe place, we’re especially grateful this July 4th to live in the safest time in human history. (Don’t believe us based on just one link? Here are some more: 1, 2, 3.) And to live in a country where the presumption is that we all have a right to safety and freedom of movement. Could we do better as a country? Absolutely. But we’re still grateful to live here, and to have the freedom that comes from carrying a U.S. passport.
But back to the financial part of financial independence… recently, several folks have said to us that they really enjoy our financial independence message. To which we’ve wanted to reply: “Really? We have a message?” I mean, we for sure know that we are different from some other folks out there in that we don’t preach total frugality or scold people for buying things they don’t strictly need. We don’t believe in scrimping every penny and stealing the joy from today, all for the sake of tomorrow. We’re huge believers in knowing what your purpose is and aiming everything toward that. And we generally believe that we can contribute most to the world if we stay positive and focus on encouraging others. But we’ve never boiled down what we believe into one clear, succinct message.
Until now. ;-)
It’s All About Happiness, Really
Calling something “our message” makes it feel big and important, or like the canned sound bite that we’ll repeat five times in a story. This is not that. Instead, this is a distillation of what we believe most strongly in our hearts about money and how each of us can live our best, happiest life.
Happiness is at the center of it all for us, and always will be. We see money as a tool, and while it can’t buy happiness, it can eliminate plenty of barriers to unhappiness. Or it can just help you sleep better at night, knowing you’re financially secure, which is certainly a small happiness. Most of all, money can buy you the freedom to pursue those activities that make you most joyful and fully actualized, and that’s major. So money and happiness will always be linked.
(Cue the cartoon bugle sounds.) Now presenting, our financial independence message! (In pinnable form if you’re into that.) :-)
Breaking the Message Down
Figure out what truly makes you happy — If we had to boil our life philosophy down to one statement, it would be this. Society places a lot of weird expectations on all of to take certain paths in life, to achieve certain things, or to enjoy certain activities. Those expectations are different for all of us, but following along on exactly the path that others have planned out for us rarely leads to profound, lasting happiness. Instead, we all need to figure out what makes us truly, deeply happy. And that doesn’t have to be anything big or exciting. Your true happiness could be devoting as much of your time as possible to reading the great books in the solitude of your own home. It could be seeing the world. It could be getting married, having 2.5 kids and working until you’re 65. It could even be owning all the things. There’s no right or wrong answer here — there’s just your answer. It helps to know your purpose, which we can help you map out.
Spend your money deliberately — Just as we don’t believe that the only path to happiness is owning only the essentials, we also don’t believe that money decisions are only good if they are most frugal ones possible. What’s important is ensuring that you’re spending and saving your money deliberately, with some plan for what you want that money to do for you. Most people have no idea how much they spend, and so it’s no wonder that they can hardly imagine saving a high percentage of it. But, once you get a handle on how much you’re spending, it’s usually pretty easy to make some choices about categories to cut, assuming you have the luxury of disposable income. Once we understood exactly how much we were spending at restaurants, and after we picked our jaws up off the floor, it became pretty easy to stop going out so much. We still spend money on things, despite being super focused on saving for retirement, but now we make sure that we’re spending on the things that make us happiest, namely travel and gear for outdoor adventures, and organic food.
Aim everything toward your goal — All that money you’re no longer spending on things that don’t bring you joy can go straight into savings, which speeds you along to your goal of spending more time doing what it is that makes you truly happy. And over time, that progress will most likely accelerate, because being super focused on a goal as noble as happiness has a way of turning into a virtuous cycle. Beyond saving, make sure that you’re structuring your money according to your goals and putting your money in the places that suit that timeline. If you are focused on early retirement, for example, don’t aim all your savings at your 401(k) and IRAs — make sure you project out how much you’ll need in the years of your early retirement before you can access your tax-deferred accounts without penalty, and save enough in your regular taxable funds to cover you during that time. Or if you’re focused on an even shorter-term goal, like buying the home of your dreams or a big patch of land to turn into a small dog rescue (you know, hypothetically), then saving your money in cash might make the most sense. Match the structure of your money to the timeline of your goals.
