A lot of this blog is about my path to Financial Independence (FI). But why would I want to be financially independent ? There are many reasons for wanting to be financially independent. And as you will see, retiring may not be the biggest reason.
In this post, I am going to list the main reasons I want to be Financially Independent. Of course, the reasons may not be the same for everybody. Some reasons will talk to you more than others. It is fine. Not everybody has the same motivations in trying to reach FI. And not even everybody wants to reach FI ;)
You may have some reasons to reach FI that I did not even think about! Please let me know in the comments if that is the case! I would like to know why you want to be Financially Independent.
Once you are financially independent, you are safe from several events that would cause a large income loss. If you get fired, if your company goes bankrupt or if you are unable to work anymore. All these events are not a big deal for your finances. They may still be a big deal for you of course. But if you are financially independent, you are ready to withstand them without issues.
It is also a security of retirement. Currently in Switzerland, retirement is not too bad. But who knows how that will be in 30 years. There may not be any pension or help for retired people. If you already are financially independent, you do not have to worry about that!
For me, it is very important that I am prepared for these events. I am already getting ready now. If you are on the path to financial independence, these events will still hurt you. But you should be able to withstand them better than most people.
2. Freedom of choice
Most people who want to reach FI want to retire early. I also think I want to retire early. However, I think the ability to retire early is more important than the retirement itself. Having the choice to retire is very important.
Currently, I still love my job. If I was not developing software for my company, I probably would be developing software for fun. But who can say if that will still be the case in 10 or 20 years. Nobody! Your company can change a lot. Your colleagues can change. Or your boss can change too. This may make a big difference in your job. After some changes, you may not like your job as much as you do now. Therefore, having the choice the retire or do something else is very important for me. Once I reach FI, I could retire, or start a company or do anything else. There are many people who reach FI and do not retire. You can still pursue FI even though you do not plan to retire.
3. Time is limited
This is also a very important fact. Time is very limited. Let’s say you have 80 years of life, you do not want to spend 65 years of them working. You want to be free for as many as possible of these years. You may still be working to the end, but you may retire or change your habits. And you may also cut your working time. All these things are possible when you are financially independent.
I like my job a lot. But there are many other things I enjoy in life. I would rather have more time doing more things than being at work 5 days a week until 65 years old.
4. A challenge
One thing I really like about trying to reach Financial Independence (FI), is that it is challenging. It is not obvious for most people how to reach FI before retirement. Retiring early is also a challenge. Even though the principles are really simple, the achievement of these principles is far from trivial.
It is good to have some challenges in your life. It can teach you a lot. You have to learn new things like investing. I have read many books about personal finance and investing. I have learned a lot in less than one year on the path to FI. But this is invaluable knowledge!
5. An awesome journey
Not only is the path to FI challenging, but it is also very interesting. I would even say it is fun. The road to FI is made of a lot of number crunching. You need to calculate your net worth. You can even calculate your FI Ratio to see how far off the road you are. For me, this is really fun and very interesting. I like numbers a lot.
Investing is also really interesting. It takes a lot of research to know in what to invest. And especially, you need to know why you are investing in each of your positions. There is no point investing in something if you do not understand why!
And my road to FI also made me want to start this blog. This is also a great journey. Even though this is not my first blog, I have learned a lot again :) And I enjoy writing on this blog a lot.
6. An alternative path
Trying to be financially independent and maybe retiring early (or at least being able to) is a road that not many people take. For me, it is good. If everybody was taking the same road, it would be less interesting. There are many roads that do not include FI and that is also good. If you prefer to be an entrepreneur and get rich, there is nothing wrong with that.
So far, most of the roads I have taken have been the classical ones. I have gone to standard school. I have gone all the way to a Ph.D. Finally, I have joined a standard company as a software programmer. I am glad I can now try another road by trying to reach FI. We will how well I am going to do ;)
7. FI teaches good values
The path to FI will teach you some very important and good values. The most important for FI is frugality. It is very difficult to reach FI without being frugal, at least to some degree. Some people are going very frugal and some other people are going relatively frugal only.
Since you will be investing on your path to FI, it is likely that you will learn some wisdom through it. Investing is something you should do with a lot of thinking, without taking any rash decisions. Your emotions are your worst enemies when you are investing. And you should learn from your mistakes. For instance, I did a lot of investing mistakes when I started. I am now wiser because I learned from these mistakes.
Another value you will probably learn is that health is important. If you want to live long and retire healthy, you need to take care of your body. You should eat healthy and do not push your body (and your mind) over their limits. In our case, for now, we did not yet change a lot, but through our vegetable garden, we are eating more healthy than before. And by preparing our food ourselves most of the time, we have a better diet than fast food restaurants.
As you can see, there many reasons to try to be financially independent. You will have much more freedom once you are financially independent. And your life and the one of your family will be much easier. Moreover, it can teach you a lot of things and it can be a very interesting journey. My life already improved since I started trying to reach for FI.
Maybe some of these reasons will talk to you, maybe they will not. Not everybody has the same reasons to do some things. And some people may not want to reach FI at all. There is no reason everybody should embrace the FIRE philosophy. There are many other roads. It is up to you to choose the one that suits you the most.
What reasons do you have to try to reach Financial Independence ?