FI Step by Step: Step 1, Define Your Why?

Step 1: Define Your Why?

Before you begin waltzing down the path to financial independence (FI), it is imperative that you ask yourself: Why do you want to do this?  Then, you have to do a little soul searching and FIND the answer.  For most of us this will be a long and sometimes difficult journey (but of course the reward is worth it!).  Along the way you may need to have difficult conversations with your spouse or family about money, budgeting, and spending.  You may decide to forego certain luxury items or cancel subscriptions you have grown accustomed to.  Selling your vehicle and starting to ride a bike or use public transportation may be a way to save thousands of dollars.  Downsizing your home or relocating your family to another area with a lower cost of living could be the only way you can realistically achieve FI.  Whatever changes you decide to make, some will undoubtedly be difficult and require some sacrifice by both you and your family.  

It is going to be during these difficult times that you will need to remember WHY you are choosing to pursue FI.  Without clearly defining why you want to make these often difficult lifestyle changes required to become FI, the temptation to go back to your old ways or rationalize that your current financial status quo is good enough will be too great.  You need a rock upon which to build your financial foundation; something that will remind you of what is most important to you, what you truly value, and what brings you happiness.

I believe that the path to FI is about more than just financial freedom, it is about living a more meaningful life.

Too many of us wake up each morning, get on the hamster wheel, do the same exact thing, and follow the crowd.  We get an education, get married, have kids, buy a house, pay for their college, and try to save something for retirement because that is what we are told we are supposed to do.  Many people get trapped in the depths of consumerism because marketing tells us we need to buy things to be happy.  Most will find that these promises of happiness if you buy this new car, the latest smartphone, or the trendiest fashion almost always leave us unfulfilled and oftentimes deep in debt. It’s time to stop blindly following the herd like a lamb to the slaughter.  We need to start living more intentionally.  I believe that the path to FI is about more than just financial freedom, it is about living a more meaningful life.  When you start asking yourself why you want to become financially independent, it forces you to really dig deep and ask yourself what you really want.  What brings meaning to your life?  What do you value?  Why do you want to do this?  

So how do you do define your why?  For some, the answer will be obvious.  Many people stumble upon FI during a significantly trying time in their lives as they are looking for answers.  Such was the case for me during a difficult period when I felt trapped by my financial situation.  When I found the concept of FI and what it could mean I knew it was exactly  what I was looking for.  For me my WHY was . . . freedom.    I craved freedom more than anything else.  Freedom to work because it’s what I want to do, not because I have to pay my mortgage, make a car payment, or save for retirement 25 years down the road.  Freedom to retire when I feel it is the right time for me and my family, not when I have finally paid off the expenses of an inflated lifestyle and the best years of my life have past.  Freedom to one day pursue other interests and to serve more through my church.  This is why I have named my blog Freedom through FI.  I believe this desire for freedom is at the core of everyone’s reason to pursue FI, but there must be some reason you are seeking that freedom.  These reasons may include the desire to spend more time with family, you aren’t happy in your current career, you wish to start another career that pays less and would not support your current lifestyle, or you want to travel the world.  

Remember, by pursuing FI you aren’t missing out on life or sacrificing luxuries, you are actively CHOOSING to purchase the ultimate luxury: freedom.

For many, however, defining your WHY is easier said than done.  Just thinking you want to be more on top of your finances is not enough to sustain you on the oftentimes difficult path to FI.  For those unsure about what to do, I came across a good strategy in the book Playing With FIRE by Scott Rieckens.  In the book, and in a documentary soon to be released (which I am super excited about), Scott documents his journey of discovering the F.I.R.E. (Fianancial Independence Retire Early) movement and the subsequent major life changes he and his family made to pursue FI.  Part of that journey was sharing the concept of FI with his wife and convincing her it was the right thing for their family.  He knew this would be difficult and struggled for a long time deciding how to share this with her.  Ultimately he asked her to make a list of the ten things she most enjoyed doing on a weekly basis, and he did the same.  Then, they compared their lists.  They discovered that their lists were very similar and really reflected their values and what was most important to them.  They also saw that most things on their list cost very little money.  As they studied their lists, a powerful truth became apparent:  most of their expenses did not reflect their values.  

I recently went through this exercise with my wife.  Fortunately she is already on board with the pursuit of FI, but I thought it would be a good idea for us to review what is most important to us.  Similar to Scott and Taylor Rieckens, we found our lists had very similar themes: exercise and outdoor activities, being involved in meaningful service to others, supporting our children in their pursuits, and spending quality time with each other.  Furthermore, most things we listed did not cost much money or were free.  If you are having a difficult time clearly defining why you want to pursue the freedom that comes through FI, I challenge you to make a similar list.  

After you have defined the reason or reasons you want to pursue FI, I recommend you write it down and refer to it often.  This could be on a document you review regularly on your phone or tablet, it could be on a screensaver or wallpaper on your computer, or you could write it on a sticky note and put it next to your bathroom mirror you see every morning.  I am personally reminded every time I see the blog.  The important point is that you record it and see it often.  When times get tough or decisions are difficult to make, you will remember why you are doing this.   Remember, by pursuing FI you aren’t missing out on life or sacrificing luxuries, you are actively CHOOSING to purchase the ultimate luxury: freedom.

Once you have Defined Your Why?, please go on to the next step:  Step 2: Where Am I Now? Determining Your Net Worth.