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This is the last letter in my crash course on financial independence and might be the most important one of all. It is all about the questions: why seek financial independence?
For me there are three reasons why I want to be financially independent:
Knowing that I have money on the side in case of a major crisis, lets me sleep good at night. I know that if I get laid off or have a medical emergency, I am financially secure and that I can survive this and any other crisis while remaining financially intact.
It gives me the chance to focus my energy on improving my life and the lives of others, without having to worry when my next pay-check will come in. In short, it reduces my emotional stress and lets me approach life relaxed (at least from a financial stand point; having a sister in your life is never stress-free).
2. Choice and Freedom.
Knowing that you are financially independent gives you the freedom to choose what to do with your time. If you have a job that you hate or a boss that you have nightmares about, then financial independence gives you the luxury to quit whenever you want to.
Of course, the ultimate goal of financial independence is not to one day storm into your boss’ office, tell him or her what a #!@#&%$@! he or she is and then storm off with your middle fingers raised to the sky. But it gives you the freedom to choose whether to keep on working or not. If you like your job and enjoy it, keep on working. If you do not get satisfaction from it and would much rather do something else, you can simply quit.
When you are financially independent, you have this liberty.
It gives you the chance to fully pursue any passion you have and take on projects that might seem risky when you are not financially independent. If you choose to keep on working, then being financially independent allows you to relax at the workplace as well.
You do not have this financial pressure to always perform at the highest level and always over-achieve. Being this relaxed often will help you reach much higher targets than being under this constant pressure, and in many cases your boss will respect you more for your calmness. For me, having this choice and freedom is key to being able to pursue happiness effectively.
Time is limited. You only have a certain number of years to live and to be with your loved ones. Being financially independent allows you to spend as much time as you want with your spouse, children, parents and friends.
It gives you the luxury to chase new experiences and make new meaningful connections. The time you have in this world is limited, financial independence allows you to make the most of it.
There might be many, many other reasons why you want and should pursue financial independence. Some people like the challenge of reaching it. Others believe that it teaches good values, such as focusing on the things that matter in life, rather than on consumerism. My main reasons are the ones listed above.
What are yours?
It is important to know what your reasons are for seeking financial independence. As mentioned, this path is not a quick and easy solution where you become rich over-night. The process I describe is a structured, simple approach which will get you there through making many small choices which have a big impact in the long run. Again:
“Hard choices, easy life. Easy choices, hard life.”– Jerzy Gregorek
Make sure to understand what your reasons are and write them down. This will help you solidify your motivation and will help you also explain to other people why you chose this path.
What Comes After Having Reached Financial Independence?
The last topic I want to approach before sending you off on your way, is that when you reach financial independence, it is not a must to stop working.
Many people who have reached financial independence keep on working because they enjoy their jobs. Others quit and take on completely different jobs in order to find a task more fulfilling. Many will decide to retire early.
Mr Money Mustache retired at 30. Personally, I do not have a specific goal to retire by a certain age. But I know that I want to be financially independent as early as possible so that I have that choice.
When you decide to retire, the important thing about “pulling the plug” is that you know what you want to do with your remaining time. If you stop working at 40, you most likely have another 50 years to live. Even if you retire at the normal age of 65, you most probably still have 30 years to live.
That is a long, long time.
People like to say that their plan after retiring is to travel the world or start playing golf. I don’t know about you, but I would get bored travelling for 50 years non-stop, not to speak of having golf as my main retirement activity.
Always make sure that when you retire from the workforce that:
A) you are financially independent and
B) that you have a plan for the time after you retire.
This is the shortest letter of the six, however I think it is the most important. The others are just tools to use in getting to financial independence. Answering the questions of why seek financial independence is key to your motivation.
I hope these letters helped you gain a better understanding of how I see the topic of personal finance and what philosophy I live by. It is up to you to choose which path you want to follow. As mentioned before, this is not the only path, but it in my opinion it is one of the simplest and most structured.
It is important to keep in mind that it takes many, many small choices and a considerable amount of time before you see the full effect of your choices. Like a snowball rolling down a hill, it takes time for it to pick up speed and really get to a whirlwind pace. But once it does, it is unstoppable.
I wish you all the best for your journey towards financial independence. May your personal and professional life be filled with lots of happiness, health and love.
Make sure you get the best out of the chocolate and money aspects of life.
- Write down your reason to pursue financial independence and save money
- Write down what you would do if you never had to work another day in your life
- Discuss it with your significant other / friends / family
Do you have any questions, concerns, feedback or constructive criticism? Let me know in the comments or send me an e-mail at firstname.lastname@example.org. Anything is highly appreciated.