…While still enjoying life in the meantime — If “figure out what truly makes you happy” is our most important message, this is our second most important. Living purely for tomorrow is never a recipe for happiness — plus, what happens when tomorrow actually arrives? If we’ve spent all our time focusing on the future, what makes us think that we will suddenly, magically be able to switch gears and focus on the present? Just like we must practice any skill, we need to build up our muscles in being present, and we do that by… being present. :-) And if we save all our money without allowing ourselves experiences that add value to our lives today, we steal that joy from ourselves, and open up the possibility that we’ll become resentful about saving, or even stop saving altogether. (Diets are a good analogy — how hard is it to stick to a super restrictive diet?) But if we indulge in small doses of what makes us happy — which doesn’t have to be expensive, by the way — we are far more likely to stick to the path of saving up for our ultimate, life-affirming goal.
What’s Your Financial Independence Message?
Your turn, guys! If you had to boil your message down to a few bullet points, what would it be? This doesn’t have to be the index card challenge, which encapsulates your financial advice (you can see ours below), but more of a big picture view behind your FI philosophy. Let’s share and discuss them all in the comments!
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Categories: we've learned
Yes, I love this! This is a wonderfully synthesized thesis statement for what this whole FIRE thing is all about. The first two pieces (figure out what makes you happy and spend your money deliberately) are so basic, yet so rarely discussed. If the goal of life is happiness, fulfillment, and meaning, why wouldn’t we devote time to figuring out how to get those things? You’d hope that these philosophical discussions would be top-of-mind — the kind of things you could discuss at a dinner table, or in a school classroom. Instead, society seems to mostly gloss over them with generalized assumptions. More stuff = more happiness. Bigger stuff = more happiness. Thanks for continuing to provoke deeper conversations on these topics :)
Thanks, Matt! :-) To your point about happiness not being discussed enough in the PF blog world, I’m thinking of adding it to our blog header (“Early retirement // Happiness // Adventure”… or something), which will force me to write about it more. Because I think you’re completely right — those of us pursuing FIRE have this amazing opportunity to shape our lives in ways most people can’t, and we’re fools if we don’t focus first on happiness, fulfillment and meaning.
This is awesome. Our financial independence message is aligned to our “decision principles” (this is what a lot of the work I do with people is based around too). When we make decisions we ask ourselves… Does what we want to do help us to:
– Maximize our health/wellness
– Meet our financial obligations/grow our wealth
-Commit to deepening relationships
-Continue to help us grow personally
– Increase opportunities in life
These may change at times, but they are a good “barometer” for us and align with our FI philosophy! Thanks for keeping us thinking! Happy 4th!
I love this system. Is that the same checklist you use for others, or is it your customized list in priority order? Just wondering because I could see someone putting relationships first, or personal growth first, or things like fun and adventure which could be their own things.
Those tend to be the same list we use for many things – but the order does change, depending on the situation.
Makes sense! Thanks for the additional info!
There are so many catch phrases and often quoted tips and tricks out there in the financial world, it’s difficult to find something to really dig into and hang your hat on that’s not a blanket generalization that may or may not apply to your specific situation. Something I keep coming back to (and still struggle with) is identifying needs versus wants. It can be easy to justify a want to the point that it becomes a manufactured need, but in reality we need far less than we think we do. While I frequently feel extreme frugality is both overrated and unsustainable, a trip through Costco, Target or Walmart reminds me of just how much “stuff” is out there, and how compelling an argument one can make for buying a lot more of it than anyone truly needs. Learning to use less, need less, want less and be more satisfied with what you do have is a skill I’m still trying to master, and a constant challenge in this “more is better” culture. No matter how much money you accumulate for retirement, if you are never satisfied with where you are in life on the inside, it won’t ever be enough.
