Financial Independence is NOT a Goal, its a TOOL

At first glance, getting to a place where you no longer need to work to pay your bills, aka Financial Independence, seems like a pretty good goal. And it is! However, once you dive in, you will likely find that it is really just a tool you’re developing in order to accomplish the real goal.

If you’re seeking more freedom and independence, you may think you just have to save money. However, the real work is discovering the couple of things you truly value in life. The real GOAL is to then be able to act intentionally, every day, in line with what you value. Financial Independence, at all levels, can be a powerful tool that allows you the choices you need to accomplish that goal.

Don’t let the Calculator Freak You Out

If you’ve looked into Financial Independence, you probably started with trying to figure out your ‘number,’ right? How much money is enough to consider pulling the plug on that job. There’s tons of ‘retirement calculators’ out there on the internet that will offer to figure this number out for you. (Retirement being a synonym for having reached Financial Independence.) Generally, they will start with the assumption that you’re going to spend about 20% less than your current income. They will then multiple that number by 25-30, depending on how long you expect to live.

However, if you’re like me, you didn’t really like that approach. First of all, the number the calculators gave me seemed impossible….it was multiple millions. That is a long way to go when you’re at zero. Even if it were possible, it was going to take a long time. I knew I didn’t have it in me to keep doing what I was doing for that long. So, I either needed to find an alternative, or get some hardcore anti-depressants. Maybe a little of both 🙂

I started looking for a different path. How could I get more freedom and independence, without waiting to simply to amass a fortune. And how could I keep motivated along the way?

A Different Path

I was lucky enough to come across the book, Your Money or Your Life, by Joe Dominguez and Vicki Robbins. The book has a lot of important points, but what I will focus on is how it makes you convert purchases basically into ‘life hours.’

How much of your time and money do you spend working to buy that double pumpkin spiced latte? You can calculate your hourly wage, but that doesn’t really capture it. You have to buy that fancy outfit, get your nails done, your hair-done. And you have to have a car so you can drive an hour round trip to work.

There is time and cost associated with all those things. All of that ‘overhead’ has to go into figuring out what you actually get paid per hour. You thought you were at $35 an hour, but after factoring in your costs, you’re down to $25. Next time you go to buy something, you can now convert it into ‘life hours’ its going to cost you.

Is that new iPhone worth working an entire week of the precious 52 you have in a year? In an interview discussing the impact of the book, Vicki Robbins said that the simple act of calculating how much of your time, energy and actual money you spend going to work to earn money, generally led to people spending about 10% less. Without doing anything else!

Start Evaluating Things Differently

You do the life hours calculation, and start to see you’re trading time for money. Unfortunately, you realize you’ve had a leak….you’re trading more of your time for money than you thought! That blows!

But then, you realize that sometimes you flip that, and can trade money for time! And why have time? To spend it doing what we really want, what really nourishes and ‘sparks joy’ in us (shout out Marie Kondo!)

This is where you start you see the real value in your money…it can buy you things, it can buy you time, it can buy you experiences. It can buy you FREEDOM.

Start buying Assets, Not Liabilities

Armed with this knowledge, you can start to use as much of your money to buy assets, rather than liabilities. Assets being things that will make you money, like investing in a rental property, or the stock market. Assets could also be education, acquiring a skill. As opposed to the liability side, things that cost you money, and often have on-going costs. For example a car. Even if you pay all cash for a vehicle, you still are going to have to pay insurance, upkeep, have somewhere to park it. Even a shirt, you have to have a closet to hang it in, right?

You probably don’t even remember the shirt you bought last month that still has the tag on it. The new car smell likely wore off about the same time as your enthusiasm for that expensive set of wheels that sits in your driveway. Once you realize the life hours things are costing you, you can start to ask if they are worth it. With your one wild and beautiful life, as Mary Oliver says, is this how you choose to spend it?

This where the Magic happens

So, you take a look at things through the Your Money or Your Life lens, and you decide you actually want more life! You do the work of figuring out how you really want to spend your life hours. The need for some things you used to spend money on naturally go away.

Suddenly, you need 10% less money than you used to. Your ‘Financial Independence’ number just dropped 10%, per the retirement calculator. Maybe that lobbed off a couple years of working that job that you don’t love. Magic! Maybe you’re hooked, and start looking for other ways to spend less, earn more income for buying assets, etc.

Financial Independence, a Tool that just gets better!

Now, what do you do with this 10% or more you now have? You can start building your Financial Independence (F.I.) tool! It will be a tiny little dull blade, at first. But as you creep your way up towards that number spit out by the retirement calculator, (or a new number you’ve more accurately generated), it will become a mighty sword. And you don’t only get it as a prize at the end, you can use it all along the way to your real goal.

Remember, the real goal is to be able to act intentionally in line with what you really value. Let’s say, what you really value is helping others, or spending quality time making memories with friends and family. But you can’t do those things as much as you’d like because you have to go to work all the time. Or, maybe you’re so stressed out by debt that you are cranky and it ruins time with loved ones.

If you can just get a tiny little blade started, like spending 10% less, you can start chipping away at the amount of time you have to spend on things other than what you value. Freedom and Independence are incremental, not all or nothing. This helps with getting on a path, and staying on a path to that very large, complete Financially Independent number.

F.I. Tool is Useful all Along the Way

If you have any level of Financial Independence, it is useful. From the very beginning, getting to the point where your income pays all your bills….that’s independence from debt. Having an emergency fund, your F.I. tool just got a little bigger. Perhaps you get to the point where you’re not afraid of losing a job you hate, and you’re empowered to go find a better one. Further down the road, your F.I. tool may have grown to the point that you take on new risks, like change careers, or take a mini-retirement.

You’re wielding that sword, slaying obstacles in your way to being able to choose how to spend your time, your attention, your money. The more you build those skills or spending only what you need…using money to make money, increasing your ability to earn money…the bigger and more sharp that blade becomes. The more you use it to actually LIVE, the more shiny and beautifully adorned your sword becomes.

What the f*** I’m really trying to say

If you’re simply watching your bank balance grow, trying to get to some arbitrary number spit out by a retirement calendar, you’re missing the point. If that number grows, but your knowledge of what you actually need, want and value does not, the number doesn’t matter anyway. If you’re not using your Financial Independence, no matter what ‘level’ of Independence you may have, you’re missing out on valuable opportunities to incrementally make progress towards your real goal.

Its not easy to figure out what we really value most, much less actually put it first in our lives. Especially, if it takes sacrifice, or standing out from the herd. Moreover, its difficult to think about what you’re choosing all the time! But like all habits, creating them starts with a small action. We get better at things the more we practice them. Put in the work, and the reap the rewards. Start building your F.I. tool, and start choosing what you value most.

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