It’s hard to scroll through any newsfeed these days without seeing articles highlighting 20 and 30-something year-olds achieving financial independence and living the life of their dreams. With stories like these, it’s easy to start feeling like you’re seriously behind the financial 8-ball. That couldn’t be farther from the truth. Regardless of your age or situation, you CAN take control of your money and start charting a course toward financial improvement. So, stop feeling down, forget those sensationalized stories about financial independence, and go after financial improvement instead!
Financial Improvement Should Be Your First Goal
By definition, financial independence is the achievement of having enough income to pay for your living expenses for the rest of your life without needing to work. In other words, your investments are generating passive income for you that cover ALL of your living needs and wants. I don’t know about you, but that’s quite a lofty goal, especially if you’re in the midst of adulthood with a house and kids and all of the obligations and responsibilities that go along with that stage of life. Psst…that’s us.
Feeling overwhelmed by competing financial priorities is quite common and something my husband and I still experience, despite having our financial act together. I mean, let’s face it, unless you’re earning an outrageous salary, those everyday priorities can cause strain in even healthy relationships. All too often, some financial priorities are delayed or suspended until further notice. You know, like saving for retirement.
Learning To Walk Before You Run
Saving for the future was something that greatly suffered for me when I was in my 30s. I just didn’t have enough money to go around and it was the easiest thing to cut back on without feeling a monthly pinch. Unfortunately, that meant a lot of lost opportunity when it came to compounding interest and building wealth.
If you’re in a similar stage of life and are feeling pressure and stress to make your income stretch to new lengths, maybe financial independence shouldn’t be your goal. At least not right now. For now, maybe you should focus on financial improvement for quick money wins like creating a budget, paying off those credit cards, and increasing your 401(k) contributions. Focusing on just one of these things can vastly increase your motivation and create a snowball in terms of improving your finances. Heck, just reading this and thinking about doing it is moving in the right direction. Kudos to you!
Financial Spikes And Crashes
Throughout the years I have had more than my fair share of financial spikes and crashes. I started my adult life with a spike by making solid money moves like contributing 10 – 15% into my 401(k) account and maxing out my IRA each year. But I also crashed big by getting myself into credit card debt because I needed new clothes to go out to eat with friends, often. My credit card debt, which maxed out around $20,000 (more than once), was a cycle I had a hard time breaking. After all, I was young and I wanted those things. Now. No matter the cost.
On top of cyclical credit card debt, I had student loans and car payments. Basically, I was normal, but normal doesn’t get you to financial independence. Normal gets you normal – which is in debt with little to no savings for the future.
My biggest financial crash of all came on the heels of leaving an 8-year relationship when I was 31 years old. I left with absolutely nothing. Well, not nothing per se, I left with four lawn chairs and my two cats. I rented an apartment I could barely afford, stopped contributing to all retirement accounts altogether and spent years healing, emotionally.
All told, the majority of my 30s were spent in the doldrums of emotional stress and were devoid of any noteworthy financial spikes. Sure, I paid off a small student loan and the remainder of my car with a bonus I received from work, but I also purchased a second home that I couldn’t really afford and was only sporadically contributing the minimum to my 401(k).
The point being, if you, like me, have had financial ups and downs due to LIFE, you might just benefit from chasing FI – financial improvement, rather than FI – financial independence. Not everyone can reach financial independence before the traditional retirement age. And that’s OK. Reaching financial independence or just getting close and retiring comfortably is more than what a lot of people will achieve.
Related:
- Why We Stopped Chasing Early Retirement For A Happier Life
- 5 Ways Frugality Can Lead To A Happy Life
- Why You Should Feel Fabulous Even If You’re Deep In Debt
- How To Pay Off Your Credit Cards – When No One Wants To Help You
- How To Execute A Frugal Reboot When Old Spending Habits Appear
- Episode 3: Why We Stopped Chasing FIRE For A Happier Life
- Episode 21: Financial Improvement – The New FI
Financial Independence Can Be A Longterm Goal…Or Not
Speaking of a comfortable retirement, my next point is this. Money is not a one-size-fits-all kind of thing and despite the sensationalized stories on the internet about everyone other than you (gross exaggeration) making all the right money moves, financial independence doesn’t have to be your longterm goal.
