Illustration by @Apple_Leow
“Financial Independence – The state of having sufficient personal wealth to live, without having to work actively for basic necessities.”
I recently came across this topic of Financial Independence (FI) and became utterly obsessed with the idea of being able to sustain myself without having to work at my standard 9 to 5 job. I mean, who doesn’t dream of an early retirement and no boss? Financial Independence is a milestone that everyone can achieve whether it is through entrepreneurial pursuits, high income, investment strategies, or dramatic saving tactics. Or you could use a combination of all the strategies just mentioned as that is your best chance to reach FI.
Achieving FI requires a commitment to a type of lifestyle that is different from the masses. The exact definition of FI can be different for everyone depending on their specific scenario. For me, Financial Independence will be a point in my life where I will be able to work as much or as little as I want, knowing that if I decided to retire, I would still be able to sustain a very basic lifestyle. As I dove deeper into the subject of FI, I found that this subject is not well known or even well talked about. Sure, there are a few articles with the top 5 generic finance rules, but I needed more specific information related to my unique scenario. I began talking about personal finances and FI with my friends and to my dismay, most people I talked with did not have the slightest clue on how to invest and were barely saving any of their income. To my surprise, some people were completely turned-off when I mentioned the exact numbers of my personal finance, like my rent,
I began talking about personal finances and FI with my friends and family. To my dismay, most people I talked with did not have the slightest clue on how to invest and were barely saving any of their income. To my surprise, some people were completely turned-off when I mentioned the exact numbers of my personal finance, like the cost of my rent, my salary, and current debt. The same people were even more upset when I asked them the nominal figure of their salary, rent, and debt. However, some people had great insights on personal finance, but these people were in the minority. Money is such a crucial part of our lives and we are doing an injustice to society and ourselves when we treat the topic as a taboo subject. So, let’s talk about money!
One of the world’s largest problems is the increasing division of wealth between the rich and the poor. According to the author of “Rich Dad, Poor Dad”, Robert Kiyosaki, one of the major reasons why the rich are getting richer and the poor are becoming poorer is because of the way money is viewed by these two groups. Below is a quote from his book where he recalls the difference of view between his two dads:
“Having two dads advising me offered me the choice of contrasting points of view; one of a rich man and one of a poor man… One encouraged talking about money and business at the dinner table. The other forbade the subject of money to be discussed over a meal.”
– ‘Rich Dad Poor Dad’ – Robert Kiyosaki
The rich are very comfortable with money (presumably because they have it…) and have no problems talking about their latest tax breaks or real estate investments. This creates a cycle where richer people are more financially literate and are more aware of key tools to increase personal wealth. The poor and middle class, on the other hand, do not speak about money as it is a taboo subject. It is not polite to ask how much someone’s home costs, or how much student loan debt they are still carrying as if your monetary value somehow reflects your true value as a person.
Your current level of wealth is no indication of what kind of person you are or what values you have to offer society.
If you are someone like me and have made mistakes with your money before, then you understand how talking about these topics can make one feel guilty, shameful, and embarrassed. However, the vast majority of people have absolutely no problem showing off their expensive new toy or latest vacation hot spot on Instagram or Facebook. The social norm of not talking about money amongst the lower and middle class in combination with the need to show social value through expensive events and/or costly toys is a deadly cycle. There are two really basic reasons for this; the first is that consumerism is deeply embedded in the American culture as depicted by the phrase “keeping up with the Joneses” (I say, keep your money in your pocket!), the second reason is that we were all taught how to be employees and are too afraid of taking the steps necessary that will make you Financially Independent. These two reasons combined create what is called “The Trap”! Don’t fall into The Trap!
