There is no doubt that financial independence is an amazing concept. It almost seems too good to be true sometimes, but there are many people that have come before us and have accomplished becoming financially independent. After achieving this important goal, the benefits start to show up. Some of the amazing benefits of financial independence are things that you wouldn’t think about at first. Some are more obvious and are what you are really looking forward to. I have spent a lot of time thinking and researching financial independence and I have come up with 8 amazing benefits that it has to offer. This list is certainly not comprehensive by any means because in reality the benefits and opportunities are endless.
The 8 amazing benefits of financial independence are:
- You can retire early
2. You can travel long term (and more often)
3. You have better financial security
4. You can finally spend time with the ones you love
5. You gain the ultimate flexibility
6. You have negotiating power
7. You now have no excuses to live a healthier life
8. You benefit from reduced living expenses
Jump Ahead To:
1. You can retire early
Okay, so this is the most obvious benefit of financial independence. I mean, after all, there is an entire movement known as the FIRE movement (Financial Independence Retire Early). I know that. In fact, I have written a full article about the FIRE movement in this post. Retiring early means a lot of different things to a lot of different people, that is why I am bringing it up.
The most well-known meaning of retirement is the dictionary definition that goes “the action or fact of leaving one’s job and ceasing to work.” You can do that if you wish, but you still need something to occupy your time. Whether that be travel, hobbies, family, etc. That is up to you, just try not to occupy it with day time television, please.
Here’s a crazy thought: You can “retire” from the job you are working now and work somewhere else. That is one of the benefits of financial independence, you can change careers, jobs, paths, etc. almost on a whim. If you are in a job that you dislike for any reason you can move on. Retirement doesn’t have to mean never working again, nothing is so permanent when you are financially independent.
There are many reasons why you may want to keep working even after you have reached financial independence. I give 7 of them in this post that I wrote. One of the best reasons I take from that list is to start your own business. Starting your own business can be a great way to keep you busy and work toward something meaningful. Your business should aim to benefit others in order to succeed, and thanks to the internet it is easier than ever to start your own business with very little money and very little risk. In fact, the website you are on is me starting my own online business.
On the flip side, you could work for free. If you work for free then it must be something that you are passionate about or else you wouldn’t be doing it. They call it volunteering and it is a very noble thing to do. Your time is the most valuable thing that you have, and if you are giving it away for free then it must be for a good reason.
Finally, when it comes to the “retire” part of financial independence, what it really means is being free from the rat race. The rat race is a race where if you follow the rules you will never win. Becoming FI requires that you do not follow the rules. The rat race will try to hold onto you as tightly as possible with advertisements and people promising you the world if you buy more of this or one of that. In the end, it is all fruitless. Following the rules of the rat race will keep you racing forever and you will fail to achieve the results you want in life.
2. You can travel long term (and more often)
On a happier note, becoming FI allows you to travel longer and more often if you choose to do so. Traveling to countries where their currencies aren’t as strong as your own means that you have more purchasing power and therefore you can live more luxuriously on the same amount you spend back home. If you were to do this long term then you would actually be engaged in what’s called geographic arbitrage. Geographic arbitrage is simply taking advantage of different prices in various locations. It can be practiced all over the world today.
A benefit of long term travel is a true immersion into a new culture. Typical touristy travel consisting of two weeks or less is simply not enough time to really get the feel of a new place and the people that live there. In fact, it can be exhausting if you are actually moving more than you are experiencing. I could go on forever about how slow travel is better, but another component of it is reduced travel costs.
A plane ticket becomes cheaper the longer you are in one area. If the ticket is $1,000 for one week or $1,500 for one month, which one is cheaper? The one month ticket is cheaper per day spent than the one week ticket. The one week ticket costs ($1,000 / 7 = $142.85) $142.85 per day spent travelling. While the $1,500 ticket costs just ($1,500 / 30 = $50) $50 per day. Nearly one-third of the cost. The same goes for accommodation. Renting something for a few nights is very expensive per night, upgrading to one week is a little bit less per night, one month and your per night goes down dramatically, sign a 6-month lease and your costs are tremendously less. An entire year and you are then paying local prices.
The point is that FI gives you the opportunity to pursue long term travel more often and it costs less to do so than standard vacations. Try getting more than 2 weeks off at a time from a regular job, it’s actually pretty difficult in most circumstances. Not to mention it is demeaning to ask for permission to do so. Financial independence can change your life when it comes to traveling.
3. You have better financial security
Let’s get one thing out of the way: job security is an illusion, it just doesn’t exist. Any job can be taken away at any moment for any reason. Sure, some might be less likely to disappear than others, but no one job is completely safe from going bye-bye. We are often taught that if we have high-level skills then we are irreplaceable but that simply isn’t true. I don’t care how many years you have worked somewhere, how much experience you have. Any business can fail, and businesses can let you go, you can be replaced. Don’t take it personally, do something about it and give yourself the ultimate financial security, give yourself financial independence.
Besides, your assets can provide you with income much easier than you can yourself. The money you invest in assets is like miniature workers. Each one of them is small but a significant stream of future income for you. If you carefully withdrawal 4% or less of your assets per year then you have a very high probability of never running out of income. This is even if you never earned one more cent in your lifetime (which is highly unlikely).
