You Don’t Need to Save a Million Dollars to Be Financially Free

Financial Independence Could Be Closer than You Think

It’s time we take another look at what we think of as financial freedom.

I LOVE the FIRE (Financial Independence Retire Early) movement. It teaches you how to wrestle your finances into shape. It celebrates living within your means, low-risk investing, and for real advocates, it means ‘retiring’ from the corporate world sometimes decades early.

It’s important that the world has movements like this.

But saving potentially over a million dollars in a short(ish) time period, so you can fully retire without ever having to work again, although totally achievable for much of the middle-class world, can be daunting. Especially if you’re not in your twenties anymore and have only recently discovered the movement, so you don’t have time — thus the magic of compounding — on your side.

There are other ways.

Partial Financial Independence (Or Partial FI) for the Win

Partial FI is saving enough of a nest egg that, once sensibly invested, can give you returns that cover your basic needs such as mortgage or rent, food, transportation. All you need to cover is ‘fun money’ for hobbies, travel, going out, or anything else that enriches your life, whatever that may be.

I mean, how frickin great would that be?

It’s achievable

This is where I feel I should write something like ‘yes, you guessed, it, that’s what I did. And you can too!’ Like some financial guru about to tell you how to get rich quick if only you pay them exorbitant amounts of money for their wisdom.

But I did do it. I’m the girl who struggled throughout her twenties to climb any kind of corporate ladder because she essentially lacked focus and couldn’t be bothered. The one who liked to have money but had no clue about how to make it. I am nothing special.

Now at 36 years old, all my basic living expenses are covered for life.

This is not meant to be a brag. I’m just so pee-your-pants excited about how this happened — and still somewhat in denial that it actually has — that I want to share the vast, life-changing advantages that achieving partial financial independence could do for you.

Most of Us Don’t Want to Stop Working

Many prominent figures of the FIRE movement may have officially retired, but most still work, and many make more money (and work harder) now than they did when they worked their corporate jobs.

Most of us don’t want to quit work altogether to sit at home, tend the garden and play bridge. We just want out of our current situation, to no longer be a slave to the wage. We want freedom and time.

The truth is that many of the advantages that accompany full Financial Independence still exist with partial FI. With your basic needs covered, you can:

Take time off work when you need to.

Quit your corporate job to follow a path that may pay less or be perceived as ‘risky’ (sometimes with very big returns).

Live where you want to when you want to.

Spend time with who you want to like family, friends, your partner, your kids.

Ultimately, partial FI gives you choices. Yes, you still need to work. But you get to choose what to work on, how many hours to work, who to work for, or indeed, who not to work for.

You Could Be Nearly There and Not Even Know It

Have you ever taken stock of your net worth? No, it’s not everyone’s idea of a fun Saturday night in, but it’s one of the most eye-opening financial exercises you’re ever likely to do.

Your net worth is essentially what you own vs. what you owe. Say you own a million dollars worth of assets and owe $300k in liabilities; then, your net worth is $700k.

So work it out. Calculate everything you own and everything you owe. Stick it in a spreadsheet and come up with your net worth number.

I know people who have had a lightbulb moment when they see their net worth in black and white because they realise that with a few changes in their lifestyle like a smaller house, a cheaper car, or selling off a few unused possessions, they are partially — or even sometimes fully — financially independent.

Even if your number is way off, at least you know your financial position. You can’t dig yourself out of a hole you don’t even know exists.

Flexibility = a Better Chance of Success

Your government makes a change to taxes that means you’re hit with a higher tax bill than you thought? No problem.

Find you develop a passion for fine wine, so you need more salary each year to cover those bottles of Burgundy? Ain’t a thing.

Your country makes a huge decision that plummets your exchange rate whilst you’re living abroad (thanks, Brexit)? Shake it off.

As it is now, life will not be life in 5, 10, or 20 years. Decisions out of your control can be made that really affects your money situation. But this is the rather beautiful thing about partial FI. If you find you need a little more cash, you can, because you’ve not stopped working altogether.

So you could reduce the withdrawals from your savings, take up an extra few hours, write a few more blog posts. Or — in a post coronavirus world at least — you could make the most of geographical arbitrage and move to a cheaper country for a while. As Kristy and Bryce from Millennial Revolution say:

When the s**t hits the fan, move to Thailand!

There’s freedom in partial FI. You get to be flexible, so the chance of your plan succeeding is so much higher.

Where to Start

Learn about the FIRE movement.

Get yourself copies of Vicki Robin’s Your Money or Your Life, Grant Sabatier’s Financial Freedom, and Quit like a Millionaire. Read blogs like Minimal Finance and dive into Medium’s Making of a Millionaire publication.

Even Medium’s prized writer Tim Denning has plenty to say on financial literacy and, of course, has written it all in a brilliantly simple way so even people with no attention span like me can get clued up on personal finance.

Learn about the principles and figure a way to incorporate them into your own life. Not everyone wants to — or can — sell their house, their car, and their business to make it happen (however much fun I personally found it), but many can work out a way to gain some sort of financial freedom earlier than they think.

You just need to start.

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.