Forget the F.I.R.E movement, there's a new financial ideology sweeping Australia - one that won't have you scrimping to the point of madness.
You’ve likely heard of F.I.R.E by now: Financial Independence (FI), Retire Early.
It's a financial ideology that’ll see you sprint frantically towards the dream of retiring much earlier than most. We’ve even covered it here on the Volt blog.
It's a life of sacrifice. Scrimping. Scrounging. Free-to-air television.
One of baked beans on toast, 7 nights-a-week. It's no way to live, for some - even with the distant but glimmering view of a future full of Mai Tai’s, sleep-ins and endless brunches.
But before we get ahead of ourselves, there’s still the whole ‘doing it’ bit. Achieving ‘FI’ and unlocking a better lifestyle.
What’s financial independence?
Reaching financial independence, does not mean paying for your own car registration instead of your parents. It’s not about always having Tim-Tams in the cupboard, either.
You need, according to the pundits, 25x your annual expenses in the bank before you’re considered financially independent.
That’s cold, hard cash savings in your Volt Save account, not total assets combined. That part comes later.
It’s only after reaching this variable golden figure, that you’re able to drop tools, and put your feet up. You then take those funds and spread them across a mixture of real estate, share market and mutual fund investment portfolios - along with maintaining a healthy savings account, of course.
And that’s it. ‘Hey presto’, you no longer have to worry about your 9-5.
Sounds pretty sweet, right? No wonder people are working their rear off and spending very little in order to retire in their late 30’s to early 40’s.
But it's not all roses.
We actually like working
There’s considerable evidence to suggest that we don’t want a hard full stop on our careers. Consider your average driven Australian professional. You might even be visualising yourself; purposeful and motivated. Now imagine how that person might feel if you suddenly cleared their schedule, and removed a major part of their identity; along with the social benefits, on-the-job learning and mental acuity that comes from working.
So there’s a consideration for all the stuff you’ll miss, by walking through F.I.R.E.
But there’s also the stress of working really hard in high-pressure environments; compounded by a strict regimen of saving and restrictive lifestyle.
Thankfully, there’s another way to reach FI - it might take you a fair whack longer, but as you embark on this arguably more positive journey to the finish line, you might realise that it’s not really about ending the race.
SLOWFI: Not an obscure pokemon
SLOWFI - its a state of semi-retirement that you can enter right now. It means a reduction in stress, more free time and a stronger handle on your wealth creation. With a few key changes in your spending habits, along with an increase in mindful investing and saving practices, you could have the same financial security as someone working full-time and kinda saving - or even those on F.I.R.E.
On top of thoughtful budgeting, there’s a few unique attributes to living the SLOWFI life:
- Giving yourself permission to slow down and work part-time - you’ll have to accept that with this change, comes a lower income. But with more time to yourself, comes less wasteful convenience buying.
- If you’re going to splash out, do it mindfully on only the things that you really care about. This should significantly lower needless expenditures and impulse buys you end up regretting.
- Gradually and thoughtfully invest in shares, mutual funds and perhaps most importantly, savings.
By embodying these core principles, along with keeping in mind the underlying formula, you’ll be well on your way to FI. Of course, SLOWFI isn’t for everyone. Not all of us want the time to work their way through the entire Netflix library
But if a change in fiscal philosophy helps you better your financial situation, and seize a few more days in your time, we’re all for it.