The Financial Independence (FI) movement can appear to be very US centric, having the largest community and most prominent bloggers and podcasters. The terminology used, retirement vehicles highlighted and strategies suggested are, not surprisingly, typically those available in America.
As an expat living in the US, but likely to be moving on next year, I’ve been conscious and interested in the broader international approach to Financial Independence.
What works in one country may not necessarily work in another one. Where you live can have a big impact on the approach you take and strategies you employ to save effectively, minimize tax, invest and build assets.
So what are the universal themes applicable wherever you live? What are some of the key differences to think about and consider when developing your plan of attack to reach Financial Independence?
Why do we hold onto things that we don’t use or value? Why do we take certain actions that don’t make sense, given current circumstances? Very often the internal rationale is “just in case”. We tell ourselves that we might need an item sometime in the future, even when it hasn’t been used in years. Sometimes we act in a certain way because of perceived possible future scenarios.
We all know the Boy Scout saying “Be prepared” and the old adage “By failing to prepare, you are preparing to fail”. I’m not sure that this is always great advice or rather, it has taken too literally by some people and becomes their Just In Case (JIC) excuse.
I’ve written previously about the millions of people living paycheck-to-paycheck. It doesn’t matter how much you earn but rather how much you spend. According to a recent Nielson survey, 25% of American families earning more than $150,000 per year still live paycheck-to-paycheck, so even the wealthy aren’t immune. Apart from poor financial habits, a key reason for this ongoing money stress, for many people, is lifestyle inflation.
It is a gradual, subtle and common problem that’s killing our collective finances. The harmful effects occur over time and in a way that often goes unnoticed.
Like the fable of the boiling frog, who didn’t perceive the danger of the increasingly hot water and was slowly cooked to death, many of us have been unwittingly turning up the financial heat in our own lives by trying to keep up with the Joneses or “upgrading” our lifestyles when we get a payrise.
Most of us have been victims to the silent assassin of lifestyle inflation. Our spending inches up year-on-year, and what was once something you considered a luxury item is now a must have “need”.
Those moments when you convinced yourself that you deserved it because you work hard, or that a “one-off” treat won’t hurt, have added up over time. The aggregate impact of decisions to get a nicer couch, second car or bigger house increase our monthly spend commitments and raise the bar of what we need to earn.
Resignation or resistance? Passiveness or proactivity? Unconscious or mindful? These are active decisions and ones which I believe have a dramatic impact on our quality of life. The mind shift to being more in control of one’s destiny also requires an honest recognition of the situtation, relationship, circumstance or lifestyle we are living and then a resolution to change. Instead of complaining about your lot in life, do something about it.
One of the most liberating realizations you can come to is that you are not a victim of circumstance, but rather a product of your decisions. There are the small decisions that aggregate over time, and bigger changes that shift the paradigm.
“We are not imprisoned by our circumstances, our setbacks, our history, our mistakes, or even staggering defeats along the way. We are freed by our choices”
I’ve written in detail about some of the positive actions and choices I’ve made in recent months about my finances and the pursuit of financial independence, trying to live with less and implementing changes to lighten my ecological footprint.
Another area I’m looking to proactively address is work.
Regular readers of my blog will recognize a number of repeating themes appearing in posts over recent months:
A desire for “freedom” from the weight of personal possessions and from the need for paid work (especially in an unfulfilling corporate job).
Acknowledgment of the value and importance of time, that we normally trade for things of little true value.
The lack of sustainable balance in most of our lives and in society at large. At a personal level, recalibration is needed around things like technology and social media use, TV, diet, exercise and consumerism. The bigger picture is equally out of equilibrium, with ever increasing social inequity and a willful ignorance about the ongoing damage we are inflicting on our planet and home.
Recognition of the need for challenge and voluntary discomfort to drive personal growth and lighten my ecological footprint.
Intellectual understanding and knowing are not enough. For change to occur, we need to take positive action and do something!
The journey towards Financial Independence can be a long, disciplined grind and we’ve set in place processes to hit our targets. We’ve also made great progress downsizing our possessions and housing. I’m still researching what effective mitigants I can put in place to reduce my personal contribution to global warming. Things are moving in the right direction but it’s a marathon, not a sprint. So how to keep motivated in the short term?
In the spirit of consuming less, spending less and hopefully learning to live with less, I’ve decided to undertake a year long challenge of No New Stuff!
Maybe I’m getting old, but it feels like many things just aren’t built to last anymore. Planned obsolesence, which is a business strategy to have things fail and encourage consumers to replace them, seems to be real phenomenon. In addition, we have endless items available to us as consumers that are virtually disposable – super low cost, easily accessible and so cheap that you’re happy to buy without thinking, even if only to use once or twice. Sometimes I think things are just too affordable.
Even if something doesn’t break, we feel compelled to replace it in time anyway. Marketers employ sophisticated techniques to convince us that new is good and old is less desirable. “Keeping up with the Joneses” mentality is unfortunately common place and, as consumers, we are conditioned to buy, buy, buy.
What is the true cost of our hyper consumerist, disposable society?
I posted recently about reframing my pursuit of financial independence to capture a more holistic ambition to also lead a sustainable, balanced lifestyle – Financial Independence Live Lightly and Simply (FILLS). With that bit of context, I wanted to write a quick blog post given events this week at the United Nations.