Why Reaching Financial Independence Will Help You Thrive

What would your life be like if you had enough money to be able to cease your financial worries forever?

Have you ever even considered this a possibility and what it would take to get there?

My wife and I discussed this frequently during our FIRE journey.

And I’m not talking about winning the lottery or receiving an inheritance, I’m referring to becoming financially independent. Everyone’s definition of financial independence, or FI, as it’s known in the personal finance community, is different.

Some might see it as moving out of their parents’ house. Others may see it as having a job that allows them to pay their bills on time or owning a successful business that allows them to work independently.

The issue with most of these scenarios is that you have to be working to make the money instead of the money working for you. Lose a job and everything goes downhill—your independence becomes unsustainable and you might end up at your parents’ house. If your business is solely dependent on you, you will suffer if you are sick for an extended period of time—hello, mommy and daddy.

How we define financial independence

We define financial independence in our household as the point at which our income-producing assets generate enough income to cover our living expenses indefinitely. This is nothing new in the finance world, but it was to us. It gave us a different perspective on the relationship between life and money.

Our approach to reaching FI consisted of trading our time and money solely for necessities and what made us truly happy, while investing the rest.

I always heard about the importance of saving for the long term, but never really had a real purpose or true meaning for it that would inspire me to stay the course. Retirement planners usually advise us to save for retirement, but if we don’t have a real purpose for our actions other than just following advice, it’s harder to stick with it.

For us, attaining financial independence represents the ultimate freedom to live our lives the way we choose. The goal was to save enough of our money so we could free our time and have it to ourselves.

However, it was not an easy walk in the park. Saving for 30+ years for retirement can be confusing for many because it’s hard to plan for something that is so far away. This is why we decided to set more aggressive goals to reach FI quicker while being in the moment. 

Financial independence implies complete control over our time

Once we reached financial independence and no longer needed to work a job, we gained total control of our time. I once heard Warren Buffett say that if he had to give half of his fortune now, he’d trade it to have all of his time to himself. This is a powerful statement on how important the element of time is in our lives.

With money not being an issue, the first thing we did was fire the darn alarm clock. We spend the days as we wish and enjoy more time with friends and family. We have more time for hobbies: learning music, playing more family games, having more regular walks on the beach, or enjoying the pleasure of unlimited reading time, like Warren Buffett does. And yes, we now have a hammock! 🙂

Enjoy more of life sooner than later

The most important realization for us is that we can now enjoy more of life much sooner rather than later. Financial independence is not synonymous with traditional retirement. We live a more active lifestyle now that we don’t have to sit in front of a computer for extended periods of time.

“What would you do with your time in early retirement?”

We were asked this question frequently on our way to FIRE and continue to be asked. It does not imply that you retire and sit back and watch life pass you by. It means you have a plethora of options for how you want to live your life. And the benefits are endless.

Travel the world for longer periods of time

For example, we love to travel. By reaching FIRE, we no longer have to wait until we’re 65 or 70 to travel the world for an extended period of time. Also, traveling becomes more cumbersome with age. No one is getting any younger, and I just don’t see myself climbing Machu Picchu as a senior citizen, so we want to do it while the body can endure it.

The days of counting paid-time-off and adding days off to holidays to make a short vacation are over. Now we can vacation whenever we want and for whatever period we want.

Financial independence kills many birds with one stone

We believe that achieving financial independence is like killing two birds with one stone. We finished saving for retirement by saving to achieve financial independence. Similarly, we no longer need to be concerned about where the money to pay the bills will come from.

There’s no need to work at a job that doesn’t make you happy or risk being laid off. The list goes on and on. We love this strategy, but why isn’t everyone following it?

Money is a means to an end

We believe that Americans have been programmed to live a life of spending that makes this path hard to pursue, so why even try?

It’s a life structured in such a way that you don’t even have time to pause, think, or reflect. It’s a brilliant design that makes it appear easier to continue down our paths, which are littered with grenades such as consumer debt and high consumption patterns, than to imagine that a simple life can bring us true happiness.

The truth is that financial independence is a more straightforward path to a prosperous life! You make money with a purpose, a means to an end.

I’m not sure if you noticed by now, but we don’t go along with the crowd. We don’t care much about peer pressure and society’s prescription for life. We set our own path along the way.

We’re always in full pursuit of what makes us truly happy. It’s a much better alternative. During our working years, we invested aggressively in the hopes of having enough “employees,” a.k.a. dollars, working for us to eliminate the need to work for money.

Savings becomes a top priority

We needed to change certain behaviors to get on an aggressive financial independence path, one of which was our savings rate. We needed to become the kind of savers that society calls “extreme”. Working for corporate America for 40+ years and then starting to travel and enjoy your life in your late 60s is, in my opinion, “extreme,” but that’s a topic for another post.

This means that instead of putting savings as the last item in our budget and saving 1% to 3% with the hope of increasing it every year, we saved as much as we could and invested it right away. Savings became our top priority, instead of spending our hard-earned money on materialistic stuff. You can get there in a few years by saving and investing as much as you can while eliminating consumer debt.

This is how you make that life that you can now only dream of a reality. This is how your quality time with your family becomes endless rivers of happiness overflown with priceless moments. It’s what it means to take the one thing that matters and set it into motion to fulfill the rest of your life. This is what financial independence means to us. You’ve got to fight for what matters to you!

What does financial independence mean to you? What are your plans for living a life with purpose?