Oh, so true! If we start spewing catch phrases, will you please point it out? Haha. I am with you on the needs vs wants struggle, and have accepted that virtually everything in our life is a want, since our needs are super basic (food, shelter, warmth… maybe health insurance) ;-). So the question is then which wants are worth indulging vs those that are frivolous or fleeting. I find that having our purpose mapped out helps a LOT with that because it’s easy to turn down wants that don’t serve our purpose or passions. And this also helps with the “more is better” culture, too, because while there is some primal part of us that wants to hoard basically everything, I think about how I want to be able to travel for extended periods, and how much I love traveling light (or how we might want to be able to rent out our home without filling up many storage lockers!), and that makes it easier not to buy things.
YES! Today’s joy is important, and perhaps more important that tomorrow’s joy because tomorrow is not guaranteed.
My philosophy is that money is a tool that can buy you time and freedom. What you do with a tool will change once you learn how to use it better. The first time you have a task to perform and don’t even know what tool to pool out of the box to accomplish it, you’ll try something that may make things worse. In time, you’ll learn. You’ll grow in knowledge about what tool to apply to what problem, but you’ll also become more skilled in individual tools. You may grow so skilled that you can build something without the tools you previously needed (I’m thinking dove and tail method in place of nails or screws). The skill-building itself may bring you joy, but you’ll still need a chair at the end of the day. Once you can build the chair, you can rest on your hand-crafted wooden laurels.
I love your philosophy and totally agree — money doesn’t buy happiness directly, but it buys time that can be used to pursue happiness. And what a great analogy of building the chair — love that. :-)
I think that’s in in a nutshell! I think there is a small group of people out there that makes you feel guilty for spending any money on anything, as if wants are bad. But it’s more about having the money to spend on things that truly mater to YOU! It takes a lot of introspection to figure that out, but it’s worth it.
So true! There is nothing wrong with wants so long as you aren’t indulging every frivolous, fleeting want. (I want about 100 things in any given day, but probably 99 of them are things I quickly forget about!) It’s about figuring out which ones are truly important. :-)
I like the “spend deliberately and towards a goal” parts. Monthly we take a look at the budget to make sure our spending meets our financial goals. If expenses come along throughout the month we discuss it and make smart decisions. We keep ourselves happy with a few items here and there but ultimately we keep our eye on the prize.
That sounds great! You’re working toward your big goal and doing some fun stuff in the meantime — perfect. :-)
I love that you mention figuring out your purpose (and I enjoyed the post where you mapped out yours). In my experience, happiness is hard to pursue directly, but having a purpose helps the pieces fall into place for a satisfying life.
Thanks, Kalie! Such a great point — happiness IS hard to pursue directly (though lots of authors have sold a lot of books based on that promise!), but figuring out what you’re passionate about or what your purpose is really helps. Hope you guys had a great holiday! :-)
This dovetails perfectly with the Road Less Traveled Challenge, because you have to figure out the correct path to YOUR unique happiness. I’m still struggling with balancing the hustle out of debt and enjoying the present, but I do my best to take a moment here and there just to breathe or give the kids my full attention. The goal is worth the effort, but we can’t afford to miss out on everything else along the way.
Haha — at least we’re consistent! :-) But not to make light of it — we really DO believe that you have to lead with what makes you happy and let everything follow behind that. I know you’re super eager to get out of debt, which is awesome, but it’s so important not to burn yourself out and make your present miserable in the interest of that goal. Glad you’re finding more balance! It’s always hard for all of us, I’m convinced, but continuing to work at finding balance is what gets us there. :-)
I love this so much. My biggest Internet bugaboo is when the occasional FIRE person will suggest taking the highest paying job you can find in a field you hate and find no fulfillment in, muscle through for 5-15 years (or more!), and then decide to be happy. What a sad way to live. Granted, these people probably make A LOT more money than me. But how can anyone be OK being miserable for the majority of their now, especially since now is all we ever really have?
