You have likely heard of Financial Independence. A lot of things on this blog talk about my journey towards Financial Independence (FI). But why would you want to become financially independent? There are many factors to being interested in achieving financial independence. And , as you’ll discover retirement is not the main motive.
In this article I’ll go over the major reasons why people are looking to be Financially Independent. Of course, the motivations might not be the same for everyone, and there are some that might appeal to you more than others. This is perfectly fine. Everyone has different motivations in trying to reach FI. Not everyone wants to achieve FI!
You might have a reason for achieving financial independence I didn’t even think about! Let me know by leaving a comment if this is the scenario! I’d like to know what makes you want to be Financially Independent.
1. Security
Once you reach financial independence, you’re secure from many events that would cause major income losses.
If, for instance, you are fired, your company is bankrupt or you’re unable to work anymore, you should not have issues sustaining your life. These events aren’t significant for your financial situation once you have reached financial independence. They could still be an issue for you, but they are not a big deal. But if you are financially independent, you are ready to withstand these challenges without a problem.
It is also a security of retirement. At present, in Switzerland the retirement age isn’t too bad. But , who knows what will be in the next 30 years. There might be no pensions or other assistance to retirees. If you’re already financially independent, then you are not required to worry about that!
I’m trying to prepare for these events, and I’m already ready for these events right now. If you’re working towards Financial Independence, these events can still be a problem. But you should be able better than the majority of people. This is another great thing about FI and it will increase your savings while working towards financial independence.
Indeed, people on the road to FI have better finances than the typical. They spend less, and often earn more. These better finances will help to achieve their goals quicker and also overcome financial difficulties much more easily.
To me, this is the main reason why I strive toward Financial Independence.
2. Family
Time spent with family is crucial. But often, we have too much time working or doing other things that are more important than our family and our friends.
Financial independence grants us the freedom to be present with our loved ones and build stronger bonds.
I wish I will have more time in the future to spend time with my children and to build stronger relationships with my wife, kids relatives, friends, and family.
Of course, I’m not delaying that! It is essential not to take advantage of FI as an excuse to not spending time with loved ones. Financial freedom can be beneficial in having more time to do more things that are important.
3. Freedom of choice
Many people who hope to get to FI wish to retire early.
I’m also convinced that I’d like to retire early. However, the ability to retire earlier is more important than retirement itself. The option to retire early is very important.
At the moment, I am still enjoying my job. If I weren’t creating software for my business I’d rather be developing software to have amusement. But who knows whether this will be the situation in 10 or 20 years? Nobody!
The company you work for can change a lot. The people you work with can change. And your boss may change too. You may like your current boss and colleagues. But what happens when they are replaced by people you do not like? The changes could result in huge changes in your work. If you undergo some changes it is possible that you will not enjoy your job in the same way you currently do.
You too are able to change! Many people believe that they will enjoy the same things in the future. However, this is not always the situation. People change a lot.
So, the option to retire or do something else is very important to me. Once I am FI, I could quit, or create an enterprise or something else. Many people reach FI and do not quit their jobs. Some people are continuing some side jobs. And some people are doing charity work with very little earnings. You are still able to consider FI even if you aren’t planning to retire.
Looking for a Financial Independence Blog to read more articles like this?
4. Time is limited
Time is also an essential fact. Time is very short.
Let’s assume you’ve got around 80 years of life in total. You do not wish to be working for the next 65 years, and you want to be at peace for the majority of these years. It is possible that you will continue working to the end however you could also decide to retire or alter your lifestyle. Also, you could reduce your working time. All of these are feasible once you’re financially secure.
I love my job. However, there are other things I love about life, and I’d like to do more things than working five days a week from age 65. When I became Financially Independent, I would also consider part-time work as a good alternative.
5. A challenge
One thing I like about working towards Financial Independence is that reaching FI is a difficult task. It isn’t evident for many people to be able to reach FI before retirement.
Retiring early is also an issue. While the principles are basic, the application of these principles isn’t trivial. Before I was aware of the concept of financial freedom, I didn’t even think it was possible to achieve it.
