This post is a brief introduction to financial independence, bits, and bobs about my journey, and one of the best tools I’ve come across.
A few months ago I spend two weeks with family and the topic of “traditional” retirement came up.
My mind went haywire and I spent the months that followed, reading, attending seminars, and talking to people.
Traditional retirement is usually thought of like this: The government will pay you a pension when you are X (whatever the future retirement age is) years old.
When discussing the topic of retirement and future financial security with friends and family I also received tons of comments along the lines of …”You might get lucky and inherit.” … “The whole system is going to change completely.” and “You need A LOT less when you are older.”
Comments such as the above made me uneasy.
All we will ever have is the now, and the future can sometimes be hard to picture. One thing is certain though and that is: How we are living our lives today, will shape our experience of life, 5, 10, and 20 years from now.
My issue with the above statements is that by telling ourselves such things we are not taking responsibility for our lives.
We are not acting from a place of knowledge and power and merely hand our responsibility over to something (the government) or someone else (family).
Handing it all over, just like that, is what I find scary and incredibly risky.
The FIRE movement
Fire = Financial Independence Retire Early.
The goal of this movement is to, as its name implies, gain financial independence and retire early although it’s not black and white. It’s ultimately about having freedom now and in the years to come.
Oliver from Frugalisten recently wrote a fabulous post about the spectrum of FIRE that I highly recommend checking out. It’s in German so just translate it using your browser. 🙂
It’s a movement that has sprung up online and there are tons of blogs, podcasts, and groups about the topic.
What people who are part of the FIRE movement have in common is that they take responsibility for their (financial) PRESENT and FUTURE by saving and investing NOW.
The minute I stumbled upon this movement I knew I had found my people.
How much money do you need for the rest of your life?
Since stumbling upon the FIRE movement I’ve been reading books about financial independence like there is no tomorrow.
One book that stuck out to me is “Financial Freedom” by Grant Sabatier. It’s a book that completely changed my outlook on life and I highly encourage you to read it. (I bought the ebook for less than 5 Euros.)
Calculate your financial independence number
In his book Grant shares tons of amazing tools, one of them being his Financial Independence Number Calculator. I punched in my data, discovered my number, and was absolutely blown away.
Running the numbers makes it all so much more tangible, and most importantly, achievable.
I had a conversation with a friend recently and he said: “If I would have 600k right NOW I would be fine TILL retirement.” I called BS on that one and sent him a link to the calculator.
With 600k right NOW he’d never need to work a day in his life ever again nor would he be dependent on a pension he may never end up getting. How amazing is that?
So, what’s your financial independence number and how can you make it work? You don’t need to share it in the comments (it’s very personal after all). Play around with the numbers and see what you can come up with.
PS: I was very hesitant to post about this. Talking about financial independence and taking responsibility is something that can be met with A LOT of resistance. All I can say to you is this: I FEEL YOU. Step out of your comfort zone, set up a budget, (start) tracking your expenses, set up a financial statement, and DIG DEEP.
I decided to post it anyway in the hopes that it’s useful to those of you who are open to it and willing to dig a little deeper. To anyone who is already on the path: KUDOS to you – you freaking rock!
Update: This post was published in November and has been updated on 2nd December. I tried to make it a little bit shorter and easier to read.