I am a few years away from financial independence. When that moment comes, it will arrive not with a bang but a whimper. One spring, or summer, or winter day, I will log into my accounts and see that I have hit my “number.” Then I will close my laptop, have another sip of coffee, and stare out the window awhile until my kids get up.
Financial independence, in and of itself, is boring, and not really the holy grail most believe it to be. Why do so many people (including me) strive so hard for so long to achieve it?
What is financial independence?
Most define financial independence as having enough money to cover expenses, without needing to work and earn a paycheck. For most, this money comes from saving a finite amount in retirement accounts: a nest egg. To determine the necessary nest egg to fully retire, one first needs to know annual expenses blah blah blah…
Numbers are boring
Nest egg value. Annual savings. Annual expenses. Withdrawal rate. Years until death. Asset allocation. Projected investment growth. Taxes. Insurance premiums. Expected college costs.
Death by a thousand numbers.
No offense to those who love the spreadsheet, but these types of numbers make me sleepy. The study of complex math can be interesting—heck, I was a math minor in college—but in the world of personal finance, numbers are counting and accounting tools. Addition, subtraction, multiplication, and division. Elementary school stuff.
Numbers exist in our minds, and on paper, and online. They are not real (I know what you are thinking, math nerds) in the sense that they have no physical embodiment. You can’t feel their warmth on the first day of spring, or sing them to sleep at night.
What those numbers can do, on the other hand, is very much real, and allows for some of the most important things in life. To know, understand, and manipulate numbers to your own ends is critical if you hope to reach financial independence and early retirement some day.
Financial independence is numbers
I’m not an idiot: I eyeball my retirement savings accounts on a regular basis. Especially as their value increases, it can be satisfying to calculate how much longer until I hit my retirement “number.”
The answer to whether or not I am financially independent is binary: yes or no. It boils down to my nest egg number (a hard-boiled nest egg?). And—as we know—numbers are boring.
Rather than “Am I financially independent?” I’m more interested in the following questions:
- Why do I want to be financially independent?
- What will I gain by not working?
- What will I do with my time?
and the answers:
- So I can stop working.
- Whatever I want.
The flowchart of happiness
My thoughts on financial independence are perhaps best represented in this “flowchart of happiness”:
Importantly, my happiness flowchart only flows in one direction. Say I want to try a new experience: build a greenhouse and learn how to grow vegetables inside during the winter, for example. This is no simple task, and takes time. With an adequate amount of retirement savings (numbers), I can stop working and create that time.
Numbers beget Time, and Time begets Experiences. I didn’t say it was rocket science.
Can I have worthwhile experiences without being retired or financially independent? Sure, I already have. But that pesky old work schedule tends to get in the way of truly epic projects, long-term travel, etc. Financial independence can make every day a flowchart of happiness.
Life is NOT boring
You know the old saying: It’s not the size of your nest egg, it’s how you use it.
Your idea of financial independence might be lounging in your shorts all day, drinking margaritas, and smelling the shrimp that’s beginning to boil. Mine could be working part-time one week out of every month, and writing snarky blog posts in my spare time. People get excited about financial independence because of the opportunities it affords. It is a means to an end.
Financial independence should be boring. It is numbers and calculations. It is not life. How you get there is boring, but what you do with it is certainly not. So check your numbers, but remember their place in the flowchart of happiness.