It’s good to take the chance to face challenges in your daily life. It can teach you lots. You must learn something new, such as investing. I’ve read numerous books on personal finance as well as investing. I’ve learned many things in less than one year as I work towards financial freedom. This is a wealth of knowledge!
6. A fantastic adventure
The road to FI hard, but it’s also fascinating.
I would even say it is a fun journey. The journey to FI is comprised by a lot of crunching. You must calculate how much you are worth. You can determine your FI Ratio and determine how far off the road you are. It’s an extremely interesting and enjoyable. I like numbers a lot.
I am also happy that I was able to cut down our costs in the course of time! In the past, I spent significantly more, because I didn’t view spending with the same perspective. Now that I am aware of what I spend, it has become fun to reduce the amount we spend!
Investing is also really interesting. It requires lots of research to figure out what to invest in. In particular, you must to understand why you are investing in all your positions. There is no reason to making a decision to invest in something when you do not understand the reason behind it!
The road to FI also inspired me to start this blog. The blog has also been an amazing journey. Although this isn’t my first blog, I’ve gained a lot of knowledge! And I enjoy writing on this blog lots.
7. Alternative paths
The idea of being financially secure and possibly retiring earlier (or at least being able to) is a road that very few people follow.
For me, it’s an excellent choice. If everyone took the same road it would not be as appealing. Some paths do not provide FI however, which is equally good. If you prefer to be an entrepreneur and get wealthy, there’s nothing wrong with it.
So far, most of my routes were the traditional ones. I’ve gone to an elementary school. I’ve gone all through to get the level of a Ph.D. And finally, I’ve joined an industry standard as a software developer. I am happy to now try another road by striving to achieve FI. We will see how well I am going to do it!
8. FI imparts good values
Finally, the way to Financial Freedom will teach you some fundamental and good values.
The most crucial aspect of FI is Frugality. It’s difficult to achieve FI without being frugalat the very least in some way. Some people are very economical, and other individuals are comparatively frugal but only.
Since you’ll be investing in your path towards FI, you will likely get some wisdom from it. When investing, you must be doing with lots of thinking , but without making any sudden choices. Your emotions are the biggest enemies when you are investing. And you should learn through your failures. As an example I made plenty of investing mistakes when I first started. I’m much wiser now because I learned from these mistakes.
Another lesson you’ll be taught is that health is vital. If you’re looking to live long and be healthy when you retire, you need to take into consideration the health about your physique. Eat a balanced diet and avoid pushing the body (and your mind) beyond their limits.
For right now, we didn’t make any changes, but through our vegetable growing, we’re eating healthier than we were before. In addition, by cooking our food at home most times it is a healthier diet than fast-food restaurants. In the year 2019, we created a tiny Health Plan to keep healthy for longer.
9. Generating wealth
If you’re following an appropriate withdrawal rate strategy it is likely that you will have more money than you need at the close. This money may then be passed onto the next generation in your household.
Many people enjoy the concept of building generational wealth. To me, it’s not the primary reason to aim for financial freedom, but it’s an added benefit. I’d be happy to pass an amount of wealth onto the future generation.
But, this shouldn’t be a reason that the next generation is not to work and rely entirely on the wealth. However, this may help them fund their financial independence when they reach it.
You would prefer your children to continue transmitting this wealth rather than just spending it. Therefore, an essential part of this is to give financial literacy to the next generation, and hopefully, they will carry on this pattern.
Conclusion
As you can see, there are a myriad of motives to pursue financial freedom.
You’ll have more freedom once you’re financially secure. The way you live your life and that of the life of your family will be much easier. Furthermore, it could be a great way to learn things, and it could be an amazing journey. My life has been transformed as I tried to attain FI.
Some of these points will appeal to you. But perhaps they will not. There are many different motives to pursue financial independence. Others may not be interested in reaching FI in the first place. There is no reason everybody should embrace the FIRE idea. There are many other roads. It’s up to you to pick the one that will best suit your needs.
Don’t make the blunder of trying to achieve FI by assuming that other people are doing it. If FIRE isn’t appealing for you, strive to attain the goals that you wish to achieve instead of the goals of others!