Why Pursue Financial Independence?

When you mention to others that you’re focused on saving and investing, you might hear responses like, "Why deprive yourself? I'm going to live life to the fullest because who knows if I'll live long enough. You're sacrificing now just to save up money for old age."

Another common criticism targets early retirement. People often say, "Maybe you just hate your job and should find something better. You'll get bored watching TV and hanging out at the beach all day."

I believe we can have a reasonable debate about early retirement. It’s not for everyone.

However, in my conversations with many early retirees, I’ve found that none of them fit the stereotype. They usually find meaningful ways to spend their time and often continue to earn income, but now they’re doing what they enjoy instead of toiling in the corporate grind.

All of that said, this post isn’t a defense of early retirement.

Instead, I want to advocate for pursuing financial independence, which is distinct from early retirement. I believe everyone should aim for financial independence, whether they want to retire early or not.

I'd like to highlight some of the benefits of pursuing financial independence. Here are some key reasons why you should consider it:

#1 Peace of Mind

The journey toward financial independence offers significant benefits long before you actually achieve it. As you progress, you gain peace of mind and control over your future—advantages unimaginable when you're mired in debt and living paycheck to paycheck.

I've experienced life on the other end of the spectrum. In my mid-20s, I was burdened with significant debt and living paycheck to paycheck. It was incredibly stressful and exhausting. Constant worry about money dominated my thoughts. I was terrified of losing my job and constantly fretted over my debt and account balances.

Financial stress amplifies every challenge at work, making each hurdle feel 100 times more daunting. I've seen this in people across the income spectrum, from those earning a modest salary to those with substantial incomes.

Many high earners are perpetually stressed because they need their job to cover exorbitant fixed costs like mortgages, car payments, and private school fees. In terms of life enjoyment, they are no different from someone with a low income who is similarly stressed and always in a state of I need this job.

I need this job is an absolutely terrible place to be. When I was heavily in debt during the financial crisis, I had just emerged from a period of unemployment, literally living out of my car. I knew that if I lost my job, there wouldn't be an easy way to replace that income. My debts were so high that I couldn't make a significant dent in them. While my employer didn't know the specifics of my situation, they were aware that I had no alternatives and exploited that, as they did with everyone else who worked there. It was then that I vowed to get myself into a financial position where I would never be that desperate again.

This desperation is evident in high earners burdened with debt and high fixed costs. Every minor issue at work becomes a crisis. They send frantic emails late at night and are stressed out on every call. Their constant anxiety makes them unpleasant to be around, both at work and likely at home. They can never relax and enjoy anything because they're perpetually worried about work-related issues. This is an atrocious way to live.

Very early in the journey to financial independence, you'll begin to escape this cycle of stress and desperation. Importantly, this isn't a distant goal that takes 30 years to achieve; most people can reach a stable financial position within a year or two. You'll create a strong financial buffer that distances you from the I need this job style of thinking.

This peace of mind comes from being debt-free, having low fixed costs, and building up a significant investment cushion. With this security, you can tolerate less nonsense at work and experience less stress overall. You'll feel more empowered to say "no" to unreasonable demands.

Achieving this peace of mind should be a goal for everyone, and it can happen early in your journey toward financial independence.

#2 You Don’t Decide When You Will Retire

The traditional view of retirement involves working at a company for 40 years, receiving a celebratory party, a gold watch, and a pension upon your 65th birthday.

However, this idealized scenario is largely a myth. Even in the 1950s and 1960s, this wasn't the norm as many believe when viewing the era through the lens of TV shows and nostalgia. Pension jobs were not widespread, the poverty rate was higher, and by nearly every measure, life was much more challenging.

Today, that postwar fantasy is truly non existent. People jump around between jobs, companies lay people off at random, and virtually no one has career stability.

Jobs are often eliminated due to layoffs, technological advancements, or economic downturns. Workers frequently lack control over these changes.

A common tale is someone in their 50’s, they have been working in a field for a long time, and they get laid off. They find it extremely difficult to replace the income that they had in the old role. Often, they have to take on a role that pays a lot less than what they were making at the height of their career. On top of that, they had a lifestyle that they can no longer afford and need to scale back. This kind of person would have loved to continue until they were 65, but life had other plans.