Thanks! Oh, I have so many internet bugaboos! :-) But yes, that is a big one — that sounds like pretty much the most joyless life, and a terrible way to get to FI. I know what it’s like to work 80-hour weeks, but I for sure could not do it if I didn’t find my work interesting and fulfilling on some level. I may be too principled about this stuff, but I wouldn’t do soul-sucking work for any amount of money. :-)
“Figuring out what truly makes you happy”. Yes so much to this one! As you get older, you realize more of what *doesn’t* make you happy and the field becomes much clearer of what truly does make you smile and bring you joy :)
So true! I’ve always been a “hobby omnivore,” and while there’s still so much I want to try, I have a much better sense now of the many things and conditions that do NOT make me happy — so it can definitely be a process of elimination as much as anything! :-)
I am so impressed that you work as hard as you do and still post such great content so consistently!
IMHO, people never really figure out their happy. They go with the flow for most of their lives and accept other people’s definition of happy- new clothes, restaurant meals, fancy phones. I think a critical eye and thought process is key to determining SO many things, most of all what really makes you happy!
Well if it makes you feel any better, I get hardly any sleep! :-) But thank you for the fantastic compliment, Kara. I really appreciate it!
And I think you’re right, sadly, that most people never ask the big questions like what they want to get out of life or what makes them happy. I know millennials get criticized for having quarter life crises (and I’m technically Gen X, though on the cusp, but definitely had my own crisis in my 20s), but I actually think they’re really useful. For a lot of people, it’s only when you have some kind of dark moment and realize that your life is not on the trajectory you want it to be on that you start to get deliberate about what you do want out of it all. So while Boomers might see that as some self-indulgent thing, I think it can be incredibly useful for getting your life on a better path that suits your own individual wants and hopes.
This is great – thank you! Reading this, and re-reading your earlier post about defining your purpose has triggered me to realize something. I’ve worked through this question a couple times in my life and you’re right, it helped keep me focused and enabled an early retirement. Now that I’ve ‘retired’ though, I’m due to refresh this personal work, to make sure I’ve set a meaningful direction that still feels right, and I don’t get too lazy for too long ;)
Glad you enjoyed! And your point is such a good one — our “purpose” and goals may not be something that applies for our full lifetime, but instead we may need to go through the exercise again. I’ve heard people say to think of life in 5-year blocks, 10-year blocks and 15-year blocks, and that feels fitting here. So maybe it’s defining your purpose and set of goals for one period of life, and then when you get to the next one, you repeat the exercise to figure out what moves you at that point. :-)
1. save >50% of your income
2. don’t buy new, always used unless it’s underwear
3. Keep costs low for everything in life unless you have to spend money (can’t clean your own teeth)
4. Don’t go to Western Europe unless you can afford it
5. Always carry anti-diarrheal medication when traveling abroad
I’d modify your #2: Don’t buy new, except underwear and any safety gear (don’t cheap out on bike helmets or climbing protection!). ;-) And LOL on #5 — good advice!
I love this! When I first joined the pf community, I had the impression that I needed to set a few financial restrictions in order to achieve my goals. But as I progress, it slowly unfolded that my journey is unique and I had to write my plan based on my circumstances, my priorities, my values. Your message is pretty much reflects what I’m doing in this journey, except maybe for finding what truly makes me happy — that’s always a tough one, but I’ll get there.
Another great and inspiring post. I wish a lot of people in and out of our community get to read this, because really, this post is gold. :)
Aww, thanks, J! I’m so glad that you’re focusing less on the “financial restrictions” and more on your own priorities and values. If it’s tough to figure out what makes you capital-H “Happy,” maybe just focus on all the little things that make you small-h “happy,” and then see if those small things have anything in common with one another. That’s how we got our answer. :-) (And of course it’s not the same for both of us!)
