The Journey To Financial Independence
The Journey To Financial Independence
As with all journeys, there has to be a starting point, and the distance between your starting point and your ultimate goal determines the amount of time and course of action needed to reach it. Where are you in relation to your financial goal? If you’re 25, college educated, have a great job, have already started accumulating some savings and investments, and your goal is to reach financial independence in 30 years at age 55, your course of action will be totally different from someone who is already 55, broke, out of work and wondering how they’re going to make it to the end of the month. But one thing you all have in common is time. Young, old, rich or poor, everyone has 24 hours a day and seven days a week. What you do with your time determines how quickly, if ever, you reach financial independence.
No matter what you’ve done up until now, you have already embarked on your own personal journey through life. Everyone’s journey through life involves getting from birth to death, and the cost associated with doing so. How much is the cost? Who knows! It all depends on the length of the journey, how you conduct yourself on the trip, and when you pay for it. Some people only live for the moment and never worry about tomorrow, therefore, why not enjoy today to its fullest? If these people die young, but they have spent everything they’ve made having fun and enjoying themselves, they win. On the other hand, if they live to ripe old age and end up spending the last half of their life in misery because they didn’t plan for the future, they lose.
Other people spend their entire working lives living very frugally, saving, investing, and planning for retirement. They don’t take vacations or live in fine houses, drive luxury cars, or enjoy any of the other pleasures money can bring, because they want to be sure they will be able to live well in retirement. Then, if they make it to retirement age, although they are financially well off, they’re used to doing without or are in such poor health that they can’t enjoy it. If they happen to die before retirement, they leave behind a nice nest egg for their heirs to enjoy, but they didn’t get much pleasure out of accumulating it.
Unfortunately, some of our brightest and most energetic people end up becoming road kill on life’s economic highway. Granted, they are people born with problems such as physical defects or mental incapacities from birth that they can’t do anything about. Some contract contagious diseases or have unfortunate accidents that limit their abilities, which may necessitate seeking help from others. All of us who enjoy good health, education, and the ability to care for ourselves should find the generosity to help those less fortunate, but we should never lose off the fact that our primary goal is to take care of ourselves first so we don’t become a burden on society. If you want to help the poor, start out by determining not to become one of them. They certainly don’t need the competition. The decision we made day to day determine the amount of joy or pain we experience on life’s economic journey.
Financial success means many things to many people, but financial independence is the same for everyone. Financial independence is the point at which you can continue to live your “chosen lifestyle” from the income generated by your investments. It’s the “chosen lifestyle” that varies, not the definition of financial independence. Whether your chosen lifestyle requires $4000, $10,000 0r $30,000 per month, you cannot be financially independent until you have an adequate stream of income from your investments to sustain whatever lifestyle makes you happy.
We need to know that by spending too much today, you risk having a good life tomorrow, and if you invest too much for tomorrow, you reduce the quality of your life today. Having this mindset, will enable us to make those day-to-day decisions that will position us to make better big decisions when the time comes.
To achieve financial independence, we have to start by determining the kind of lifestyle we want to live. We need to divide our earnings between improving our current standard of living and investing for the future. And this is the decision we need to make consciously or unconsciously every day. Do we eat out tonight, or save money by cooking at home? Do we buy that new pair of sneakers, when we have perfectly good pairs, just because our friends have a new style? Do we trade our cars now and get that new one that smells and looks good, or do we wait a year or two and invest the savings? How many decisions like this, big and small, are you faced with every day?
Do you realize that a day’s income invested today could pay for several days, 20, 30 or 40 years from now? So, you need to have the discipline to invest now, the dedication to keep it up long term and the desire to one day live your chosen lifestyle without having to worry about money.
Start early, start now to live an overall standard of living reasonably below your earned income, and invest wisely. The decision you make day to day determines the amount of joy or pain you experience as you travel down life’s economic highway.
That’s all for now, my friends. See you all in my next article.
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