Why independence is important

Why do we speak about financial independence as being important?

What does independence give you that you can’t have just from earning money? If you earn enough to cover all your expenses as well as any other material items, products, services, holidays, why isn’t that the ideal end goal. What more could you gain by having independence, and surely why would you even bother pursuing it?

High income

I’ll explain with a story. Back when I was working in the finance world as a full-time professional I would constantly have the conundrum of being stuck in the office without anything to do. Might sound strange, but most of my corporate working hours I didn’t do much more than sit behind a screen, thinking about my work, or scrolling on the internet looking for new ideas. Suddenly, usually around 4pm or so, there would be a flurry of activity to get out a letter or proposal or model that needed to be done by that evening. So, most of my day from the 7am commute would consist of very little to no real productive work (at least not productive in the way of people doing physical labour) and then from 4pm till 8pm the real work would start. It could’ve waited till the next day if anyone actually thought about it, but we were all paid a lot of money to do it that same day. You don’t people $250k per annum only to have them decide to do it later. This was a place where people got paid well, and you did the work now.

What’s the problem with the above scenario? We got paid well, the work wasn’t too difficult or strenuous, it was in a beautiful environment with lots of social lunches, and the best tools/equipment in the nicest building with incredibly smart and accomplished people. So why wouldn’t you want that forever? and why would anyone ever quit to earn a fraction of that income? We were all well on our way to having beautiful homes overlooking the city from up high, sleek motor cars and sport cars, and overseas exotic holidays.

Money isn’t everything, independence is

Except, I wasn’t spending any of my money on those pursuits. I was putting all my savings into investments. I wanted to delay gratification and become wealthy. Saving 80% or more of my annual income. The problem came when I reached the 4% rule threshold, and now … I had all these investments that could support my current (relatively-frugal to my banking friends) lifestyle. While they were buying Porsches with the last bonus, I was buying index funds.

I had a problem of my own making. I now didn’t like being cooped up in an office, while the sun was shining. But, I had enough money that I didn’t need to be there. I was independent. Once you’re independent, you have no patience for waiting till 4pm before you start getting to work. It all seems a waste. All that time. You could be going to visit your family, or walking the dogs, reading, doing some volunteer work, spending time exercising, pursuing your hobbies, playing games or sports. All of those things used to done on weekends, or late in the evening. For what? for a Porsche and a nice house? My friends loved the end result of the fancy car, so they didn’t mind the process of working all the time and debt that ties you in. They said there wasn’t any alternative anyway. I found the alternative of delaying gratification and saving it all.

Logically, I probably should have stayed to build it up further, and get the Porsche anyway, but hey, YOLO. What if I never got to spend a decent amount of time with those that I love. I could’ve been like my colleague, who had a wonderful house, a chef, and was going to get married and go on an exotic honeymoon. Except work was first, and so they cancelled the honeymoon. Didn’t get married either. I didn’t want to make that trade. Independence let me say no to the same situation.

Great, so now what?

Am I stupid? perhaps. I needed to work hard to get to this point, and I could’ve gotten sick as a result. Then what’s all that money for if you didn’t spend it.

But now, having worked hard, and not spent it all, I can choose how to spend (in my mind) my most valuable asset. I can spend time exercising, mental wellness, family and social, outdoors, and hobbies. Personally I’m happier being able to spend my time how I wish. I still aspire to have the Porsche (who wouldn’t? I’m not a monk), but it’s a different track.

Instead of spending 90% of my time to double my wealth every 3 years to the exclusion of all else, I’ll spend 25% of my time on income pursuits, earn a lot less and let compound interest on my hard work do the rest. Personally I’m happier choosing how to spend time, instead of waiting on the whims of senior managers, where they seem to get (joy?) power out of giving arbitrary deadlines that they themselves would never want to complete.

Independence with money > high income banker.