I had a new thought about a way to reach financial freedom. What if instead of trying to save up for one large lump sum, mythical “retirement” you just start saving up to cover all of your monthly fees, starting with the smallest fee first. For example, if you took a Netflix subscription of $8.99. (also kinda silly because you should absolutely be splitting Netflix with a friend or relative). If you want to pay the full list $8.99/month all you would need to do is open a stock market investing account and put enough in the account to cover the yearly cost of this subscription service. You can keep it simple by just starting a Vanguard account and buying a total stock market fund like VTSAX. Once you open your account if you add $2,450 into it that will cover your netflix subscription for life (8.99/month = 96 dollars per year. 2,450 x .04 = 98 dollars per year). You can adjust the formula to whatever % return you would like, but the benefits of this paradigm shift in the thought process about retirement seem immense:
- Suddenly the monthly cost of every service, bill, or activity you have will be very well tracked, understood, and ultimately shrunk because doing so directly affects your ability to make incremental progress toward your goal. Additionally when you appreciate the monthly cost of everything you start to make better decisions about purchases.
- It’s incredibly motivating to make incremental progress. It’s why almost every majorly successful game allows the player to make incremental progress. Imagine if all of us could visualize our development the same way it shows up on our character’s when playing a game like the Sims or Zelda. We get to see our characters attributes grow, it’s addicting, it’s why game companies make games this way. It’s why you can spend time playing a game making your virtual character better at reading, weight lifting, or shooting without just making your real life self-better. Or if gaming isn’t your thing; enjoying watching John Snow move towards claiming the Iron Throne, or reading about Harry Potter developing his skills as a wizard, and inching closer to his date with destiny through a confrontation with Lord Voldormort.. All of these things have a commonality that you can pretty much watch the characters grow and make incremental progress towards some sort of goal. Incremental progress feeds something for us at an almost biological level. If you can use this tool that we all, or most of us, seem to possess it will make the journey towards financial freedom much easier, and much more likely to be successful
- As your investments grow to cover each and every one of your monthly expenses you will get a sense of overwhelming relaxation and freedom. You will enjoy the activity/subscription/service/product fully knowing this is now a part of your lifestyle that is totally paid for. Along the way, after each milestone, you can look at your string of accomplishments and see how much you have been “leveling up” your life.
- Ultimately, once you make it to the level of being able to cover all of your monthly expenses with your chosen % return amount you will literally be free to do whatever you desire. Keep working at the same job, why not if you are having fun! Continuing traveling full-time, why not, your expenses will always be covered! But the real magic in this plan is if you realized somewhere along your journey that you actually don’t even want to “retire”, that you get a large amount of purpose and sense of self-worth from whatever job that you do. You can decide to stop short of covering 100% of your expenses knowing that you don’t want to quit your job.
The best approach would probably be to just throttle back and aim to cover 100% of your expenses in say 5 – 10 year increments, because things can change. Maybe you are working at a company that you started and absolutely love right now, but in 5 or 10 years you might burned out and ready to make a change. Or maybe you are currently a firefighter and love being part of a team environment + literally saving peoples lives. It’s completely fine if you derive a lot of your self-worth from your profession. However, ultimately we will all be happier if we could derive a sense of self-worth internally, that doesn’t rely on any external inputs; but this is a lot easier said than done . What we do and what happens in the world around us influences the internal dialog we have in our head about the type of person we are and the type of life we live. It’s fine to strive for the ability to not let external factors affect you, but it’s also okay to never make it all the way there, and to let some external factors control some amount of your happiness and sense of self-worth. After all, some external things like losing a child, or a spouse, can never be fully removed from our daily lives after they happen. Those will be a part of you forever, like a stone that you carry around with you in your pocket. At first it may seem huge and heavy – more like a boulder you’re trying to get out from under – but that eventually, with time and story-telling about the person, sharing their memory with others (even people who didn’t know them) the boulder is worn down and smoothed into a rock and then a stone small enough to fit in your pocket.
So with this overall thought process in mind, it appears to me that methodically saving up enough money to cover your monthly expenses little by little, and documenting the journey along the way will make a dramatically positive effect on the trajectory of your life. You will have the freedom to be present for many of life’s milestones, and will enjoy the benefit of the natural desire to make incremental progress throughout one’s life. These effects will be more powerful the younger you are when you start a stock market investment account & start contributing money to cover you lifes monthly expenses.