financial independence

There are many complicated layers to being financially independent – like an onion.  First a quick personal story for analogy.

I use Wednesday as a day to be less structured.  It’s my day to be in less of a hurry, more creative, and to think.  The highlight of the day is putting our oldest child, Stella, on the bus.  She’s in Kindergarten.

There’s comedic relief in the process itself.  Our house is less than a mile from the school.  Walking or riding her bike would make great sense when it’s warm enough (cue the stories that any Grandfather could share about “in their day” walking to school in full snow gear).  We could also make our mornings far more efficient by simply driving her there on the way to any subsequent activity.

But, we don’t do those things, in my mind, for one main reason: her independence.  Watching her become increasingly independent brings tears to my eyes because that makes her happy.

This past Wednesday, I stepped outside with her for our normal trek to the bus stop, noticed it was raining, also noticed the neighbor was on their way to the bus stop (adult supervision accounted for), and on a whim asked Stella, “Do you want to walk down by yourself?”  She beamed with pride, nodded yes, and began the walk down.  All went well, I stayed dry, but I thought more about that moment later.

To a fault, I push her independence.  I’m not sure where that comes from other than wanting her to fend for herself someday, but I get in a rush to get that job done with all our kids.  There’s always Newton’s Third Law at work: for every action, there is an equal and opposite reaction.  My sense of urgency for our children’s independence can also take form in instances like these:

  • 3 kids pounce from a car in a busy parking lot fearless of anyone that might not see them
  • Being afraid to show weakness in an area at school rather than ask for help.

“Over” independence could be as simple as a safety hazard or as complicated as being afraid to ask for help and learn more effectively.

Shortly after this experience, I reflected more on the idea of accepting help and even played with the word “independence” – after all, it’s in our company name.

Here is a summation of some of my musings, so please let me shift gears from the personal and draw the parallel to your financial world.

The reality is we’ll never be totally financially independent and acknowledging this fact would probably do us all some good.  This acceptance can relieve significant undue pressure.

A young person is dependent on the financial resources of parents.  A gainfully employed person is dependent on a company to pay their wage and to maintain their employment.  An entrepreneur is dependent on its customers’ willingness to pay and capability of paying.  A retiree is likely dependent, in some fashion, on Social Security, maybe a pension, maybe market cooperation.  Even the wealthiest person, who may not technically need Social Security or Medicare, is dependent on the rest of society.  After all, what is a dollar bill, besides a worthless piece of paper?  It’s the system that we all agree upon that has value.  And, even at the top, the targets on your back become larger and higher in quantity.  An agreed upon judicial system is needed for even the wealthiest to keep (or lose) what they’ve obtained.  They are dependent.

Knowing that you’ll never be completely financially “independent”, the question then becomes, what do you want to be independent from?  Your employer, your mortgage company, your customers?  A step further, why are you seeking total independence?  Is it some sort of badge of honor?  I grapple with this egoic notion.

There was a lot of thought put into the name of our company a few years back.   I’m only doubling down on that name now – although, in a more specific fashion.  Financial Independence Advisors does not seek to create some disillusioned experience of total freedom from money concerns.  That world exists for no one.  Our clients are better served if we understand what they specifically want independence from while embracing that we’ll always be at the mercy of some societal limitations.  Targeting your greatest source of angst and what you seek the most freedom from can dramatically change investor behavior.

Maybe longevity is not in your family history and working forever seems dreadful. Likely you’ll prioritize retirement savings and freedom from an employer over freedom from a mortgage company (if forced to choose). Maybe you’re hungry to explore the world and being “house poor” and tied down gives you hives. You’ll likely prioritize a smaller mortgage, accelerated payments, and freedom from a lender. Maybe your concerns are a suspect Social Security system and a polarized political system that changes the tax code every term. You’ll likely prioritize tax efficiency and strategic income planning. Point being, the conversation is more about priority than complete independence. At risk of being repetitive, getting crystal clear from where you seek freedom will drive your financial plan.

Total financial independence does not make you a hero.  This concept is nothing more than an onion with varying complicated layers, none of which present total independence, even for Jeff Bezos.  We’re better off surrendering to this fact and being specific from where we seek our independence.  Accepting help is an inescapable part of life, and seeking total independence is utopic.  Take some pressure off yourself.

Stay calm.  Stay invested.

Thanks for reading,

See disclaimers.

Mitch

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