You’ve likely heard many stories about Financial Independence. Many of the posts on this blog are about my path towards Financial Independence (FI). But what is the motivation behind wanting to become financially independent? There are many reasons to seeking financial independence. And as you’ll find retirement is not the most significant reason.
In this post I’ll go over the major motives people seek to become Financially Independent. Of course, the motivations might differ for everyone, and there are some that may appeal to you more than others. It is fine. It is not everyone has the same motivations for trying to reach FI. Even not everyone is eager to be able to reach FI!
You might have other reasons to achieve financial independence that I didn’t even think about! Let me know via the comment section if this is the scenario! I’d be interested to know why you want to be Financially Independent.
1. Security
Once you’ve reached financial independence, you’re safe from several situations that could lead to a significant income loss.
In the event that you lose your job, if your company goes bankrupt, or you’re unable to work , you should not have issues sustaining your current lifestyle. All these events are not significant for your financial situation once you have reached financial independence. They may still be significant to you, however. But if you’re financially secure, you’re ready to withstand them without issues.
It is also a security of retirement. At present in Switzerland the retirement age isn’t all that bad. However, who knows what the situation will be in the next 30 years. There might not be a retirement pension or assistance for retired people. If you are already financially independent, you need not worry about that!
I want to be prepared for these events, and I am already getting ready for these events right now. If you’re working towards Financial Independence, these events aren’t going to be easy for you. But you’ll be able to endure them better than most. This is another excellent thing about FI; it will also enhance your financial situation while you work toward financial independence.
Actually, people on the road towards FI have better financial standing than the average. They can spend less and, often, make more. This will assist to achieve their goals quicker and also overcome financial difficulties much more easily.
Personally, I believe this is the best reason to aim to achieve Financial Independence.
2. Family
Spending time with your family is important. But often, we spend too much time working or doing other activities than caring for our family and friends.
Financial independence grants us the freedom to be present for our family and create more enduring bonds.
I would like to have more time in the future to spend with my children and to build stronger relationships with my spouse, children family and friends.
Of course, I am not putting off this! It is essential not to make use of FI as an excuse to delaying spending time with beloved ones. Financial freedom can be beneficial in having more time to complete more things that matter.
3. Freedom of choice
Most people who want to be able to reach FI wish to retire early.
Also, I think I would like to retire earlier. However, the possibility to retire early is far more crucial than retiring itself. Being able to decide when to retire is vitally important.
At the moment, I am still enjoying my job. If I didn’t create software for my company I’d rather be developing software to have enjoyment. Who knows if that will still be the scenario in 10 twenty years or a decade from now? Nobody!
Your company will undergo a number of changes. Your coworkers can be changed. Your boss could change too. You might be happy with your current coworkers and boss. What happens if they’re replaced by someone who you don’t like? The changes could result in huge changes in your work. Following some adjustments it is possible that you will not enjoy your job as much as you are now.
You too are able to change! Many people assume they will like the same things in the near future. But this is often not the scenario. People change a lot.
Therefore, having the choice to either retire or to do something else is important for me. When I reach FI I can choose to retire, or start an organization or do something else. Many people reach FI and don’t retire. There are some who are continuing to pursue side business ventures. And some people are doing charity work with very little income. You can still take a look at FI even if you don’t plan to retire.
Did You Know? Fire The Boss is a great financial independence retire early blog.
4. The time is short
Time is also an essential fact. The time span is extremely short.
Let’s say that you have eighty years of your life in total. You do not wish to work for 65 years and want to be at peace for the maximum number of these years. It is possible that you will continue working until the end but you might decide to retire or change your habits. Additionally, you can reduce your working time. All of this is possible once you’re financially secure.
I enjoy my job. But there are a lot of things that I like about my life, and I would rather have more time doing more things than working five days a week until 65 years old. In the event that I was Financially Independent I’d also think about part-time work as a good alternative.
5. A challenge
One thing I appreciate about trying to reach Financial Independence is that reaching FI is challenging. It isn’t obvious for most people to reach FI prior to retirement.
