Celebrating financial independence
by Justus Morgan, CFP
As we celebrate our country’s independence this month, thinking about celebrating our own financial independence is worth pondering too. Despite the many economic obstacles we’re facing individually and as a country, we’ve been through worse times and survived. One helpful strategy for overcoming turmoil is to focus on what’s under our control versus outside of our control.
At times, it may seem financial independence is impossible to achieve for many people. While it’s certainly more difficult depending on your circumstances, I’d recommend starting with defining what financial independence means to you so it’s a less generic concept. Is it the traditional retirement model where you work until a certain age and then step away from the work force for the rest of your life? Does it mean spending more time doing the things you want as you continue to work at some level for a longer period of time? Ultimately, financial independence represents choices with how you spend not only your money but also your time.
While I don’t have a crystal ball telling me when inflation will decline or where the stock market will move next, I also recognize these changes are out of my control. The ancient Greek philosopher Epictetus discussed this concept of control thousands of years ago as a strategy for navigating life. Focusing too much on things out of our control only leads to frustration and misery since we can’t influence their outcomes.
The alternative is to focus on what we control, primarily our actions. The achievement of our financial independence is influenced by actions we can take right now. While it won’t lead to overnight success, spending less than you earn and saving the difference is the surest path to financial success. Higher inflation increases the cost of goods and services which makes this even more difficult to accomplish but it’s nevertheless a crucial action.
If you were planning to retire this year but are second guessing your decision because of the decline in the stock market it might be because you had too much invested in stocks this close to retirement. On the other hand, if you didn’t have anything invested in stocks you’re probably still worried because inflation is eroding the value of money in bank accounts and bonds. Making sure your investments are aligned with your financial independence goal is critical to navigate the current and future economic environment.
I’ll be the first to admit these are simple concepts but certainly not easy to consistently follow. Separating things we can control from those outside our control is the first step in moving towards financial independence. Planning ahead for financial independence will hopefully give you something to celebrate in the future!