I’ve been fascinated by an experiment lately, where I introduce the concept of FIRE (financial independence/retire early) in conversations where lifestyle, goals or finances come up naturally. This isn’t done in the context of encouraging anyone to pursue it or how to do it, just at a very basic:
I’ve heard of this new trend where people are minimizing their costs and saving up to 50% of their salary to become financially independent after 10 – 15 years and some even choose to retire in their 30’s.
I’ve done this with friends, acquaintances, co-workers and even a local tailor. Reactions have ranged from intrigued to predictably ‘that can’t be possible’. The act of saying we all have different goals is one thing, but having that simple short conversation has been fascinating to see other perspectives. It’s really re-enforced how important it is to spend some time having those conversations. So what financial goals and perspectives are out there?
It’s Not About the Money
When we talk about financial goals, it really has nothing to do with money. That’s incidental. Money is a means to an end. It’s only relevant because it’s intrinsic in everything we do. We exchange money for our time, in turn we give up money for what we need and want. It’s about shelter, food, transportation, clothing, vacations, security, validation, self worth, flexibility… As you can see, it’s not just material items or experiences but also about how we feel and what we value.
So when you think about your financial goals and plans, keep in mind that it’s a means, not the end. Goals will be different for everyone but just as valid. It’s all about what you’d like to do with your time and be willing to creatively find ways to imagine possibilities and solutions to achieve them outside of society’s constraints. Or hey, if a nuclear family with two kids and a white picket fence with traditional retirement is your jam, guess what? That’s perfectly legit as a goal too.
Six Financial Goals
Making Ends Meet
Does that sound like an odd one? It does feel a little weird to list it here, even though I’m well aware, as everyone else, that there are plenty of people who struggle to make ends meet. This isn’t because they didn’t work hard or live within their means. In fact, they probably worked multiple jobs. But still, they’re living pay check to pay check, and even then maybe don’t have enough money to pay for all the basic survival needs. For anyone in this situation, getting to a place where you can satisfy the 2 basic Maslow’s hierarchy of needs, physiological and security, will be ecstatic and relieved.
Living Debt Free
An article recently published in Global News cites Canadians have an average $8k in consumer debt, not counting mortgage debt. In some of my conversations, it wasn’t uncommon for someone to casually mention they carry credit card debt. Not because they thought carrying a small balance was good for their credit rating. It was just a fact of life! So while they comfortably (?!) carried credit card debt, if they had to pick a financial goal, being debt free would be great.
Healthy Savings Rate to Retire at 65
While thinking this far ahead wasn’t mentioned by many, the next common reaction had to do with comfortably retiring between 55 – 65. This was expressed in one of two ways:
- It would be great if this was possible. Kinda leaving you with the impression they didn’t really have a plan for it and didn’t think it was possible.
- They were happy with their lifestyle, working and had a plan to hit traditional-ish retirement age.
At least with the second one, it was a choice and I can respect that. There could be many reasons why people don’t want to aim for FIRE.
Financial Independence/Retire Early (FIRE) or Financial Independence Optional Retirement (FIOR)
For those that aren’t familiar, this is when someone’s main priority is living well below their means, maximize their savings and invest to amass a net worth high enough to retire well before traditional retirement age. Or to reach their retirement figure and simply have the option to take it, or not. This isn’t to say that life is all work and no play.
I love this new term! Basically the same concept as FIRE with a slight twist: having your investment portfolio income pay for a good portion of your expenses, while still having to earn a salary, albeit much less. This is somewhat of a middle ground. Allows you to work less due to passive income, leaving you more time to pursue a passion project.
Alternating between working full time while building up a nest egg and taking mini-retirements to do other activities, while living off said nest egg. Whether it’s to travel, try a new business, build up a side business, etc. This is a way of incorporating some aspects of FIRE, while saving for traditional retirement, and not having to wait quite as long as barista to take a time out.
Reasons Not to FIRE, FIOR or Barista FIRE
Aside from highlighting that there are many different ways to create an alternative lifestyle, there have also been some intriguing perspectives on not pursuing more aggressive financial lifestyles.
Structure and Regular Pay
Not having to work was an intriguing idea, they had a healthy savings rate and spending was in line with their priorities. They liked the thought of not HAVING to work but they liked structure to their day, regular pay check and social aspects of work. When pointing out that they could make their own structure, they knew themselves and felt it wouldn’t work the same. Besides, it was the combination of all three. The only exception was the appetite to break out on their own one day and start a business. That would still naturally give them structure.
Life is Short
I’m used to seeing this as a reason to reach some sort of financial freedom early, so that you can have more of the one resource you can never get back: time. In this case though, they felt that if you could save that aggressively, it was better to aim for traditional retirement age, while easing up on how many hours your worked along the way there. After all, there was no guarantee you’d have your health or life at 60, 50 or 40. So better to enjoy more along the way rather than work 9 – 5 and possibly saddling up on side hustles.
Communication and Exploring Ideas are Important
If anything, my little experiment has really highlighted how important it is to continually explore new ideas and revisit ones we’ve thought over and discarded. Having conversations with many different people, from friends to casual passerby’s, just might lead to understanding your motives better or give you insight that’ll change your life.