How to go from financially self-sufficient to financially independent

How to go from financially self-sufficient to financially independent

November 26, 2019

Photo by Andrian Valeanu on Unsplash

I believe that it is important to use your creativity every day. Living wholeheartedly is a practice I support and try to follow myself. I want to help you live your version of your creative life while taking care of yourself financially along the way. Financial independence is accessible. You can make work optional. Before you can be financially independent, you need to be self-sufficient.

Financially Self-Sufficient is the start

Self-sufficient means you’re earning money, and you’re paying the bills to make ends meet. This is where most of us start and too many people stop. 55% of people have nothing but social security at the age of 65. We need to change that. While there is nothing wrong with working your whole life, my crusade is to help people make work optional.

“None of us started out as landed gentry.” ~Elizabeth Gilbert

There is no entitlement for financial independence. Pensions are almost gone. You have to take care of yourself and go beyond living paycheck-to-paycheck. But it’s not a Eureka moment where you learn, “This is how you do it!”

How to move beyond self-sufficiency

  1. Take note of where you are. Most people realize, “If I don’t do more than what I am doing, I will not be able to achieve financial independence.”
  2. Define what your goals are. If you don’t define what you want, you won’t know what you need to get there. You won’t be able to move beyond self-sufficiency.
  3. Put your plan in place. You have to build the right “planter boxes” over time to create a sustainable harvest for life.

Box 1: cash reserve - Your cash reserve is a savings account that will ebb and flow in cash value over your lifetime. Initial goal is three months of expenses.

Box 2: retirement account - The ideal is saving 15% of gross income over 30 years; your whole career while you’re earning.

Box 3: investment accounts: Save 10-20% of income for other goals

Of your income that remains, you spend for housing (30% of overall income) and day-to-day living and enjoyment (40%). Balance current living expenses with your quality of life choices (travel, nicer things, experiences, art, etc.).

You may be doing work you don’t want to do for a living. How can you find fulfillment when you need to fill your planter boxes? To live wholeheartedly you also need to exercise the creative side of your life. If you’re not using your creative energy, you’re likely using some form of numbing. When you add creativity in your life - even for 15 minutes a day - you are working on the practice of living wholeheartedly (link to Brene Brown’s list of 10 things).

Examples of adding creativity to your life:

  1. Paint your bike
  2. Read 2 books a month
  3. Play an instrument
  4. Write a blog

Do your art for art’s sake. Don’t give up your day job, yet.

I have worked for some unhappy physicians who would rather be a singer or musician. Many doctors come out of medical school with $200K in student loans. Maybe they would have been better off to follow their curiosity, to follow that which gives their soul wonder or delight, but they’ve chosen the medical field.

They may dream of being a full-time musician; however, their reality is that they need to earn income doing a “day job.” You, too, may be working as a professional in a career, or a combination of multiple jobs --- as a server, a bartender and driving for Lyft. Weave in how to do your art while you’re working for pay and benefits.

If you’re living a creative life like I choose to do, the path is not necessarily clear.

How do you know when you are financially independent?

Financial Independence comes once you build your garden of investments. For every million you grow, with competent management of the money you have, you should be able to plan for 4% or $40,000 of income for life. Is that amount combined with social security enough for you? If not, you need to save more. If it is, you have achieved financial independence.

What if I can’t save more money from my job?

You may have to do more. You may need to do your job and something else. That may mean going back to school, or getting a second job. There are thousands of ways to make a decent living. It is taxing and may not be fun, but it may be what you have to do to become financially independent.

The good news is that when keep your eye on your creative pursuits along the way you can use your creativity to find opportunities. Maybe when you travel, you find a way to make money along the way. If you are interested in art, you could work at a gallery.

The journey from self-sufficiency to financial independence is much more enjoyable when you practice living wholeheartedly along the way.