Financial Freedom and the Value of Time

Financial Freedom and the Value of Time

If some ninety-year-old rich dude offered you Kshs. 1 Billion to trade places with him, would you do it? Of course not. Why? Because time is more valuable than money.

The average person has approximately 25,000 days to live in their adult life. If you’re reading this, you likely need to trade your time for money in order to live a life that is safe, healthy, and happy. But if you didn’t have to work to make money, you’d be able to spend that time however you wanted.

No one cares about your time as much as you do. People will try to take your time and fill it up with meetings and calls and more meetings. But it’s your time. Your only time. Financial Freedom is designed to help you make the most of it. Make money buy time.

The goal is always to retire as early as possible. When I say retire, I don’t mean that you’ll never work again, only that you’ll have enough money so that you never have to work again. This is complete financial freedom — the ability to do whatever you want with your time.

Traditional Retirement Advice Doesn’t Work

If you want to “retire” sooner rather than later, you need to rethink everything you’ve been taught about retirement and probably most of what you’ve been taught about money. As a society, we have collectively adopted one approach to retiring: get a job, set aside a certain portion of your income in a retirement account or pension scheme, and in 35+ years you’ll have enough money saved that you can stop working for good.

This approach is designed to get you to retire in your sixties or seventies, which explains why pretty much every advertisement about retirement shows silver-haired grandmas and grandpas (typically on a golf course or walking along the beach).

There are three major problems with this approach:

  1. It doesn’t work for most people.
  2. You end up spending the most valuable years of your life working for money.
  3. It’s not designed to help you “retire” as quickly as possible.

The first major problem with traditional retirement advice is that even if you follow it perfectly (and most people usually don’t), you still might not have enough to live on when you are in your sixties.

The popular advice to save 5% to 10% of your income isn’t enough. You should be saving as much money as early and often as you can. If you want to be sure you’ll be able to retire at 60, you need to start (and keep) saving at least 20% of your income from the age of 30.

Here’s how big a difference it makes.

If you’re making a net average of Kshs. 50,000 per month over this 30-year period and saving 20%, or approximately Kshs. 120,000 per year, you’d have deposited Kshs. 3.6 Million by the time you retire. Factoring in a 7% growth rate, that investment would be worth Kshs. 11,694,526.

And this is assuming that your salary never increases, which it very likely would over time, so you’ll have even more money.

Saving 20% of your income will significantly increase the chance that you can retire after 35 years. But this brings us to the second and third major problems with traditional money advice: It isn’t designed to help you “retire” early and requires you to work full time between your twenties and your sixties.

There’s nothing inherently wrong with this, and people can live perfectly happy lives working for 35 years and then enjoying the fruits of their labour when they’re older. But it requires a huge trade-off — basing 35 years of your life around earning money — and the payoff isn’t guaranteed.

A Dream Deferred

When you spend almost your entire life working for a paycheck, what happens when you break that routine? What happens when your identity is wrapped up in your title and job responsibilities? What happens when you’re now too tired to pursue your dreams, or maybe it’s been so long that you lost your dreams along the way?

Despite the fact that people work so hard to be able to retire, half of the people over 50 haven’t even thought about what they want to do when/if they retire.

I don’t know about you, but this makes me pretty sad because it means many people are choosing to work for several decades of their lives without giving any thought to what they’re working toward. They have collectively adopted the traditional retirement narrative — work until your sixties  — without pausing to question whether this is what they really want out of life or if there’s a better way.

A New Perspective

In her deeply moving book The Top Five Regrets of the Dying, nurse Bronnie Ware says the top two regrets of those facing the end of their lives are “I wish I’d had the courage to live a life true to myself, not the life others expected of me,” and “I wish I hadn’t worked so hard.”

She goes on to say that the vast majority of her patients never accomplished at least half of their dreams, often because of their choice to keep working instead of following them. These people pushed on, saved, and worked only to look back and wonder what it was all for.

Is this what you want? Do you want to defer your dreams until sometime in the far-off future when you might not have the energy or drive to do anything?

Making money isn’t nearly as complicated as it’s made out to be. In fact, given the efficiencies of the internet, it’s easier to do than ever before.

What’s difficult is letting go of the assumption that there’s only one surefire path to retirement — earning a steady paycheck for several decades and saving a portion of it for later — and that any other path is reserved for the lucky few. The more money you make, the more money you can invest, and the faster you’ll reach financial freedom.

The hardest part of fast-tracking financial freedom is learning to look at the world differently, to accept that even though you may not know a single person who has done it, it’s possible to earn enough so that within just a few years, you’ll never have to worry about money again.

But if you want to live life on your terms, you need to manage money on your own terms as well, and that requires a new perspective.

…To be continued here.

Adopted from Get Rich Slowly.

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