Financial Independence = FU Money
I saw the following, thought provoking Tweet;
The account appears to be anonymous but he has some interesting things to say, a more understandable Nassim Taleb maybe, Taleb retweeted this is how I found it. I gave Guru a follow.
I've said many times before that I frame being wealthy more along the lines of being financially independent with the following statement; if you make enough to pay the bills, save a little for the future and have a little left over for some fun then you're better off than most folks. To my way of thinking this is more about lifestyle than income in terms of living below your means. If you can afford a $2000 mortgage payment then could probably find something a little cheaper to maybe just $1500. And even if that is not the case you can drive cars for longer, eat out less if you eat out a lot and other things to reduce your financial footprint. Another way to come at this is to proactively avoid lifestyle creep. Instead of increasing the cost of your monthly lifestyle as you make more money, instead plow that into savings or maybe increase savings by at least some with pay increases.
The idea of saying FU to (usually) an employer/boss has varying levels of importance to people. It's not been a very important thing to me, I think I have been pretty good at leaving situations quietly, not wanting to burn a bridge because you never know when your path will cross with that company/person. That doesn't mean I wasn't thinking FU. But I concede there are circumstance where someone feels that going out profanities a blazin' needs to be done.
If you're in your 20's it's very unlikely that you will have the sort of financial cushion that would allow you to wake up one day and say I have had it and simply move on. Plenty of people that age do it but usually this happens in conjunction with confidence of being able to find something right away. I actually did this in my mid-20's. I was a broker at Shearson, I had a small book of clients but knew I did not have it in me to build a proper book on the timeline that the firm expected. I was able to sell my book for about six months of living expenses which sounded great to me and it worked out well. Embedded in saying FU (even if you only say it on the inside) is a certain amount of risk. The less money you have, the more risk you might be taking.
Some one who is 45, has $150,00 saved in taxable accounts (not IRAs or 401ks so no penalty for withdrawals) who has decided they've had enough, that they need to take a couple of months off and then they will start looking for work can probably handle this pretty well financially. The smaller the monthly financial footprint, the better they can handle it. So two months planned time off and let's say it takes eight months after that to find a job; 10 months of drawing on savings. Even if this person's monthly expenses are $10,000 they can handle it but would be depleting a lot of their savings. At $5000 a month, which is not a miserly existence, the scenario becomes far more comfortable and leaves a bigger buffer if things go wrong.
Tying in to my post from the other day, this is about optionality. Personally, I want the optionality of the $5000 lifestyle above, versus the $10,000 lifestyle in every aspect of my financial life. I've made the point many times before, money is high on the list of things people worry and fight about. Spending a lot of time on negative activities like fighting/worrying about money seems like a miserable way to go through life and arguably is bad for your health. I personally want no part of that.
It might be difficult in your 20's and 30's to think about what you will want, what you will be like or anything else about being in your 40's or 50's but if you did live below your means and save diligently in your younger day then having some level of financial independence when you do get a little older is very empowering. Knowing you could say FU even if you don't want or need to goes a long way to reducing financial stress and the value of that is priceless.
The picture of the sign that accompanies today post is from northern Arizona on the Navajo Reservation, it is a different highway system on the reservation. The actual sign is black and white, I just filtered the hell out of it.