Financial Independence

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

The Importance of Financial Education

“A wise person should have money in their head, but not in their heart.” ~Jonathan Swift

Over the last few weeks the financial services industry has been all over our newsfeeds, TV and newspapers, and if you’re like me the Royal Commission has made it into the lunchtime conversations at the office. There’s been some devastating stories and disgraceful misconduct exposed, and countless articles on questions to ask your financial planner and how to avoid being ripped off by your financial institution.

My big takeaway from all of this, is that you can never truly trust any sole person or corporation with your life savings. I wonder how many times we have to hear these devastating stories, before we take control of our finances? Who knows what the consequences will be for these individuals and corporations? A warning? A fine? Maybe even jail-time?

Only one thing’s for sure — you need to take control and responsibility of your finances, and you need to financially educate yourself.

You are going to learn most of your financial lessons along the journey, but it needs to be your journey, When you outsource your finances to someone else, they make the mistakes and they learn the lessons, and you miss out on so much. Yes, sometimes it is appropriate and even necessary to seek out professional financial advice, but without a basic level of financial literacy you have no way of knowing if the information they provide to you is in your best interests.

I have definitely made mistakes and lost money along my own financial journey, but I have owned those mistakes and I have learnt from them. It’s not something that you can master overnight, rather I think of financial education as a lifelong journey of knowledge and lessons. I can’t promise you that your journey will be easy, but I can pretty well guess that it will grow and empower you.

“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” ~Ayn Rand

While all of these news stories may make you want to run and hide from the industry all together, it is important to know that for every bad seed out there, there are countless others who are passionate and dedicated to the industry and to providing you with high a high quality service.

I know young Australians want to learn about their finances and take control, but they often feel as though it is out of their power. Let me tell you right now that no one can force you into signing the dotted line for a financial product. You can choose everything from your transaction account to your superannuation, but most people don’t realise how much choice they actually have when it comes to their finances.

The main thing that I hope you takeaway from this — is that it’s never to early or late to take back control, and get started on your financial education journey.

If you want to get started, the most important resource I would like to suggest to you is ASIC’s MoneySmart website, which has such a huge wealth of knowledge contained within. They also offer free downloadable guides that cover a whole range of topics from first-time investing to planning your superannuation.

Another good resource for those interested in investing for the first time is the Australian Securities Exchange (ASX) website, where they offer free online courses, videos and even the ASX share game (where you can try out investing without using your own money).

I’d love to hear your thoughts on financial education in Australia, so please feel free to reach out via email at hello@katecampbell.info or in the comments below.

Until next time,

Kate


Discovering the FIRE Movement in Australia

FIRE stands for Financial Independence, Retire Early (or as some people like to call it, FIOR - Financial Independence, Optional Retirement).

It’s as much of a mindset as it is a way of life or an aspirational goal. Over the last year, I discovered this movement in Australia (which is already quite large in the US), and have dived deep into learning as much as I can.

FIRE is all about increasing your savings rate, consuming less, pursuing happiness and having the financial freedom and flexibility to choose if, how and when you work. FIRE is not necessarily about frugality (although some pursue it that way) and retiring to do nothing all day. The retirement part is optional, but by being financially independent you have more opportunities to direct your life and make decisions out from a position of strength.

When you achieve Financial Independence you gain the ability to live off of your personal finances, without the requirement of a salary to maintain your lifestyle. A common aim of the FIRE movement is to have 25x your annual cost of living invested in a diversified portfolio, with a safe annual withdrawal rate of 4%.

I guess the big attraction of financial independence for me, is the feeling of empowerment and self-sufficiency it can give you. For me, it’s not necessarily about early retirement (although I may choose that), but the ability to make choices from a position of strength and give back to the world.

My discovery of FIRE came from reading through copious amounts of online content and clicking from site to site. To get you started I have listed below some of my favourite FIRE resources from around the web (which I will add to regularly).

Here are some of the best FIRE resources from around the web:

And some more resources that are specifically Australian:

And of course some Podcasts (via iTunes):

And finally some of my favourite financial independence-themed books at the moment:

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!

And as I read in the April 2018 edition of Money Magazine Australia - ‘Don’t make your life about money. Money is a means to an end, not an end in itself. Don’t get lost along the way.’

Until next time,

Kate