I don’t think I’m overstating it when I say that if you are unfamiliar with the concepts of the Financial Independence (FI) movement, prepare to have your mind blown.
No, it is not a get rich quick scheme or a multi-level marketing pitch. It is simply an overview of every financial move you can make to achieve more freedom in your life.
Financial Independence (FI) as defined by the FIRE (Financial Independence Retire Early) community is the moment when you have saved 25x your annual expenses in investment accounts. If invested properly, this savings will provide income for the rest of your life, allowing you to pursue meaningful work (or endless beach lazing) without the constraints that come from being fully employed by someone who may not fully align with your values.
Don’t believe saving 25x your annual expenses is possible? Check out one of my favorite “Mister Money Mustache” blog posts of all time here.
“FI is not about running away from the things you hate in life. It’s about running toward something. It’s being intentional about life and not just grazing through it. Once you start living intentionally, earning, spending, and investing decisions become much easier. Decisions that previously seemed hard and felt like sacrifices become automatic as they drive you toward your desired outcome.”ChooseFI: Your Blueprint to Financial Independence
More importantly than the “end goal” of saving 25x your annual expenses, is the freedom you gain along the way. As you start to save, you’ll cross new thresholds that will give you increasing freedom. For example, having $1000 in investments means that new tires are not going to break you. Having $10,000 in investments means you are not as reliant on your current job, and maybe you can look for other work that you love without the stress of cobbling together a rent payment. Having $100,000 in investments means you could probably take an entire year off and look for problems in the world you want to help fix (by entrepreneurship or volunteer work). Having $1,000,000 in investments means you could live off of $40,000 a year in perpetuity. Could you live off of an inflation adjusted $40,000 income for the rest of your life?
“FI is about having the ability to reclaim your time and control of your life. It’s about having time for family, friends, and hobbies. FI is about having flexibility. It’s about having the freedom to fit in meaningful work around your life rather than trying to fit in life around your work. FI means having the freedom to pursue the options that are most personally rewarding rather than needing to chase the highest financial returns. It means having the freedom to fail on a project or in business without it leading to failure in other aspects of your life.”ChooseFI: Your Blueprint to Financial Independence
The good news is, you don’t have to stop there if you don’t want to, and you don’t even have to go that far. There are countless examples of people using the concepts in this book (which are no more complicated than “spending less”, “making more” and “investing the difference”) to build lives that don’t cost that much and are therefore able to invest in legacy building employment or volunteering at a younger age. Many of the people interviewed on the podcast actually make MORE money after they reach FI. It’s amazing what extreme value you can bring others (aka income you can bring in) when you’re not stressed about where rent is going to come from.
This book was written by three suburban dads who have all reached FI to varying degrees. I believe it is the simplicity of their backgrounds and normality of their lives that makes this book so exciting. If they can do it, we can too. And since they are not claiming to be gurus or experts, there is a refreshingly accessible tone that invites and inspires rather than simply dictates best practices from on-high.
Read the first 17 pages “here!
I have read many personal finance books in my effort to ensure I don’t repeat the mistakes I have made in the past, and this has been my favorite. It takes complicated topics like investing and tax planning and distills it down to actionable steps at the end of each chapter.
“It’s common to think investing is confusing, overwhelming, and impossible to do on your own. This is not an accident. There is a tremendous incentive for the financial industry to promote feelings of inadequacy, fear, and confusion in investors. Creating complexity and anxiety allows the financial advice industry to justify their existence. None of this creates value. Instead, it promotes complicated investment portfolios, high advisory fees, and excessive trading that benefits the financial services industry.”ChooseFI: Your Blueprint to Financial Independence
I highly recommend this book to all humans that use money. Anyone who handles money of any kind…at all…ever…would benefit from reading this book. The topics and specific actions contained in each and every chapter are eye-opening and inspiring. This book–and the associated podcast–have been an incredible value-add to me, and I know they will be for you too.
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