Hey, thanks! :-)
I could say that I love your message. I’ll actually say that I love the way you live your (next) life, and how you approach your finances. We (my wife and I) have grown a lot financially since moving in together and luckily we’ve grown at the same rate in the same direction.
Our approach is similar to yours. We want to live & enjoy our lives now, without taking away from our future enjoyment either. We know what will make us most happy; spending time with each other. All the time that we have to spend apart isn’t so cool, so that’s what we’re aiming to change.
Thanks, Tristan! That’s awesome that you guys know what makes you happy, and that you’re moving in the same direction toward a common goal. Not always true in marriage, as you know! :-)
It is awesome, and you’re right – it’s imperative partners are on the same wavelength. Apparently finances are the biggest reason for divorce. We are both lucky we are with someone who wants to grow financially in a good way.
To me, I always interpret relationship problems having to do with money as being fundamentally about bad communication or lack of trust, and then money is just a manifestation of that. So high fives to you guys for mastering money, trust and communication! :-D
You know, I’m not sure we have a FI message… Talking with some distant family about FIRE over the weekend though, I realized ours would be “Track your spending! Identify your needs versus your wants, and then focus your spending appropriately.”
The exclamation point is warranted, because if you don’t know how much you spend, how do you know how much you’ll need?
For instance, the person I was conversing with was aiming to retire at 51 which is pretty impressive, but he had no clue what their monthly spending rate was. I pointed him to Mint to start tracking how much he spent per month and where the money was going. Then you could figure out what was a need and what was a want, and where their big “money sucks” exist.
The focus spending appropriately is like your “spend deliberately”. If you love cable, keep cable, if you love football, figure out a way to pay for the NFL package, if you love hiking, figure out a way to get out and hike more. That’s why it’s personal finance – everyone’s situation and spending is personal to them.
Whether it’s to be extremely frugal (No thanks!), hit a certain savings rate, or just work towards your FI number, it’s all your personal choice and plan. :)
To me your “TRACK YOUR SPENDING!” (I added caps to your exclamation point) ;-) message could also be articulated as “KNOW THYSELF!” or “BE DELIBERATE IN YOUR CHOICES!” It’s all about knowledge that most people lack but that’s easy to attain if you just suck it up and do it. And that knowledge is so often transformative! Once you know that stuff, you can actually align your money to fund the things you care about. Okay, I don’t need to restate your position to you — YOU KNOW THIS STUFF! Hahaha.
How does someone planning on early retirement not know what they spend?? Thank goodness you filled him in on tracking tools — you might just have saved his whole plan!
Just catching up on posts. I love this one! You guys are brilliant and so is your message. “Just do you” amiright? I think the hardest part of the whole equation is figuring out what makes us truly happy and how money fits into that.
Awwww, thanks! I think “brilliant” might be overstating it, but I’ll take the compliment. :-)
Whenever I talk to people about PF who don’t seem to care about this money stuff, I always try to reframe the conversation. I tell them that my PF journey isn’t about making a bunch of money or making a super awesome budget, it’s all about living the life you want.
I hated the idea of budgeting and saving money before – but what changed for me is when I started looking at my financial goals once my daughter was born. I want to retire early, pay for my daughter’s education, and take my wife and daughter out on adventures. By paying a little more attention to our money, we can do that. :)
I love how you put it: It’s about living the life you want. Such a perfect way to encapsulate what all of us are working toward. I don’t think any of us really care about the numbers, and we certainly aren’t doing any of this to brag about how many commas we have in our net worth or how much we rock our budget. It’s so that we can do the big stuff that money can buy. :-)
love this, in some of the fire groups people can be so judgmental and believe you have to be extremely frugal.,I 100 agree that you should do what makes you happy, go out and have fun (responsibly) I know people that are in their 50s that don’t do any thing because they want to save everything for retirement, life is too short to skip the occasional concert or fun outing
Oh amen to that! And I’ve heard similar stories from folks who were so focused on saving, they forgot to live. We do not wish to follow that path!