Being financially independent is about as financially secure as you can get. You should be well diversified in your assets and therefore not reliant on just one thing. If you are working a normal job and that work income is your only source of income then that is extremely risky. Having one boss is extremely risky, you can lose it at any time.
4. You can finally spend time with the ones you love
Time is one of the greatest benefits of financial independence. Time is one of those things that we are guaranteed a limited amount of. Things get scary when we realize that we have no idea how much time we really have. Our goal is to gain as much control over our own time as possible. One of the most sought after ways to spend that time is with the people we love.
Our friends, our family, our pets, whoever they may be we just can’t find the time to spend as much time as we want to with them. What is holding us back? Why are we so busy? Jobs. Jobs are the biggest barrier that keeps you from walking your kids to school, picking them up, seeing your parents, walking your dog every day, etc. eliminate the reliance on the job and suddenly we can find the time to do all of those.
Financial independence gives you the opportunity to spend more time with the ones you love. It is often the gift that everyone wants from you, not material possessions. Your time is precious and everyone knows that. That is why spending time with the ones you love is so powerful.
5. You gain the ultimate flexibility
Flexibility is one of those things that will help keep you happy. I’m not talking about flexibility in your body, but you have time to improve that too. I’m talking about flexibility with your time. You can go anywhere at any time. When you are FI you can choose to not “have somewhere to be”. It is because of this flexibility that you can get the best deals on many things in life.
When it comes to travel and vacation you can take part in them at the cheapest times of the year. That means more value for you because of your flexibility. Plane tickets can double in price if you can’t change a departure by just one day. There are several travel dead zones throughout the year that financially independent people can take advantage of with their flexibility.
Beyond vacations, you have the flexibility to live anywhere you want to. You can move freely if you choose to do so until you find that perfect place for you. On a bigger scale with your life’s direction, you can change course as you wish. You are not affixed to any one thing because you have the assets and wealth to make a change without much risk. If you want to keep working and yet change where you work, how you work, or what you work on you can do so when financially independent.
6. You have negotiating power
You can negotiate anything because you have other options. This is especially useful at a job, but negotiation can be useful everywhere. At work, you can use your FI to negotiate better hours, more time off, better pay, or whatever. The point is that you are not completely reliant on your work income and therefore you have more say so. Your ultimate flexibility is what gives you this negotiating power.
With your flexibility, you can negotiate prices on things you buy or things you rent. This is because you don’t have to be in a hurry and you can adapt and accommodate different dates and times and therefore can spend more time looking for the best deals.
7. You now have no excuses to live a healthier life
There are so many ways that we put off living a healthier life. Most of the excuses come from time constraints. We don’t have enough time to go to the gym. We don’t have time to take the stairs to the third floor. We don’t have time to cook healthy meals at home. Gaining control of your time allows you to allocate it more to things that matter. Your health matters.
Right off the bat, you can incorporate more strenuous exercise in your life spending as little as 4-5 hours per week in the gym or something similar. Then you can incorporate light exercise into your daily life by not being in such a hurry all the time. Park farther away from the grocery store, take the stairs, walk the dog, etc. These things take more time but they pay dividends by increasing daily exercise time.
Now you can also cook more food at home and eat out much less. Most of the time when we eat out it is due to convenience and time restraints. Normally you are too tired to cook when you get home and you only have 30 minutes for lunch so you have to grab something pre-made or at a fast food restaurant. No more of that, you can now have the time to be the chef of your own meals. Health insurance be damned, you can live a healthier life thanks to financial independence.
8. You benefit from reduced living expenses
Yes, becoming financially independent is cheaper than working for a living. How is this possible? Well, there are many reasons, but the main one being that regular employment is expensive on its own. Your new found flexibility allows you to purchase things at the most opportune times as opposed to when you find the time. This is big for things like vacations and plane tickets, but can also be useful for smaller things like groceries.
In addition, if you have to commute to your employment then that is a significant cost. The IRS lets you deduct 58 cents per mile for business activity (not regular employment) in 2019 so that is their way of saying on average how much it costs to operate a vehicle. The Bureau of transportation statistics (BTS) puts the average total cost per mile at 59 cents per mile in 2018. So if you drive 30 miles roundtrip for your job then on average it costs you (.59 x 30 = $17.70) $17.70 every day. A 5 day work week is ($17.70 x 5 = $88.50 and finally with a 4 week month that is ($88.50 x 4 = $354) $354. That is a significant cost just to work for a living. Double it if you are a married couple that commutes in separate cars. That’s another expense you can cut if you are financially independent and gainfully unemployed.
Downsizing to just one vehicle from two is easy when you are financially independent as a family. The savings are significant, and doing so is not always possible when both are working a regular commuter job. Plus, now that a job does not tie you down to one location you could move wherever you want, preferably somewhere where the cost of living is less than where you currently are and therefore your cash flow will stretch further than before.
Conclusion
So there you have it, 8 amazing benefits of financial independence. The benefits continue on beyond what I have listed and are in theory unlimited. The biggest and most comprehensive benefit is control over your time. Once you have control over your time, your list of benefits become endless because you can choose to do anything with your new found time.