“Never forget, because your two emotions, fear, and desire, can lead you into life’s biggest trap if you’re not aware of them controlling your thinking. To spend your life living in fear, never exploring your dreams, is cruel. To work hard for money, thinking that money will buy you things that will make you happy is also cruel. To wake up in the middle of the night terrified about paying bills is a horrible way to live. To live a life dictated by the size of a paycheck is not really a life. Thinking that a job will make you feel secure is lying to yourself. That’s cruel, and that’s the trap I want you to avoid, if possible. I’ve seen how money runs people’s lives. Don’t let that happen to you. Please don’t let money run your life.” – ‘Rich Dad Poor Dad’ by Robert Kiyosaki
I was guilty of falling into the trap and living the paycheck to paycheck lifestyle in the first couple years of my career. Like most people in America (and the world), I was not fully aware of the pitfalls of credit card balances, the costs of a New York City lifestyle, and the freedom of having my own income. By the end of the first year of work, I saw that I had made a substantial sum of after-tax money, but my savings were virtually a big fat ZERO. I didn’t think much of my savings as I was living my life to the fullest and doing what I wanted. At least, that is what I told myself. In reality, I was just eating out far too much and buying things that were outside my budget. I am sure some of my readers can relate…
After working for 4 years in the corporate world of investment banking, I decided that there needs to be a path out of this eight hour day, five days a week work cycle. It was obvious to me that my single source of income from my career would never grant me the amount of money I needed to obtain my Financial Independence. I had seen my coworkers working in these soul-draining corporations until their 60’s and 70’s because they trusted the system we were all taught to believe in. Over time, I gradually became less enthralled with my lifestyle and started making lifestyle changes to save money and focus on my financial future. I got a better job, I paid off my debt, lowered spending, began saving, and even invested a little bit. I want to make absolutely clear that there is nothing wrong with working a 40 hour per week job that pays your month to month expenses and allows you to live your life. If you are happy doing what you are doing, then I say you should continue that and be happy as you are in the minority of employees. Personally, I would want to live a life with more freedom, more choices, and more meaning. I imagine that many people would be able to relate, so I began talking to my friends about
I want to make absolutely clear that there is nothing wrong with working a 40 hour per week job that pays your month to month expenses and allows you to live your life. If you are happy doing what you are doing, then I say you should continue that and be happy since you are in the minority of employees that actually enjoy their work. Personally, I would want to live a life with more freedom, more choices, and more meaning. I imagined that many people would be able to relate, so I began talking to my friends about financial strategies and personal wealth.
One day, I was having lunch with my co-worker and he told me his salary after his recent pay raise! Not the percentage increase, a range, or a ballpark figure, he told me his exact salary! I couldn’t believe how much more he was making than I was, especially considering how similar our credentials were. I began to get jealous and spiteful about how much more he made than me even though we had similar responsibilities in work. I was especially annoyed since I believed I was doing more work in comparison. I eventually realized that the jealousy I felt was misplaced, and I really should have been upset with my own inability to negotiate for a higher salary. After bringing this up to my employer, he was not willing to give me such a large raise. It took me a long time and a lot of interviews, but I eventually found the company that was willing to give me an 80% pay raise and
I couldn’t believe how much more he was making than I was, especially considering how similar our credentials were. I began to get jealous and spiteful about how much more he made than me even though we had similar responsibilities in work. I was especially annoyed since I believed I was doing more work in comparison. I eventually realized that the jealousy I felt was misplaced, and I really should have been upset with my own inability to negotiate for a higher salary. After bringing this up to my employer at the time, he was not willing to give me such a large raise.
It took me a long time and a lot of interviews, but I eventually found a company that was willing to give me an 80% pay raise – matching what my friend was making. I ended up telling one of my closest friends about my pay raise, who worked in a totally different field (but had a similar educational background), about how much more I was making. He eventually talked to his boss about his salary and got a 30% pay the next month.
The point I am trying to make is that I owe a lot to my coworker as he was willing to tell me the exact pay he made. If he did not tell me how much he was making, then it never would have ignited a fire in me to make sure I was getting paid my market value. Once I was able to place a market value on my own head, I was better able to negotiate for a higher pay and wouldn’t stop until I got it. It is in your best interest to know your true market value and maximize your own income. Your most important asset is your mind and the money you get paid for your time. So, it is critical that you get paid what you deserve. I truly recommend asking how much your peers and coworkers make, as you will be surprised how much more you can get paid by just changing jobs or moving to a different field. If you make more than your coworker, then he or she will be able to take advantage of that information and benefit from that knowledge.
I want to make absolutely clear that I am not a professional here to give advice on investments or to provide a specific get rich quick scheme.
My goal is to share my experiences and strategies that have worked for me and hopefully some of them work for you. The story above is only one example where talking about money has increased my wealth personally, but income is not the only financial subject that can be talked about if you are a more timid kind of person. You can always ask or share the latest saving tip, credit card trick, or investment strategy. Through this blog, I am hoping my readers begin to think about money differently by changing their “Money Mindset” and begin to plan for their Financial Independence.
I plan to write about many different topics about investment strategies, saving tactics, and other wealth growing articles to help fix this huge social problem that is ballooning in front of us. There are many different paths to Financial Independence and each path may or may not work for any individual. I don’t know which is right or wrong, but I will be sharing my ups, downs, and all-arounds with you during my journey. In the meantime, I urge you to reach out to your closest friends and talk about income, savings, retirement plans, and other financial topics on your mind. Let’s make money a topic of conversation like the latest movies or pop culture and not a topic of taboo. I welcome any feedback on this article, positive or negative, after all, let’s talk about money!