Today I’ll approach a subject that I’ve been researching the last few months, more in depth. I’ve toyed with the notion of being financially independent in the past, not because I don’t like what I do, as I am fortunate enough to have a great job which I actually like, but essentially because I like imagining what would happen if that was ever the case. You are considered to be financially independent when you don’t depend on a fixed source of income that relies on you having to work for someone, a certain number of hours, a certain number of days, for a long period of your life, or as most people would put it, a job.
Googling returns the following quote:
Financial independence is generally used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income that is greater than their expenses.
Not having a job typically frees up time. What would I do all day? I’m an avid reader, does that mean that I could read hundreds of books per year? Would I get bored after a while? Would I finally set down the laptop and write a novel? Would I build a startup worthy project? Dust off my Japanese and read up on my stockpile of manga? And the million euro question, do I even need all that time to do those things?
The answer to this last question is, most probably, no I don’t. It comes down to prioritizing your life and doing only the things that are worth doing. Having said this, having all the time in the world wouldn’t hurt. I remember reading somewhere (I forgot where) that your best work comes out when you don’t need to get paid for it. For every person the reasons will be different, but there are discernible patterns emerging among all of us:
- Not having to work a typical 9 to 5 job
- Not being tied to a physical location
- Ability to travel more and having more time off
Let’s examine these three points in more detail.
Not having to work a typical 9 to 5 job
Once you’re financially independent, you really don’t need to work for anybody, anymore. It doesn’t mean you can’t do it, it just means that you’ll be able to live more “on your terms”, which roughly translated can be considered being able to not take any job that doesn’t connect with you, doesn’t pay enough for the troubles it creates or just sit back and not work at all. The main point is indeed, the fact that you now have a choice. And having that choice is what most of us fight for during our lives.
Not being tied to a physical location
This one resonates with me. I’m an economic migrant and have been one for a while. Coming from Portugal, a country that doesn’t really have many opportunities for good jobs or decent pay, I have been living on and off from my country for almost 7 years at this point. Between a brief stint in California and my current life in Ireland I wouldn’t expect going back to Portugal in the near future. Having the ability then to choose where to live, is very important to me. I could go live in other countries, stay in Ireland, retire in Portugal, who knows? Even though I like Ireland I wouldn’t mind living in other countries in the future. I believe living abroad is one of toughest things you can do in your life and at the same time (as with all hard things) it’s a great opportunity for self growth and discovery. Picking up a brand new culture, new language, new friends and landscapes will enrich your life and for me it runs the risk of being an addiction and not wanting to go back to the old life in my own country. The important thing then, is that with financial independence, I will have some wiggle room on where I choose to spend my days.
Ability to travel more and having more time off
It’s no secret I love traveling. Most people like it, so I’m not in any way special or even different. Some like going to resorts, while others are more attracted by the backpacking style of it. If you have to work a job, independent of where you are in the world, you’ll have limited time off. Some of us have it better than others, but make no mistake, with a job comes a bunch of strings attached and one of those is pretty much the limited ability of doing whatever you want with your days (otherwise known as time off). I’m not even considering the paid aspect of paid time off, as most jobs might give you the ability to take time off without being paid, but in my experience those are few or next to none. In conclusion, then, being financially independent will allow you to take control of your holiday plans, which might not even include travel, it could be just spending a few weeks of the year relaxing with your family or friends.
And there you have it. Three reasons that I suspect cover 99% of the reasons why people decide to pursue financial independence and early retirement. There are of course a myriad of other reasons, some people want to spend more time bring their children up, others do it for reasons that are more in line with their ethos, such as rejecting a consumerism life style, but those will differ for each and all of us and in reality they are secondary effects of these main reasons.
As I mentioned before, a secondary effect, if you want, of having more time off, is that you can use that time to actually just…work. Like I mentioned before, maybe there’s a side project that you always wanted to work on, or maybe there’s a passion that you want to turn to full time job and earn a living at. Once you buy that time, you can do it.
In the future I’ll talk more about the why, but mainly the what and how of financial independence, with some details that I hope my European audience finds interesting, so stay tuned!
Also published on Medium.