Here’s the problem: people think money is all about numbers, spreadsheets and bank account balances. To use an old cliche, “Personal finance is personal”. This statement is true, but it does not go far enough in my humble opinion. It really doesn’t address the deeper issues we face, and that we are flawed human beings. We are all messed up in our own special way, especially yours truly.
The principles behind financial independence are relatively simple and easy to understand. It’s simplicity makes it possible for everyone to get started on their path to reach financial independence.
The reality is that we are all running two types of business when it comes to personal finance: (1) An Active Labour Business; (2) A Passive Investment Business.
In my wild and crazy journey in discovering the FIRE movement, I was inspired to create and stick to a budget, and I began tracking my net worth over time. By doing this over a year, I discovered something that was so obvious that I think many bloggers and personal finance gurus take for granted.
I call it the “Missing Link.” What I finally discovered was that your net worth is totally savings dependent. The fastest way to FI is to manage your budget well and use your savings to either purchase assets or pay down debt (preferably both).
It is important to understand that FI is not about retirement, though it can be. FI is reaching a point where you do not necessarily have to work to earn income to live. It is a form of freedom. But a freedom from what? What good is freedom without a reason for living? We all need a WHY to guide us on our journey.