I wanted to step away from the market news, discussion on investing and talk about the topic of “financial freedom”. This subject evokes a lot of interesting responses from the community. After all, everyone’s background and life experiences are not the same.
Financial Freedom = Retirement
The first common theme/variation of a response equates financial freedom to a point in life where you do not have to worry about making ends meet. Lot of folks simply think of this as retirement and this eventually leads into a pretty picture of a relaxing next to beach, sipping your favorite drink or whatever. I’ve got to admit, this sounds fantastic.
But after thinking about this a lot, to me this sounds just like a…..vacation.
I enjoy vacation time and some “do nothing”/”chill out” time. But if the same situation would extend over a long run, it would drive me nuts. I would probably just get sick of myself after a few days of “doing nothing”. Retirement or not, I think I would still be involved in some form of activity to keep myself engaged and mentally challenged. This drive to work on something cool and rewarding is what fuels me, and I do not think that is going to change in retirement.
Indeed, my work schedule as I get closer to retirement might change substantially. I might consider during more “consultant” like roles during the later half of my career. I might also consider stepping away from the tech industry altogether and going towards academia. I have always enjoyed teaching young students whatever I have learned from my experiences and I might even consider doing it for free. The gift of educating a young child, especially from a financially challenged background, can not only setup that child for life but can benefit a whole generation to follow. I find that thought very captivating.
Financial freedom = Escaping the 9-5 cycle
The second theme around any financial-freedom discussion is centered around of escaping the 9-5 work cycle. This has an implied assumption that almost everyone who works in their present day job, hates it for one or more reasons. They are pursuing the path of financial freedom so that they can escape this “monotonous” cycle and “use their time doing something that they actually love”.
I can understand folks hating their day jobs if they are stuck doing something that they are not really passionate about, but are doing it because pursuing other income options is not a viable option. This is indeed a difficult situation.
What I have a problem is with the broad assumption that everyone who is in a 9-5 job is expected to hate it. I am in the (supposed) minority who does NOT hate their day job. I think I was fortunate enough to realize very early in my education that I would end up with a career in engineering. And I ENJOY doing what I do. I cannot explain the thrill of seeing people using products which potentially is running a piece of software that I designed and/or contributed towards. I can actually take a bet with you that if you do a quick scan around your house, you might find atleast one such electronic product where this is true. And I am not saying this to brag or anything. I think this is largely true for large number of engineers who work with me on products or other such solutions.
Add to all this, I find the predictability around getting a periodic paycheck extremely useful. This actually helps me plan a budget and also determine how much to invest etc. In a world that is full of chaos and unpredictability, THIS one aspect is probably the biggest advantage of the 9-5 job. It helps me sleep better at night.
I also feel that a lot of the 9-5 job haters are exaggerating some of the downsides. Some common criticisms might sound something like…
- But, you are working to fulfill someone else’s dream, aren’t you?
- You are being told about what you need to do.
- There is no freedom…your time is not your time…
- You are not an owner. You are just a modern-day slave.
- And who likes working in a cubicle anyway?
I honestly feel this is a slightly myopic perspective of the world. If one were to open up their mind a little more, they would see that most of these concerns were just hollow statements with no real substance. Let me try debunking these..
Working to fulfill someone else’s dream
Not really. Like I said, I enjoy working on engineering problems that are ultimately related to products that common people use in their day-to-day lives. This is as much my dream as it is the CEO/upper management’s dream. Great products are built by great teams of people all working towards a shared dream.
You are being told about what you need to do
Ok? So what? First of all, why is this such a bad thing? Second of all, I have always been encouraged to ask questions regarding the tasks being assigned to me to get a better context of the larger problem it is trying to solve. There have been several occasions where my immediate boss has welcomed me bringing up these questions and we have either re-scoped the task, eliminated it if it was deemed unnecessary or kept it as-is since I have understood it well. In all three cases, it has helped everyone concerned.
There is no freedom…your time is not your time…
There is some truth to this argument. This largely depends on the kind of industry you are in and the work you do. Thanks to the WFH dynamics in the post-pandemic world, I have been able to have a largely flexible work day where I can plan my personal activities and appointments around my work schedule without either one being impacted. I have been pretty lucky to have worked for bosses who were mostly hands-off and did not believe in micro-management. But I can understand that not everyone might have the same experience.
You are not an owner. You are just a modern-day slave.
This is kinda related to the “me working to fulfill someone else’s dream”. Again, good corporations will make each and every member feel like a co-owner. Sure, there might be some cases where you might not agree with the approach to solve a given problem. But usually the opposing parties, in any given discussion, also have a sound argument. And this argument about being a modern-day slave…well if you are in stuck in that mindset, then no amount of talking is going to convince you to look at it some other way.
And who likes working in a cubicle anyway?
Thanks to COVID and WFH dynamics, you no longer need to work from an office! And even if you had to work out of a office, most workspaces now have enough flexibility to allow you to take your laptop and sit anywhere you want in a building and work from there.
Granted, I might be a bit biased in that not all 9-5 jobs are like mine. There might be certain types of 9-5 jobs which are indeed terrible because of bad working hours, bad management and vitriolic work environments. But what is stopping you from quitting and finding a job where such a situation does not exist?
This is perhaps a FAR MORE important step than anything else. You need to put yourself out of toxic work environments and go find a job that is personally and professionally rewarding. In my opinion, focusing on being kick-ass at your job should be a higher priority and thinking about stock markets and investing. This allows you to command a very competitive wage, which in-turn improves your savings rate. Once you have a solid base i.e. your day job, you can then focus on long-term financial plans as well.
So what does “Financial freedom” mean to me?
I have grappled with this question a lot and it has not really led to any clear answers. But one thing is certain, I want to be in a position where I have a periodic stream of income coming into my bank account. That cash is going to give me the ability to pay my bills and live my life. This is perhaps the SINGULAR most important reason why I have chosen dividend growth investing as my investing strategy. It is perhaps the only strategy that helps in stay invested in the market, generates a passive income stream while I can focus on my day-job and do my best on that front.
If my calculations are right, I will have enough money in retirement to live life king-size. But I will continue living well below my means. Why? Because I am not envisioning a king-size life next to the beach, sipping a margarita or whatever. Personally, I find that such a life to be boring and meaningless. I might consider traveling for a bit, but I am pretty sure I will find that sickening and tiring after some time as well.
Maybe the choice to live your life your own way in retirement is what financial freedom really means? I really don’t know.