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!
Don’t cheap out on helmets!