Musings

Why Financial Independence is Important to Me

If you haven’t heard about FIRE yet, read this post first.

So I’ve been thinking this past week about why I believe in and aspire to be financially independent. I guess the big attraction of financial independence for me, is having more choice. I can choose where to work, live, eat and travel, without having my choices constrained by my next paycheck. If I’m in a bad situation, I want the finances behind me to leave and not look back.

For me, the goal of FIRE is not necessarily about early retirement (although I may choose that), but the ability to make choices from a position of strength.

I think part of FIRE philosophy has been instilled in me by my mother, who, through her own hard work and smart investments, has been financially independent for most of her life. She made the decision to keep working because she wanted to, not because she had to. I believe financial independence is a worthwhile pursuit, because you buy back your time.

Yes, I may have to learn to live with less and find fulfilment in the simpler things in life, but I’ll be able to choose how my time is spent. In an ever-changing world full of chaos and uncertainty, the key truth is that it all comes to an end. We don’t know when or where or how, but we do know that it’s the only certainty in our lives.

So what am I going to do with my one chance at life?

I’m going to embrace change, step outside of the box, finish my studies, travel overseas, learn as much as I can at work and most importantly, start putting money aside in order to be financially independent within the next 20 years. Big goals with lots of planning — but there’s no second take, so why not!

To those out there who have told me that it’s a ridiculous goal to strive for and who have pointed out the many reasons why it’s not possible for XYZ reason — I’m quite aware that it’s a big goal. I understand that inflation may rise leaving me with less purchasing power, I understand that we may be in a bear market for an extended period of time and I also understand that if I have a family down the track the numbers will have to change. But even if I don’t reach financial independence by 40, I’m going to be in a much stronger position financially than I would without pursuing this path.

With this goal, evening failing to achieve the desired outcome will set me up in a much better position.

So what’s the worst case scenario if I don’t reach FIRE?

  • I have a solid understanding of my own approach to money and investing.

  • I know how to create and manage my budget.

  • I have enough saved up to ensure that I never run into financial difficulty if I get sick or lose my job.

  • I have learnt how to plan and work towards my financial goals.

  • I am comfortable speaking about money with friends and family.

  • I know how to invest and grow my money.

To me, the benefits of striving towards this ambitious goal are just as important as actually reaching it, so let’s catch FIRE! As I continue on my FIRE journey I plan to share what I learn and discover here, as a record of my discoveries and growth. Please feel free to share your FI questions or stories with me, I’d love to hear from you!

Until next time,

Kate

June 2018 Letter

Welcome to my June 2018 monthly wrap-up! It’s been another big month at work with the launch of a new product, and I wrapped up another two university units. It feels good to be making progress on that front, and I’ll be glad to reach the halfway mark in a few months.

One of the interesting things that happened last week was speaking to a journalist from The Age on how and why I invest outside of my superannuation. It all happened very quickly, and suddenly I was on the front page of the Sunday Age Money section — they say we all get five minutes of fame! The article features a few different points of view and is worth a read, as I think it’s an important topic to discuss and think about.

I particularly enjoyed seeing a new face in the analyst team at Forager Funds Management by Chloe Stokes. Read her recent analysis of Zara and the fast-fashion industry over here.

Another great read on the topic of Self-Directed Education and transitioning away from the traditional education industry over on the Alliance of Self-Directed Education‘I wanted students to be empowered, take control of their own learning, and feel free to experience real life outside of the four walls of the classroom. Self-direction is a fundamental skill required to learn and adapt in the rapidly-changing world we find ourselves in.’

Are you looking for a job and want to brush up on your interview skills? Check out College Info Geeks recent article on How to Ace Your Next Job Interview: 35 Proven Tips.

When thinking about financial independence, an area I hadn’t really thought about was the hidden cost of working. Pat the Shuffler points out that ‘we spend more time on work than just our work hours, and we spend money on our work that needs to be taken into account when working out our real hourly wage.’ He also breaks down the costs of working, which are really interesting to see and consider.

If you’re interested in Exchange Traded Funds (ETFs) — check out his great little video by one of Australia’s ETF providers, BetaShares.

Until next month,

Kate

May 2018 Letter

Another jam packed month full of work, finishing more university subjects (yay!) and collaborations on the How To Money platform. I recently wrote about the importance of financial education on my personal site, which is an issue I am extremely passionate about. On How To Money this month we featured a guest post on diversification and the healthy investing pyramid, and recorded a podcast episode on comparing financial products with Finder.com.au.

If you’re looking for a phenomenal piece of writing, this option article written by American author Jessica Knoll is absolutely spot on. For Jessica, ‘success meant doing something well enough to secure independence’, which is something that particularly resonated with me. Jessica points out that ‘rich’ is still definitely a man’s word, and for a woman to say they want to be ‘rich’, it elicits a much different response from society.

In thinking about education this month, I read an article by Dr. Kevin Currie-Knight about the need to give learners time to fail. Dr. Currie-Knight highlights that the ‘freedom to fail without penalty, and the freedom to take the time one needs — are key to the learning process, but are often missing in school environments. As soon as one puts learning on a standardized time schedule, you preclude the learner from being able to take their time, and this means that failure now comes at a cost’.

Until next month,

Kate

April 2018 Letter

Well, that’s a wrap on another busy and exciting month! I’ve been busy working on my RG146 qualification this month which has been interesting, and it’s definitely been a learning curve. I’ve also been smashing out a few university assignments, so it’s good to see some progress there.

If you’re looking to kick-start your morning routine, one of my favourite podcasters and bloggers has a great episode on starting your day off on the right foot — check it out! While you’re there — make sure you check out his article full of examples of great personal portfolios and websites, if you’re thinking of putting one together.

I’m not sure how I came across this video by Michelle Phan, but I found it deeply moving. She left Youtube a year ago and made this video to share why she made the decision to leave it all behind.

Money can’t buy happiness, but it can buy time. Sometimes you have to let go of things to move forward and create your own happiness.

I was also referred to MealPal this month by some colleagues, which is a subscription service where you can skip the queue and get meals for less than $8.00. I think at the moment they are only operating in Sydney and Melbourne CBD in Australia, with over 100 local restaurants offering meals every weekday and the ability to pre-order your meal and skip the queue. I’ve really enjoyed MealPal so far, and it’s definitely saving me money on lunch in Melbourne CBD (which is getting quite pricey).

New on the How To Money Platform

HTM Article: What is a Bond?

HTM Article: Getting Started on How To Money

HTM Podcast Episode 11: Getting Familiar with Bonds

Interesting Reads from Around the Web

The Ultimate Guide to Studying for Tests and Exams — College Info Geek

How to Take Notes in College: The 6 Best Systems — College Info Geek

17 Ideas for the Modern World of Work — altMBA

How to Build a Micro-Niche Site — Bren on the Road

If we Taught Walking in School — Derek Magil

If we Taught Bike Riding Like we Taught Careers — Praxis

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Have a wonderful month!

Kate