Early retirement can be a challenge. Although the concepts are simple, the implementation of these principles is far from trivial. Before I was aware of money independence didn’t even think it was possible to achieve it.
It’s good to face certain challenges in your life. It can help you learn many things. It is important to master new things , like investing. I’ve read a lot of books on personal finance as well as investing. I’ve learned lots in less than one year on the path to financial independence. However, this is an invaluable experience!
6. A fantastic trip
The path to FI hard, but it’s also extremely interesting.
I’d even say that it is a great trip. The path to FI is made by a lot of crunching. You have to figure out how much you are worth. You can even calculate your FI Ratio to know how far from the road you are. For me, this is extremely enjoyable and fascinating. I like numbers a lot.
I am also happy that I managed to decrease the amount we spent over time! At first, I was spending much more because I was not considering spending with the same perspective. Now that I am aware of spending it’s been fun to try to cut down our spending!
The investment process is fascinating. It takes a lot of study to determine what you should invest in. And especially, you need to know the reason you are investing in all your portfolios. There is no reason to investing in something if you do not be aware of the reason!
The journey I took to FI also made me want to create this blog. This blog is also an excellent journey. While this isn’t the first time I’ve blogged, I have learnt a lot! I also enjoy writing on this blog quite a bit.
7. A different path
The idea of being financially secure and perhaps even retiring early (or at the very least, being able to) is a road few people choose to take.
For me, it’s good. If everybody were taking the same road it would not be as appealing. A lot of paths don’t include FI however, which is very good. If you’d rather be an entrepreneur and get rich, there’s nothing wrong with doing that.
So far, most of the roads I have taken have been classic ones. I have gone to an elementary school. I’ve gone all until I earned the stage of Ph.D. Then, I joined the standard business as a software engineer. I am happy to take a different path by striving to achieve FI. We’ll see how I will achieve it!
8. FI can teach good values
Finally, the way to Financial Freedom will teach you some basic and valuable values.
The most essential aspect for FI is Frugality. It’s hard to get to FI without being frugalat the very least to some degree. Certain people are exceedingly economical, and other individuals are comparatively frugal only.
As you are investing your way towards FI it is likely that you will gain some wisdom from it. Investing is something you should be doing with lots of thought before making any drastic choices. Your emotions are among your greatest enemy when investing. Learn from your mistakes. As an example I made plenty of investing mistakes when I began. I’m now more experienced because I’ve learned from these mistakes.
Another important thing to discover is that health is essential. If you’re hoping to live a long life and retire healthy it is essential to take good care of your body. It is important to eat a healthy diet and do not push the body (and your mind) over the edge of their capabilities.
In our case, for right now, we didn’t yet change a lot however, through our vegetable gardening, we’re eating better than we did before. By cooking our meals ourselves most often it is a healthier food plan than fast food restaurants. In 2019, we created a tiny Health Plan to keep healthy for longer.
9. Create wealth generationally
If you’re following an appropriate withdrawal rate strategy, you are likely to get more money than you’ll ever need at final. This money could then go onto the next generation members of the family.
Many people are drawn to the idea of creating wealth for generations to come. It is not the primary motivation to work towards 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 an excuse for the next generation to not to work and rely entirely on the wealth. However, this may help them achieve financial independence later on.
And ideally, you want the next generation to carry on transmitting this wealth rather than just spending it. Thus, an important part of this is to impart the financial knowledge to the next generation, and hopefully, they will be able to continue this trend.
Conclusion
As you can see, there are many reasons to work towards financial independence.
You’ll have a lot more freedom when you’re financially independent. Also, your life and the lives of your loved ones will be much simpler. Furthermore, it could help you learn a lot of things, and it can be an amazing trip. My life already improved after I began trying to reach for FI.
Perhaps some of these arguments might appeal to you. But perhaps they will not. Not everybody has the same motives to strive for financial independence. And some people may prefer not to achieve FI in the first place. There’s no reason why everyone to adopt the FIRE idea. There are plenty of other options. It is up to you to select the one that will best suit your needs.
Avoid the trap of setting your sights on FI just because other people do it. If FIRE doesn’t appeal to you, try to accomplish the goals you wish to achieve, not the goals of other people!