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?
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.