If you’re finding the personal finance space a little later in life (think: you already have a 4-bedroom home with 3 children that want to go to college, and aging parents that might need financial assistance), you might just want to focus your efforts on financial improvement to live a comfortable life now and later.
When I found the FIRE movement back in 2015 I was totally smitten. I was willing to do almost anything to ditch my corporate cubicle and live a life of “freedom”. But when I realized my family needed to slash expenses on nearly everything we enjoyed like cable TV, coffee shops, and movie nights, my initial exuberance quickly turned to disappointment and unhappiness.
Turns out, for us anyway, living a barebones lifestyle in our late 30s/40s wasn’t worth an early retirement. We’d rather strive to consistently make smart money moves that continue to propel us in a positive financial direction and also allow us to live a life we still love, cable TV included. Our longterm goal is still financial independence, but we’re taking the more scenic route these days.
Small Wins = Big Motivation
Focusing on financial improvement over financial independence allows you to start seeing real progress quite literally overnight. Just by sitting down and talking about your money is a step in the right direction and will make you feel better. And when you feel better about your money you’re creating momentum that will motivate you to keep going.
One of the best things we ever did when we got serious about our finances was to track our net worth using the free online tool, Personal Capital (psst…that’s my affiliate link). Tracking our net worth allowed us to see the difference every little penny made, whether it was going toward savings or debt repayment. It did wonders to keep us motivated to stay the course.
Tools:
- Personal Capital is the online tool we use to track our net worth
Financial Fitness And The Financial Gym
In the end, improving your finances is a lot like improving your body. You’re not going to skip a dinner out with friends and suddenly be in a much better financial position; just like you’re not going to have a rock hard body after one workout at the gym. With almost anything in life, slow and steady wins the race. Remember the tortoise and the hare? The tortoise made steady progress (smart money moves) throughout the entire race (life) and crossed the finish line (retired comfortably) before the hare who didn’t take the race seriously and tried to play catch up at the end.
If you’re ready to take control of your finances and start making progress toward the life you want to live, whether that includes financial improvement, financial independence, or both, I highly recommend checking out The Financial Gym. Founded by Shannon McLay, host of the Martinis and Your Money podcast, The Financial Gym is all about financial education and helping you reach your money goals – not about selling you products or investments. After an initial conversation, you’re paired up with a B.F.F. (Best. Financial. Friend.) that coaches you toward success. How cool is that? And the phone call is totally free!
So there you have it. A new acronym for FI that is relatable to everyone whether you’re struggling with debt or are already on your way to early retirement. Either way, financial improvement can and likely should be a part of your overall money roadmap.
What’s your #1 tip for financial improvement?
Bonus Section (Woot, Woot!):
If you’re struggling with the first steps of financial improvement (like getting out of credit card debt), our partners over at Debt.com offer a free evaluation to help you understand your options, then they connect you with accredited service providers that can help you get the help you need. You can also call 844-213-9902 to speak with a certified debt specialist immediately.
How long will it take you to become debt-free?
Use Debt.com’s free credit card payoff calculator to see how long it will take you to pay off your debt with minimum payments.
6 Comments
here’s another one for you. if you walk out in the woods and cut down one tree it doesn’t make you a lumberjack. we did financial independence in the way you describe. meet up in our mid-late 30’s, spend a few years undoing some bad moves, spend 10 more years saving and investing well. done.
Nice work! We finally “undid” our past financial wrongs and are full speed ahead toward FI…we just don’t have the pedal to the metal anymore. We’re just cruising and enjoying the ride 🙂
As someone starting too late to go for true FI, I’m all about financial improvement instead. I’m finally contributing to retirement so that I can retire one day. For now it’s just a matter of playing catch up but at least I’m improving!
That is awesome! Yeah, financial independence just isn’t realistic for some people…and that’s okay. Having a comfortable retirement doesn’t have to mean ending up “rich”. Sounds like you’re on the right track!