I’ve recently been enjoying The One Thing, a very thoughtful time and goal management book by Gary Keller and Jay Papasan. While I came away from the book with several very good ideas for time and goal management, there was one quote on page 142 that just stood out to me like a beacon of light:
“[F]inancially wealthy people are those who have enough money coming in without having to work to finance their purpose in life. Now, please realize that this definition presents a challenge to anyone who accepts it. To be financially wealthy you must have a purpose for your life. In other words, without purpose, you’ll never know when you have enough money, and you can never be financially wealthy.”
Let’s break this down into parts.
First of all, the authors hit the nail on the head with the first sentence, defining “financially wealthy people” as being those whose expenses are covered by income from their investments or from their previous efforts so that they no longer have to work for money. I call that state “financial independence,” meaning you’re simply no longer dependent on work to make ends meet in your life and can instead direct your energy elsewhere. It’s my long term goal at the moment, one where I’m far from the beginning but also far from the desired destination.
What’s interesting, though, is that the authors assign a purpose to financial independence. In other words, a significant part of their idea of financial independence is that you have some kind of purpose in your life that’s able to be financed by your investments and careful planning. That purpose inherently defines exactly how much money you need. Without that purpose, you can never have enough money.
I’m heading for this nebulous goal of “financial independence,” but how will I really know when I get there? I need some sort of purpose so that I know how much money I will need in order to be financially independent and live out that purpose.
This idea was one of those “close the book and think for a while” moments. I actually sat the book down, put on my coat, and went for a walk around the neighborhood when I first read those sentences.
Here’s the reality: Sarah and I have worked our tails off up to this point in our lives and right now, we could both retire extremely early if we were willing to live on a very tiny income, smaller than either one of us feels comfortable with. We’ve sat down together and done some modeling and realized that with our current financial state, we actually wouldn’t lose our house and we would be able to feed everyone if we both lost our jobs at the same time.
However, there are a lot of things we wouldn’t be able to do. We wouldn’t be able to travel much at all. We’d go down to one vehicle and would have to be very careful with how we used it. We’d have to make a lot of things ourselves, meaning a healthy portion of our time. As a result, we’re not retiring early any time soon unless it’s forced on us.
The interesting part, though, is that even those realizations point to a bit of a purpose when we’re financially independent. Clearly, some degree of travel is part of our purpose in retirement, which means that it requires a certain level of investment. I would very much like to spend at least a week at every national park in the national park system and walk the Appalachian Trail while I’m still young and healthy enough to pull it off.
That’s not going to fill all of my time, though. The truth is that I am wired for creative endeavors. I like making things. I like writing essays and books. I love writing and compiling computer code. I like building stuff. I also like learning new things and incorporating what I’m learning into the stuff that I build.
I also enjoy helping people. I’ve done a lot of different kinds of volunteer work over the years. I also write for The Simple Dollar, whose core mission from the day I started it was to offer as much insight into financial decisions as I could muster from an ordinary person with nothing to sell who wasn’t a part of the financial industry.
That’s who I am. That’s the core of what’s meaningful for me. I like learning and thinking and creating and helping people. When I am doing those things, I feel the most complete. That’s my purpose.
Thus, when I reach financial independence, I want to be able to support a life where I can learn and think and create and help people. I intend to take some classes at the local university and slowly progress through a different degree program for my own enrichment. I have ideas for several books I want to write. I want at least two or three hours a day for reading and I’ll probably take a daily hike, too. I will probably take a leadership role in a local charity that would eat up 10 to 20 hours a week at least. Aside from that, I want a life that’s largely like the one I have now, except with perhaps a little more domestic travel.
That is the life that I want in retirement. It sounds incredibly fulfilling to me. It fulfills what I think is my purpose in life – to create things and to help people. It also doesn’t rely greatly on the actions of others.
The question then becomes centered around cost and, honestly, that adds up to roughly what we’re spending now. Our children will move out, which will lower our costs, and we’ll travel a bit more, which will bring them back up. I work from home so my professional expenses are already pretty low – no commute, no wardrobe – so nothing like that will vanish when I retire early.
Thinking about financial independence through the lens of purpose really helps me to understand that goal and what it’s really all about. It isn’t about dollars and cents in an account; it’s about building a purposeful life that really has meaning for me. The dollars and cents are just a tool and the amount we need to save is just a target number, nothing more. The thing that matters is the purpose, because without that purpose, the goal of financial independence becomes very vague, very fast.
Another valuable part of this type of thinking is that it often really informs how you spend your spare time right now. The list of things that I want to do – to learn and to think and to create and to help people – are things that I fill my professional life and my leisure time with right now as much as possible. I engage in hobbies that make me think and learn, such as playing strategic games and reading, and my other hobbies blatantly recharge my creative juices, like hiking does. My work is about thinking and creating and helping people. I spend a surprising amount of time volunteering to help people in other ways.
It turns out that my life is pretty fulfilling right now. Financial independence merely serves to add to that fulfillment by eliminating the profit and income motives from everything that I do, rather than just from some of the things that I do, and also eliminates some of the time constraints. It lets me do those things more and gives me more windows of opportunity to get lost in the flow of the moment, because I’m convinced that flow is the truest source of happiness in life.
So, turn this whole thing around on you. Let’s assume that somehow, right now, you had enough money in the bank to simply fulfill whatever purpose you have in life. What would you do? How would you fill your days with something that brings deep and lasting meaning to yourself?
It’s not an easy thing, of course. It will take time and you’ll find that over time your idea of “purpose” will shift around a little bit as you gain life experience and knowledge.
However, when you put a purpose in place and give yourself a real, tangible goal that just rings true for you, you’ll not only find a ton of motivation to work toward financial independence, you’ll also find things to fill your spare time with and perhaps even find some smart career choices along the way.
What is enough? Enough means simply having adequate financial resources to do whatever it is that you’re drawn to do in life without interference. It’s a wonderful, powerful personal finance goal.