You’ve probably stumbled across the FIRE acronym before – it stands for Financial Independence Retire Early. It came out of the US and has spawned countless books, podcasts, conferences, and even a movie. Reddit has huge discussion threads devoted to the idea, with the primary thrust seeming to be how young you can achieve early retirement.
Now I’m well on board with the first part of FIRE – Financial Independence. But it’s the second part – Retire Early, that I have a problem with (as do many in the FIRE community themselves).
Financial Independence grants you choice. Choice in how you spend your time, how much of your time you devote to income generating activities, and what sort of income generating activities you do. Having gained that choice, why on earth would you want to retire?
A primary life goal is to achieve happiness. Whilst there are some common sources of happiness such as social connectedness and making progress towards meaningful goals, at the micro level, each of us derives happiness in our own unique way.
In today’s episode I want to reflect on ways you could use your hard earned Financial Independence to achieve happiness, that don’t involve retiring early.
You’ve worked hard, paid down debt, built up some wealth, and have reached a point of Financial Autonomy, or Financial Independence if you prefer. You have gained choice.
What next?
One train of thought is that you retire. Take long walks on the beach, play golf, and probably watch more television. But if you’re like me and find these ideas vomit inducing, you need something considerably different.
So let’s consider some alternatives.
- Reduce your working hours
Sure there are some jobs that are just 100% horrible. But for most of us, there’s plenty of happiness in our working lives. From the social interaction of working with colleges and perhaps customers, to the satisfaction of a job well done, and in some roles the joy in helping others get the most out of their lives, our working lives provide purpose and have a value beyond the dollars that they generate.
But of course there is more to life than employment. Whether you want to have more time with your children or grandchildren, write a novel, or indeed play more golf, cutting back your hours might be a preferable path to a full cold turkey retirement.
- Freelance or working casually
My interview with Jim Smith in episode 114 shone a light on the benefits of being in a flexible work arrangement. Jim chose to work as an emergency teacher rather than hold a permanent position, and this enabled him to travel, support a charitable effort that he was passionate about in Nepal, and create a small business to share his love for Nepal and its people with others, particularly students.
Jim was able to work this way because he had worked hard earlier in life, paid off his mortgage, built some investments, and not lived an extravagant life.
The opportunities for freelancing today are enormous, with the internet the enabler. You can often work anywhere, and choose when you will engage in income producing activities, and when you won’t.
(See also episode 102 for my discussion with Sharon Tang from freelancer.com, where she talks about roles like working with NASA now being available to freelancers around the globe).
Using your hard earned Financial Independence to gain this sort of flexibility is a fantastic outcome and one which certainly holds the potential for plenty of happiness in your life.
Looking to increase the amount you save and put towards wealth creation? Our online short course Cash Flow Mastery may help. It provides 6 different money management strategies, and an easy to use Self Assessment tool to help you choose the one most likely to lead you to success. And the best bit – it’s only $9! Learn more here.
- Trying a new career
Instead of retiring early, perhaps you could start all over again, but this time on your terms. Way back in episode 55 you might recall I spoke with Tim Lavery on his move from bank manager to primary school teacher, which was a great example of what could be possible when you put yourself in a position of not being constrained by your finances.
Embarking on a career change could be the spark that provides new fire in the belly and reason to bounce out of bed in the morning. With a bit of luck, you’ve got 90 odd years on this earth – surely you can fit in more than one occupation.
- Start or buy a business
Building and running a business can be hard. But as with most things that involve a challenge, they can often be incredibly rewarding too as you see your idea grow, build a team, and constantly learn new skills. And of course your goal need not be to build the next Google. Perhaps your ideal business is just you and a couple of staff. Fantastic.
- Volunteering
A widely recognised source of happiness is doing things for others. So if you’ve worked hard and put yourself in a position of financial independence, why not use your new gained flexibility to volunteer in an area of passion and interest for you. From helping out at the local primary school, to participating in one of the services clubs like Rotary or Lions, supporting environmental activities, or the increasingly popular voluntourism option of spending time in a developing country – there are plenty of opportunities to put your time and energy to great use making a difference in the world.
Before we wrap this one up, something you might have noticed about all bar the last of the FIRE alternatives listed above is that they all generate money. The handy benefit of this is that you can pursue these interesting journeys far earlier in the life than would be the case for a goal of complete retirement. It could be for instance, that the achievement of clearing the mortgage is enough to enable you to pursue your dreams.
This is the reason I prefer the idea of Financial Autonomy over FIRE. What most of us seek is to not be controlled by our financial obligations. We don’t necessarily need millions of dollars in financial assets to make that possible. We just need a good plan, control of our expenses, and a preparedness to not follow the crowd.
Thanks for listening. Until next time.
Resources & Links
- Gaining Choice – Newsletter
- Freelancing with a Safety Net – Episode 95
- How Freelancing can help you succeed – Episode 102
- Cash Flow Mastery – Online Course
- Tim’s big jump – from bank manager to primary school teacher
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