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If you find yourself frustrated on your path to F.I., remember the 3 common myths of Financial Independence
Finding motivation on the path to F.I.
Many of the authors and content creators I follow in the financial independence space have transitioned their content to an interesting phase. Often I hear them, at their present net worth, going on and on about how great financial independence is.
Undoubtedly, I am truly happy for them. But how does this affect those of us in pursuit? How does it affect the person who is still 5, 10, or 20 plus years away from financial independence?
For many readers and community members, it can be frustrating. It is hard not to compare yourself to another when it comes to finances. The number one thing that knocks people off track and destroys their motivation is comparison. Comparison to others. Comparison to where you thought you'd be at 30. at 40. at 50, and beyond.
First things first, we should strive to eliminate our comparisons.
1. Eliminate Comparisons
There are two exceptions worth mentioning regarding eliminating comparison behavior:
That said, comparisons are the enemy of happiness in most cases. It can often lead to a path of envy and resentment. Further, it typically only serves negative energy. You will not find a more competitive person on the planet than myself, but even I have had to step away from this one.
This is your path. Not anyone else's.
2. Keep track of your net worth
You can do this on high-end software such as Personal Capital, or use a simple Excel sheet. Totally up to you (I prefer to use an Excel sheet).
This can be a great way to remain focused on your individual situation. It also motivates you to keep track of your income and expenses because your savings rate ultimately helps determine how quickly your net worth can grow. It is often said that the only way to improve something is to measure it.
3. Evaluate if you need to give yourself a break
This needs to be earned however. Take inventory of where you are by assessing your progress thus far and assess whether you need to allow yourself an increased budget for a few months prior to returning to a more aggressive approach. I would put a definitive end date on this inflated spending, however.
If pursuing financial independence has given you a great deal of stress and you find it difficult to consistently maintain this furious pace, consider having planned periods off from this extreme frugality behavior. Perhaps take two weeks to spend as much money as you want. Try on an inflated lifestyle if you are so brave (just be ready to hate it). See how it feels to let the dollars slip away from you a little more freely. Hey, who knows, you might actually enjoy debt and keeping up with the Joneses. If you do, quit reading now because this is probably not your type of community (you are welcome back anytime however).
If you are worried about FOMO (fear of missing out), try "test-driving" a few atypical spending habits to see if the consumer culture life actually is your calling. If you take this route, I just suggest finding out what the return policy is for whatever you are purchasing.
If you choose to take a break, definitely have an exit plan for when you aim to jump back into frugality or the pursuit of financial independence. This obviously includes not making any purchasing decisions that indefinitely ruin your net worth and personal finances, especially if the cost is high and recurring (think boats, cars, couch payments, etc.).
4. Remind yourself why you joined this community
Don't like your current job? Most people don't and yet do nothing about it. But you are!
Love your job but want more free time? I am happy for you as this is a good problem to have. Your time is more precious than anything. Loving your job and what you do for 40 plus hours per week is a rare bird. If you have it, consider the strategies you learn in this community to negotiate more PTO, remote work, atypical schedules, 4 day work weeks, transitioning to part time, etc.
Do you resent debt and do not like to be a slave to the lender? I can certainly relate to this one. Eliminating debt is often an excellent way to remove your burden to work or at least eliminate your need to be a prisoner to a higher paycheck. Eliminating most debt from your life often allows you to choose work you love and enjoy since the pay rate is less meaningful.
Do you just want to be part of a frugality movement as a sure way to be a millionaire someday? Do not be ashamed. As the late Jim Rohn would say, think of what you will become in the process of becoming a millionaire. Unfortunately, money is one of life's greatest motivators for many of us. Admittedly, most of us are driven by attaining a large net worth (or at least the appearance of high net worth). Saving and investing is one of the most tried and true ways to become a millionaire, as long as you remain invested for the long term and practice a fair bit of industriousness and frugality.
How I, personally, stay motivated for the long-term
I remind myself the importance of stay the course. Being consistent and displaying discipline. I look forward to learning more, saving more, investing more. I have learned to truly value the ultimate commodity in life, time.
I continue to assess my current income streams. This helps keep me motivated to make them bigger or add one or two more along the way. Consider most millionaires have multiple sources of income. When assessing your income streams, I like to try and diversify.
The concept is to save as much money as possible as early as possible, regardless of when and where you start. Remember, your situation is unique and all you are looking to do is improve upon your current situation.
Consider that if you find a way to earn an extra $20 a month every month for 25 years, and invest it in an index fund you could wind up with $17,543 (assuming an 8% annual return).
An extra $50 a month invested over 25 years could be $43,863.
$100 extra a month, could turn into $87,727 after 25 years.
$1,000 extra a month, in 25 years, could be worth $877,271.
Start small, aim high, and be consistent and disciplined along your path. Consider searching along the way for things that can upgrade your present level of happiness. Things to aim for over time that typically are correlated with increased happiness are:
And yes, enjoy the ride. This is not about a life of deprivation. It is about a life packed with value.
Remember to celebrate victories along the way. Celebrate paying off a car or student loan. Hit a certain number for your net worth, do something you enjoy, even if it costs money. Do not be ashamed to celebrate.
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