Updated: Oct 1, 2020
Have you ever dreamed of telling your manager at Kohls' to go screw himself because you did not want to stay after closing even for $7.25/hour? Have you ever planned for days to think of a way to ask for a raise at a burger shop? Have you ever interned in a cubicle and thought "damn, how did my parents do this for 30 years?" If you can personally relate to any of those questions, then financial independence (or F.I.) is for you.
The term, "Financially Independent" was first coined in 1992 in a book called "Your Money, Your Life" by Vicki Robin and Joe Dominguez. However, the concept has been around for much longer than that. Financial Independence means having enough income (generally through passive work or investments) to cover expenses throughout the remainder of a person's life. Notice, this does not mean a high salary, large inheritance, or lottery winnings are required. The coolest aspect of reaching F.I. is that all you need to do is increase your income and reduce your expenses so that monthly income > monthly expenses. Being financially independent means you do not need to rely on a boss, the government, and certainly not your parents to support your lifestyle.
Does this mean you have to live in a box? Definitely not. Your lifestyle can be based around whatever is important to you. If you like getting margaritas with your friends every Thirsty Thursday like me, then do it. If you want to buy a new pair of Nike sneakers and flex on everyone in high school, then why not. However, just know that there is a trade-off, and you need to cut spending in other areas. Maybe shop for groceries at Aldi's instead of Whole Foods to save a few bucks, or even doing something drastic like cut spending $15 on Netflix every month. Either way, I want to begin by debunking the most common myth about F.I. which is it is only for people who want to waste their 20s living on Ramen and Natty Lights:
My close friends know me as the cheap guy who buys clothes at Old Navy and wears shoes that are clearly listed on Target's clearance ads. I have turned down many requests to go out for dinner, and I almost exclusively buy Pinnacle vodka because I can get it for $19 a handle. While many may scoff at this, I absolutely take pride in it. That is because I do not give a shit about any of those products listed above. While I generally don't have the "best style" and really do not understand the point of a Supreme shirt or any luxury product for that matter, I do like to put money towards what I value in my life. For me, that is spending money on experiences with my friends (e.g. going to the movies), getting haircuts, and saving/investing everything that I can. That is what I want to help convey to you guys, (my Generation Z friends that this blog is written for), so that you may begin your path towards Financial Independence as I am working on now.
It is important to decipher what you want out of financial independence. I'll get into the details of investing in future posts, but if you are just hoarding money away for the sake of having it, you will likely get bored very quickly. You need a large, (but attainable) goal, or anything to look forward to even if it takes years. For me, its a life without having to spend the best years of my life behind a desk, staring at a computer screen as my hair goes grey and I form a beer belly. I do not ever want to work for a scummy boss who rips me a new one for bringing him the wrong coffee. I won't last long in an environment like that, and I need to prepare now so that I can avoid it in the future. Instead, I would much prefer to work on a vineyard in Europe after college and hike the alps in my 30s, while my money works for me. The only way I will be able to achieve this, is if I am financially independent. I would much prefer to work a few more hours now and invest my savings so that it has time to grow well into the future. I recommend you take some time to think about a life that you want 3 to 7 years from now after you are graduated from school, and think how you would like it to continue many years after that.
While you come up with your dream life, (I know you may not know what that quite looks like yet, and trust me it will change very frequently), you should begin preparing for it so that it can become reality. The beauty of this whole thing is that you are probably like me: 20 years old (maybe a few years younger or older) and have your whole life ahead of you. The difference between us and our parents is that we have time on our side. That is time to make mistakes, time to invest, and time to let our money grow and work FOR us. We do not need to be stuck in a career that we cannot stand, and can take steps to create a life that we enjoy. I recognize that not everyone has the same opportunities, comes from the same background or privilege, but what we all share is the ability to benefit from financial literacy. What I will be talking about in future posts are changes to a lifestyle that everyone can incorporate, or at the very least work towards so that they have the opportunity in the near future. Saving money and investing is not just for wealthy fraternity brothers named Chad. It is something that you need to implement in your life to ensure a future without soul-sucking, fluorescent lights staring down at you from 9 to 5.
Stick with me for future posts as I show why I am not talking out of my ass and how it really is as easy as it sounds even for us high school and college-age kids.