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, gabbing 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...
There are two exceptions to this rule:
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.
Keep track of your net worth
You can do this on Personal Capital or use an Excel sheet. Totally up to you.
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.
Evaluate if you need to give yourself a break
I do not recommend this one lightly. However, if you have had great stress becoming frugal, tracking your net worth, assessing your real hourly wage, etc., do not be afraid to plan some period of time taking a break from the number crunching.
Take a little time to spend more freely. Take a few weeks off from tracking your net worth. Do not open the budget sheet for a little while. See how it feels to spend more on things. If you happen to like spending more, then maybe you need to redefine what financial independence means to you.
If the thought of this one causes you too much anxiety, then skip it. If you believe you are having classic 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.).
Remind yourself why you joined this community
Don't like your current job? Most people don't. Most people are also not doing a damn thing 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.
So how do I remain motivated for the long-term?
Stay the course.
Value compound interest and time.
Most importantly, continue to assess your current streams of income. Consider most millionaires have multiple sources of income. See if you can diversify. Consider a yard sale. Pick up an extra shift. Search online for gigs helping people move, decorate, clean up, landscape, etc.
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.
Find a way to get an extra $20 a month, invest it in an index fund, rinse and repeat for 25 years and presto... you could have $17,543 assuming an 8% annual return in the market.
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. Be consistent. Along the way, look for things that can upgrade your experience. More pay. Less stress. More time off. Family growth. Improving your homestead. Find both tangible and intangible ways to improve your life along the ride.
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.
Dr. Jon is a physical therapist by day, and a dedicated frugalist by night, deeply enthralled in the thrill of "pinching pennies" and investing the margin.