2819: Retirement and Financial Independence Equals Apples and Oranges by Helene Massicotte on Money Freedom

[00:00:00] This is Optimal Finance Daily. Retirement and Financial Independence Equals Apples and Oranges by Helene Massicotte of Free2Pursue.com. Welcome to another Sunday edition of Optimal Finance Daily. I'm your host and personal finance enthusiast, Diana Merriam. For now, let's get right to it and start optimizing your life.

[00:00:25] Retirement and Financial Independence Equals Apples and Oranges by Helene Massicotte of Free2Pursue.com. Most of the rhetoric we hear about saving money these days is the same old stuff. Yes, saving is important, but the messaging is all wrong. Here's what we hear most of the time.

[00:00:46] Save for a rainy day, save for retirement, save for your family's future. What I don't hear as often is, save to increase your options, save for peace of mind, save to reclaim your right to think, save for how it makes you feel today. It's a fundamentally

[00:01:03] different type of thinking, and it's what differentiates those who seek financial independence from those who merely seek to retire. Traditional Retirement Thinking Traditional retirement thinking tries to get you to think about retirement, which is often

[00:01:18] decades away. It's just too far out to be meaningful. We're to save so that our future selves have enough to live on to meet their needs, but we can't even relate to this person.

[00:01:29] We don't want to relate to this person yet. Combine that with the belief that our wages will always go up and it's why many of us wake up in our 50s and start scrambling to save enough.

[00:01:40] Traditional retirement thinking also makes us think of saving money as the denial of pleasure through budgeting. Budgeting tells us that we need to put money aside for emergency savings, retirement, and for larger purchases. That's all fine and good, but the message that budgeting

[00:01:55] sends us is that once that money's allocated, we're entitled to spend the balance, whether it makes sense to or not. That's the wrong mindset, and it tends to lead people to think about the minimum they need to save to get by. It makes saving feel like a punishment.

[00:02:12] Finally, Traditional Retirement Thinking makes saving a duty as opposed to a worthwhile activity, telling us that we need to save to ensure we survive a disaster or that we need to save so

[00:02:22] our family will be okay if we croak doesn't feel good. If anything, it makes us not want to save, because maybe it'll mean that nothing bad can happen to us and that we'll live forever.

[00:02:32] This whole approach is based on fear, and I think that's what makes people not want to save. Here are the messages this provides. You're going to grow old, you're going to die,

[00:02:43] bad stuff is going to happen to you, and you need to think about it every time you consider your budget and savings rate. Yuck. That's why there's so much talk about automating retirement savings. It makes it hurt less. Who wants to do something that hurts?

[00:02:58] Financial Independence Thinking. Unlike traditional thinking, financial independence thinking gets your savings behavior working for you in the present, because it's not about retirement. It makes you consider yourself as a free agent,

[00:03:12] able to change course in your life when you want to. You save because you like the possibilities the money offers you now. You save because you like being able to follow your moral compass

[00:03:23] and only work in settings and for people that make you feel good about yourself and what you're doing. You save because you like not having to worry about debt, bills, the next paycheck, etc., because you know how much mental energy that can sap from your body.

[00:03:38] You save because it gives you a chance to listen to what it is that you want, not what others want from you. The latter being the unfortunate default. You save because it makes you more effective at what you choose to do with your time because

[00:03:51] you can focus on the activity itself, not the potential externalities associated with it. You save because it reduces the feeling of needing to compare yourself to others. Who has their net worth stamped on their foreheads anyway?

[00:04:04] You also save because it just freaking feels great. That's a completely different way of framing the activity we call saving. Savings turns from an obligation to a rewarding activity, and because we focus on what we're gaining as opposed to losing, it's self-reinforcing.

[00:04:22] A saving mindset keeps our lifestyle in check by getting us to ask ourselves whether spending the money will really make us better off. It makes us value our time and money much more than

[00:04:33] the traditional alternative. It makes saving a joy, not a punishment, and the more joy we feel, the more likely we are to save. In fact, with this mindset, savings rates often increase, not decrease as our savings balances increases. How cool is that? You just listened to the post

[00:04:54] titled Retirement and Financial Independence Equals Apples and Oranges by Alain Massacot of freetoperusew.com, and I'll be right back with my commentary. I liked how this article reframed saving as something boring and daunting to something

[00:05:10] a little bit more exciting. It became easier for me to save when I stopped thinking about it as something I should do or have to do to something that I get to do. I recognize that many people

[00:05:22] struggle to save, and I'm extremely fortunate to be in the position where I can, so I don't want to waste this opportunity. Money is a really powerful resource for creating options and

[00:05:33] creating the habit of saving and investing has made me feel like my life is full of possibility. There have been times in my life where I had very specific reasons to save. So for example,

[00:05:45] when I saved to take a two-month sabbatical to walk the Camino, which is a 500-mile trek across Spain. But I don't think you always need a specific reason to save. I've been motivated simply by the idea of having money available for things that I can't foresee right now.

[00:06:01] One thing I often tell myself is that I can't anticipate today the opportunities that will present themselves tomorrow, but I can be prepared to jump on those opportunities if I've got some money on hand. It's true that we need to save for a rainy day, but preparing for

[00:06:17] the emergencies life may throw at you is using fear as a motivational tool. This can taint your financial goals with an air of negativity and make it harder to stick with your goals over time.

[00:06:28] Recognizing that life throws you opportunities just as much as it throws obstacles your way can create a much more positive mindset around saving and a positive abundant mindset around money will make your habits more sustainable and enjoyable. And that's another weekend edition of

[00:06:46] Optimal Finance Daily in the books. Thanks so much for your support and for listening every day of course. Have a great rest of your weekend if you're listening in real time, and I'll be back tomorrow where your optimal life awaits.