Why Financial Independence is Important: An Outline of Considerations

What’s your ‘why of financial independence’? Everyone is different and has varying backgrounds and perspectives on why financial independence is important. 

Why Financial Independence is Important: What’s your Why of FI?

Becoming financially free takes time but it so worth it. Financial independence takes time. You must have a plan and roadmap to get started.

Use our personal financial plan example as a starting point. Financial independence is very important. People around the world need to take is serious.

We can’t predict the future, but what we can do is plan for the future. We can’t control the things

What is financial independence?

To Millionaire Mob and our community, the definition of financial independence is the ultimate goal of passive income + dividend income + side hustle income is greater than your expenses.

Alternatively, you can build up a net worth that is sufficient to cover your expenses until the end of your life. I’m more income driven because I’d love to leave a legacy of assets that my kids and family can use to live a better lifestyle.

Financial Freedom Plan and Outline

Here is an outline for considering your financial freedom plan and why financial independence is important.

• Work to live or live to work

  • Are you living to work or working to live? By living to work one is so focused on their job they don’t see what life has to offer. I’d rather be working to live my life.
  • Life to me isn’t about waking up each day having to work. It should be about the option to work and bettering the lives of those around you.
  • Is the income from your job supplying you with enough to live your life? Or are you simply going through the motions to pay the bills?

• Retire to something vs retiring from something

  • We have always said that one needs to retire to something rather than from something. Financial Independence Retire Early leads individuals down a road that has many choices.
  • Do you turn left at the fork in the road and sit on a beach drinking margaritas? Do you keep going straight and work a little here and there because it’s what you truly want to do with your time and life? Or do you take a right at the end of the road and travel the world?
  • There are many choices to make along this journey but if you choose to retire from something, you end up asking yourself “what now?” You’re at a higher risk of going back into the workforce, who wants to do that?
  • You should take as much time planning what you will do after financial independence as you took getting there in the first place. Having your “why” in place is key to enjoying your life. What’s your reason for hitting financial independence?
  • Having a plan from the start is vital to success. Many individuals have started down the path to financial independence only to realize it wasn’t for them. While they are probably in a better situation financially, they could have realized early on what really they want out of life.
  • What’s not talked about enough is the impact to the mental psyche. The brain needs to be active and doing something rather than becoming stagnant. I’m also willing to bet that since you’ve achieved financial independence that you’re a high achieving individual, right? You’ve set many goals in your lifetime and have exceeded them.
  • You have set high standards for yourself and now that you’ve hit financial independence, now what? All that comes to a screeching halt. While it may seem great in the right here and right now for a week or two, you’ll start to get bored and want a new challenge. This is why you should retire to something rather than from something.

• Make a living to live how you so choose

  • One should make a living in order to live on their own terms. That money is only a tool towards freedom. Are you using that income to your advantage? Or are you becoming a slave to your debt? How are you using that income to live your best life?
  • Are you choosing to travel the world and experience culture? If so, great! Are you using the money to start a charity or non-profit? Great! Whatever it is that you choose to do with your money, make sure it’s on your own terms. Live the life that you want to live.

• Are you just in a job for the sake of having a job?

  • I’ve heard individuals say that they are only in their current job because “it pays the bills.” While this is all fine and dandy, is your job filling your emotional needs, too? The paycheck has hidden values on it that also pays your happiness, your values in life, and experiences, amongst many others.
  • Why would you stay at a job just because an income is coming in? Wouldn’t you want to be at a job because you are helping others or that you are truly happy in the line of work?
  • This goes back to finding your “why of FI” by why do you have that particular job over a different job. Is it because it pays more money and this will progress your steps to financial independence faster? Or does your job actually fulfill your emotional needs in life?
  • Slow down your progress to financial independence to enjoy your life. This could mean delaying FIRE by a year or two because you make less but you will be more fulfilled in the right here and now.
    • Is the goal really to get to FI as quickly as possible? Or is the goal to have a more meaningful life?
  • Dying on the inside because your life is unfulfilled
    • Having an unfilling life is a ticket straight to depression. One’s life should be fulfilled with things that make them happy. There is no need to go through life suffering.
    • While on the path to financial independence find what makes your heart sing. What is it that attracts you to FI? Along the way have you found your “why to FI?”
      • Once you truly find out what makes your heart sing – go after it! If that will make your life that much better, do it. This right here is key into finding out your why of FI.
    • Your path needs to be fulfilled with financial independence but also personal independence. Learn to love yourself so you aren’t dying on the inside.
      • Self-improvement is a key concept that is often overlooked in personal finance. If you are at the top of your game, your profits will be at the top of theirs.
      • Along with your path to financial independence and finding what makes your heart sing you’ll want to improve your life in other ways. This means that you’ve found your why of doing what you are doing and acting upon it.
    • Need to have intentionality
      • You must be intentional with why you are wanting to achieve financial independence in the first place. If you are not intentional with your plan, you’ll have no plan at all. It’s like the saying goes “fail to plan, plan to fail.”
      • So how can you be intentional towards your goals? Set out where you want to be when everything is all said and done first and then work backward.
        • This will give you a goal to work towards with intent in mind. Otherwise, if you took your first step how would you know it’s in the right direction?
        • Next, create a timeline of events. Factor in how long it will take you to reach your goal of financial independence and then divide that up into separate years.
        • For example, say your goal is to have 1 million saved up in 10 years. You’d then have to look at how much you currently have saved or how much you are in debt. This will be your starting point from which you can subtract your end goal, 1 million, from.
        • The next step is to then plug your numbers into a calculator to see how much you need to save each year adjusting for inflation and compounding interest.
        • Then you’ll have to look at your budget and see if it’s possible to save that much each year or not. If it isn’t possible, then you’d have to find ways to either decrease your spending to save more or you’d have to find ways to increase your income from side hustles or a better paying job.
      • As you can see, by being intentional with your goals, you start to have a vision of where to take your first step and develop a plan from there.
        • To quote Abraham Lincoln: “Give me six hours to chop down a tree and I will spend the first four sharpening the ax.”
          • This quote is powerful in our situation above because it shows that one must come up with a plan to execute rather than starting with a faulty plan.

Conclusion on Why Financial Independence is Important

As one can see, finding your why of FI is much more than numbers. It revolves around why you are getting started in the first place. This can be from traveling the world, quitting your job, helping others, personal growth, family life, amongst many other things.

Finding out why you want to start and continue on that path is crucial to your success. Be intentional with your decisions that will allow you to focus in on your personal development as well as your financial independence.

See Also:

• Accumulated Wealth Tips: How to Improve Your Financial Ratios
• Finding a Financial Planner for Millennials
• 19+ Personal Financial Ratios to Use

Author Bio:

Tim is an Air Force Officer who is on the path to financial independence. He is currently 25 years old and has amassed a net worth of $225K. Along the path to financial independence, he practices minimalism and simplicity by living in a tiny house. He blogs over at Life For The Better where he talks about his journey to financial independence, tiny house living, minimalism, relationships, and more.

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