How many real estate agents in 2005 thought the market boom would last indefinitely? How many Kodak executives in their mid-40s during the early 2000s expected to coast at the company into retirement? Consider the stark contrast for a music industry executive in 1995, when CDs flew off the racks at Tower Records, compared to today’s market.

Numerous high-earning executives have seen their careers halted due to political issues or corporate restructurings. Others have had promising careers derailed by medical problems or injuries preventing them from performing their duties.

Additionally, the desire to work may wane as you age. It’s easy for a 30-year-old to believe they’ll work until 65, but at 55, the corporate grind can feel much more taxing.

The reality is that you never know when your career might end. It could be due to various factors beyond your control. Moreover, you might not want to continue your career as planned.

The solution to this uncertainty is financial preparedness. If you’re a high earner but keep your fixed expenses low and save diligently, you can handle unexpected changes with ease. This financial cushion provides flexibility, allowing you to take a lower-paying job without significant stress.

Pursue financial independence to create a buffer against the unknown. Life cannot be perfectly planned or plugged into a spreadsheet. The future is unpredictable, so prepare for the worst and hope for the best.

#3 Optionality

One of the most heartbreaking realities young people face today is taking on six-figure debt for college before having the life experience to fully understand the implications. Because of the debt, upon graduating, their focus shifts from “What do I want to do with my life?” to “How do I make enough to manage this debt?”

This scenario is all too common and deeply unfair. It's not just limited to college students; people across all age groups can find themselves trapped. This often leaves individuals stuck in careers they can't afford to leave due to their high expenses.

Pursuing financial independence provides a crucial buffer, offering you options. With financial stability, you can choose a lower-paying job with fewer hours if it brings you more happiness. A 22 year old without student loan debt can pursue a less lucrative career or a passion project like missionary work or traveling the world, without the burden of debt or high fixed costs.

Financial freedom also allows you to choose the people you interact with. You can have a ‘no asshole’ policy in your life. You can afford to reject an asshole boss or walk away from disrespectful customers.

This is something I really admire about Warren Buffett. He exemplifies this freedom, working only with people he respects and enjoys. This is something that he always practiced but I think it was really driven home for him the hard way through the Salomon Brothers debacle, when he got thrust into dealing with assholes regularly.

The greatest thing money can buy isn't a huge house or a fancy car; it's optionality. It’s the ability to say ‘no.’ If your money isn't giving you options, then what's it even for?

#4 Simplification

When I first began my journey to get out of debt, I immediately noticed a significant improvement by simplifying my life. I eliminated unnecessary expenses and sold possessions I no longer used. This process of stripping down and simplifying was incredibly liberating.

The more clutter and complications you have in your life, the more stressed and anxious you become. It starts gradually, but before you know it, you're overwhelmed by unnecessary distractions that consume your thoughts and dictate your life. Simplifying your life can significantly reduce this stress and bring you greater peace of mind.

As we age, many of us accumulate complexity in our lives—properties, cars, gadgets, and even toxic relationships we don’t really need. This clutter can weigh us down.

Pursuing financial independence and becoming intentional about spending forces you to simplify. Shedding unnecessary expenses and unused possessions brings a profound sense of freedom. You start to realize that happiness doesn’t come from material things.

True liberation and happiness come from simplicity, not from accumulating more stuff.

It’s More than Money

The pursuit of financial independence offers profound and far-reaching benefits that extend well beyond monetary gains.

It provides peace of mind, the ability to handle unexpected changes with ease, and the freedom to make choices that enhance your quality of life. By focusing on saving and investing wisely, you can liberate yourself and create a buffer against life's uncertainties.

Ultimately, financial independence is about more than just money—it's about creating a life that is resilient, flexible, and aligned with your values and aspirations.

Financial independence is something that everyone should pursue - whether they want to retire early or not. By preparing for the unknown and embracing the principles of financial independence, you can achieve a life of greater freedom, happiness, and fulfillment.

Disclaimer

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