Scratching my Head!

I’m fascinated by people who oppose the idea of becoming financially independent.

Personally, I think that this opposition is borne of the acronym FIRE. Most of us in the personal finance echo chamber know that this is an acronym for Financial Independence, Retire Early. It’s rather unfortunate that so many have twinned the two concepts together. They are not the same thing. A person can pursue one aspect of FIRE while completely eschewing the other.

A large cohort of people think that both elements must be pursued with equal vigour. I’d like to take a few minutes to tackle this misunderstanding into the ground.

Financial Independence =/= Retiring Early

Becoming financially independent can be a goal that is completely separate and apart from retiring early. Everyone should strive to become financially independent because it maximizes the options that one has for living the life that they truly want. Volunteering to build houses for six months after a hurricane? Travelling for 18 months just because you can? Taking a job that requires you to only work 3 days a week instead of five so that you have more time for doing what you love? When you’re financially independent, you can do all of these things without worrying about how to maintain your employment.

If you love your job, great! No one is saying that you have to quit the job you love simply because you have enough money to live without receiving a paycheque from paid employment. One of the side benefits of being financially independent is that you can continue to go to work if that is what makes your stomach do little flip-flops!

I’m always left scratching my head when people ask me why I would ever want to retire early. Sadly, I’m not one of those people – think professional athletes or celebrity entertainers – who is paid to do what they love. If anyone is looking to pay me cold hard cash to read books while enjoying a nice glass of wine, please speak up.

No one will stop you from working!

Allow me to be exceptionally clear on the following point. Being financially independent is not an obstacle to working. If anything, it gives you the power to work on what really matters most to you. When your stash of cash can pay for your bare necessities, then you’re free to take a paycut – if necessary – in order to do work that you find fulfilling. Rent – food – utilities can all be paid for by your Stash’O’Cash while your newly-reduced paycheque can be stretched to cover everything else. In the meantime, you have the pleasure of knowing that your life’s energy and your precious time are being applied to your true calling.

When you’re not financially independent, there’s a good chance that you are somehow being prevented from pursuing your dreams and living the life you want. It could be that you have debt that eats up a good chunk of your take-home pay. Maybe you’re caring for a parent or grandparent. Perhaps it’s just that you weren’t fortunate enough to have a job that pays more than ‘just enough’ to make it from one paycheque to the next. Whatever the reason, the lack of financial independence means that you cannot spend your time doing what you truly want with your time.

No one should be ashamed to pursue financial independence. It is not synonymous with greed or selfishness. Instead, it is a recognition that each of us has been granted one life. We only have so many tomorrows. Achieving financial independence allows us to spend our days doing what is most important to us. We are not shackled to someone else’s goals in exchange for a paycheque.

Save, invest, learn, repeat. Do this until you’ve become financially independent. At that point, take stock of how you spend your time. If you want to keep working, trust me when I say that no one will stop you. You can continue to collect a paycheque, content in the knowledge that you’re doing so because you truly want to and not because you have to.

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Weekly Tip: Keep your emergency funds separate from your other savings accounts. When the money is all co-mingled, it’s too easy to forget that the emergency money should NEVER be spent unless there is a true emergency that threatens your financial security. At the time of this post, millions of Canadians have lost their jobs due to the COVID19 pandemic. They’re facing a true financial crisis. Another scenario where an emergency fund is imminently reasonable is if your home burns down. An emergency fund comes in very handy if your town catches on fire and you have to relocate quickly. I’m looking at you Fort McMurray.