4 Reasons You Should Choose Financial Independence

Financial independence (F.I.) is when you have accumulated so much wealth or resources that you are no longer dependent on your job for money. While some people may feel like financial independence is an unrealistic pipe dream, I’d argue that its possible for many of us and definitely something we should all strive for. Here’s why we should all care about and choose F.I.:

1. It can decrease [financial] stress in your life. Although money can’t “buy happiness” a certain baseline level of resources can certainly decrease stress. Many Americans live paycheck-to-paycheck and barely have enough money to cover all of their monthly expenses. Others of us may be a bit more financially stable but still wonder how we will repay all of our student loan debt, afford rising health care expenses, or fully fund our retirement. These worries can cause stress and decrease the quality of our lives. Saving money from our main jobs, investing in appreciating assets, and establishing multiple streams of income can help ease this worry. It allows us to become less dependent on each paycheck and establish the financial independence that decreases these financial stressors.  

2. It gives you more control over your life. Another perk of being financially independent is the ability to have more freedom in your life. When money is not the main objective, you can be more selective with the jobs you take and the work you do. You no longer have to feel burdened by the need to work a decent-paying job that you don’t like. You now have the freedom to select work that fulfills you, regardless of how much it pays. You can also have more control over your daily schedule and more autonomy with your work commitments. When you are able to work a job that you actually enjoy, one that fulfills you and allows you to contribute to society in a meaningful way, you also create more happiness that can have a lasting effect. Establishing financial independence can help make this a reality.

3. It lets you have more meaningful experiences with the people you love. One of the benefits of having your finances in order with a fully funded retirement account and little dependency on your next paycheck, is being able to enjoy your wealth. Although buying possessions and having more “stuff” can bring us temporary pleasure, lasting happiness often comes from spending quality time and having meaningful experiences with the people we love. Think about how happy you could be if you could travel to anywhere in the world with the people closest to you. Or, if you could do the thing you like most around the people you love most. Having the ability to spend more time with your children, go to work each day doing what you enjoy, visit your family and friends frequently, relax often, or travel the world can result in more sustainable levels of happiness and increase the overall joy we have in our lives.

4. It gives you the chance to have a bigger impact in the world. Although you don’t need money to make a difference, having money allows you to make a bigger impact and do so in a way that doesn’t jeopardize your own well-being. When you no longer have to make the choice between helping your family members and paying your own bills, its much easier to help others. When you no longer have to choose between financing your children’s education and contributing to charity, it much easier to give. When your financial matters are taken care of and you are less dependent on your paycheck, it becomes a lot easier to contribute to others and oftentimes you can give to even more causes, organizations, and people than before. Having the ability to improve lives and outcomes can drastically increase your own life satisfaction and create an inner peace and happiness that lasts longer than you can imagine.

The Power of Focus: Pick your ONE thing

As young professionals who have overcome the post-grad struggle and are finally starting to build our careers, we understand the value of money. It may not be the only thing we care about, but having enough of it to live well and enjoy life with our loved ones is essential. Instead of mindlessly spending money then awaiting our next paychecks, we should re-examine our habits and utilize the power of focus.

Step 1: Determine your top 5 “big” goals.

While the devil is in the details, it’s often helpful to start by looking at the bigger picture. A few times a year I sit back and think about my overall financial goals. Although this can seem a bit esoteric initially, it doesn’t have to be. Simply identify your most important financial goals. As a young resident physician my top 5 goals are to:

1-Be completely debt-free;

2-Own a home;

3-Take international vacations;

4-Give to charity;

5-Be financially independent (aka have the flexibility to work less without worrying about money)

What are your top 5 financial goals?

Step 2: Write down a few things you must do to achieve them

Once you determine the financial goals that are most important to you, write down ways you plan to achieve these goals. For me, that means tracking my spending and sticking to a budget. It means saving a percentage of my income each month and investing money towards retirement. If I’m being honest, it also means staying away from the mall so I’m not tempted to buy cute clothes and new dresses whenever my favorite stores are having a sale. It even means forgoing the temptation to buy things online after seeing new home décor ideas on Pinterest. Most importantly, it means eliminating any consumer debt and having the self-control not to accumulate more in the meantime. What are some things you must do to reach your larger financial goals?

Step 3: Choose one thing to change about your finances over the next 6 months

To be honest, I’m eager to become financially independent. I wish I could snap my fingers and erase my massive student loan debt and have millions saved for retirement. Don’t we all? Unfortunately, life doesn’t work that way. Realistically speaking, it will be about 10 years before my student loans are paid off or forgiven. I’ll be well into my 30s before I can comfortably purchase my dream home and in my late 40s before I can truly become financially independent. Although both of those goals can seem far away, there are several things I can do now to put myself in a great position going forward. However, trying to do all of them at once can be daunting and unsustainable.

I’m the type of person that needs to see progress. I need to feel as though the sacrifices I’m making (aka the cute clothes I’m not buying and lavish vacations I’m trying hard not to book) are actually worth it. Thus, I find it helpful to focus on one thing. Choose one change you want to make in your finances over the next 6 months, whether that’s trying not to spend more than $100 on take-out, putting $300 into a savings account every pay period, or contributing 10% of your salary towards retirement. Choose one thing to stick to over the next 6 months. My one thing is eliminating the credit card debt I accumulated in grad school.  What is your one thing?

Step 4: Laser focus on that one thing

Once you pick your “one” thing. Laser focus on it. Since I’m someone who loathes consumer debt, I’m laser focused on eliminating it. How? By literally throwing money at my credit card balance each month. As a resident physician, I’m definitely not making the doctor salary people google online, just yet. I don’t drive a Tesla, own a large home, or spend money frivolously without remorse. However, as a single person with no kids, who is an employed physician, I make enough to pay off my credit card debt. In fact, despite having a negligible “minimum payment,” I send in a several hundred dollars each month and should be credit-card debt free by the end of the year. I realize everyone’s financial situation may be different, but we should all laser focus on one thing. In what way do you plan to do this?

My point? Instead of getting bogged down by large goals that seem far off, I have found it helpful to focus on one small goal every 3-6 months. I like to see progress and achieving these small goals will give me the momentum needed to continue along the journey to reaching my larger goals. What do you think? Is this a strategy you believe will work for you?