Working towards Financial Independence (FI) is great! However, the WHY of Financial Independence is also equally, if not more important.
Importance of WHY
Many years ago, I watched a TED talk on How great leaders inspire action. I was a consultant back then, and this talk was focused on how companies can get better. However, I later realized that the concept was also just as applicable to people.
The key message of the talk is that most companies know WHAT they do (e.g., make products) and HOW they do it (e.g., processes to make products). But very few companies know or can articulate WHY they do what they do. And it is the WHY that is the most important of the three.
I found the same to be true on my FI journey. I knew the WHAT and HOW of FI. But I did not have a good WHY.
The WHAT / HOW / WHY of Financial Independence
WHAT: This is the easiest one to answer and also the same for all FI aspirants. The WHAT or the final result all FI aspirants want is the same – we all want to be financially independent.
HOW: This is a bit difficult to answer but is largely the same for everyone. There are only three ways to get to FI – Earning, Saving, Investing. Most FI aspirants use a combination of these three things to achieve financial freedom.
WHY: This is the most difficult of the three and also can vary a lot for everyone. We all may want the same thing (FI) and may use the same combination of paths to get there (Earning / Saving / Investing), but the reasons we want FI can be very different.
Not just that, people typically spend very little time focusing on the WHY. Everyone is focused on the HOW – trying to earn more, save more, invest better. This does help us to get to FI sooner. However, not having a good WHY can be a bummer, as I learned on my FI journey:
My Experience with the WHY of Financial Independence
I started my FI journey because I was in a demanding job and was working all the time. I wanted to get to FI so I would not have to work anymore! This was my WHY. While this is great in theory, I realized that doing nothing can be incredibly boring!!
While some people can relax on the beach all day, I am not one of them. ‘Wanting to do nothing’ was not a great WHY. Also, once I reached FI, the WHY was not very useful because it did not give me any direction on what to do after FI.
Instead of running away from something I did not want, I should have thoughts of something that I could run towards.
A Different Way
One of the fellow FI acquaintances I know has a different story. He is interested in music. In fact, he is passionate about it. However, he was not able to devote much time to it because of his job.
When he started his FI journey, he was clear about his WHY – he wanted to become financially independent to focus on music.
When he did indeed become financially independent, he quit his job and is now focusing on music. He was running towards something (music) rather than just running away from something (his job).
Benefits of Knowing your Financial Independence WHY
Persistence: The Financial Independence journey can take many years, and it is important to know why you are pursuing FI. My FI journey took more than a decade. Over that long period, there were many times where I was not sure if it was worth it. Having a WHY (even though it was not a great WHY) really helped me stick through the long journey.
Focus: Knowing your WHY helps you maintain your focus. There are many distractions, and it takes a lot of discipline to Earn / Save / Invest consistently for many years. Having a clear WHY can help you focus and avoid distractions.
Post FI: Having a great WHY can not only help you with your FI journey, it can also help you plan your post FI life. One of my friends wants to travel the world, which was his primary motivation to pursue FI. After reaching FI, he has structured his post-FI life around this passion.
What if the WHY changes?
I think it is fine if the WHY changes with time. In fact, it is quite natural that it changes. The person you are at 20 is not the same person you are when you are 30 or 40. As you change with time, your perspective and thinking change. So the WHY can also change.
It is better to have a positive WHY than a negative one. As I got closer to FI, I realized that my reason for pursuing FI (not to work anymore) was not a great one! Just quitting my job and doing nothing after FI did not appeal to me. I had to find something to do after FI, something that I was passionate about.
After much thinking, I settled on writing. In this age of Youtube, TikTok, Twitter, etc., writing can seem a bit old-school. But I love to write. Also, the best thing about FI is that I get to try it out. If it works, great! If not (or if I am not good at it), I can try something else.
This is the best thing about FI – I can try out different things, and I have a lot of time!
In Conclusion
FI has several benefits. Although it is tempting to get started with FI, it is important to understand why you want to achieve FI.
Not only will it help you on the FI journey, but it will also help you plan out your post-FI life.