Do you need as much as you think to be financially independent?

Or another question I pose to myself this morning as I sit here with my coffee: If I had to live on what I have accumulated now, could I do so with some semblance of quality of life?

If you’re new to saving (or investing), then this may feel like a ludicrous question. But say with some intense saving for the next 5-10 years (depending on age), and assuming you don’t have a massive mortgage, is it too much of a leap to think that this could apply to you too?

While in ‘normal’ day-to-day worklife and all the spending that might go on to offset the (normalised) humdrum and stresses, you may base your yearly figure needed in retirement pretty much on that life minus the commute, the weekly new work shirt (what?!), the overpriced latte/lunch/after-work drinks to decompress next door to work etc.

It would also seem completely logical to think you now have all this time on your hands, you’ll clearly need to spend some money – maybe having overpriced lattes while sat in a café updating your blog / writing that book / thinking of new sources of passive income or meeting with friends for drinks after-their-work?! And you may fancy doing some expensive stuff that you put off like forever, like travelling or getting whatever vehicle you’ve always dreamed of.

But perhaps you don’t need all that, just bits of it? Perhaps you just think you do, because you cannot think outside of the prism of the current rat-race routine you are immersed in?

A post-FI perspective

I read David Cox’s post this morning over at I retired Young in which he emphasises the small things making a difference in his post-FI life that’s going swimmingly well. Sure, there’s no shortage of pricey big-ticket items for him (and his FI number seems mindbogglingly high!), but FI is a vehicle that has helped him become a relaxed person, a skier, no longer accepting ‘normal’ is enough, vegetarian etc. The key message from someone on ‘the other side’ of the journey is: contentment doesn’t really have a price, and to make the actual decision to retire takes a leap of faith.

Obviously, what floats your boat differs from person to person, and some people who find themselves financially independent would no doubt fritter the time away. One-off costs can be factored in, so I’m thinking of overall baseline costs. In Don Ezra’s exploration of Life Two (which gave my blog its name), he sets out George Kinder’s (Seven Stages of Money Maturity) 3 questions*, and here are my oldish notes in response to the first question:

So, no big ticket items. Well, I’ve always been interested in personal development and creative pursuits, and these things CAN cost very little. Time and effort are the costs here, not money.

But the new realisation is: Perhaps I won’t need the expensive latte or lunch out very often when I’m writing my book/article… While I love working in cafes, perhaps this would be an occasional treat. Maybe I don’t need the expensive weekend days out in the mall/playcentre/wherever that we normally (pre-lockdown) have, because not being drained of energy by the weekend and actually having the chance to get fitter means I enjoy exploring the myriad parks in walkable distance more. The park isn’t just one ‘thing’, but I can play football with Junior, or tennis, or cycle or whatever!

Because the main thing isn’t spending or not spending (as we get so zoned into this through the prism of seeking FI, which I obviously am totally guilty of myself!), but the time to write, space to think and reflect, the mental energy to be more adventurous and consider activities outside of your usual realm of thinking, to become a RELAXED person. In other words, maybe the focus will totally shift once away from work-standby mode to work-off mode!

Likening lockdown to FI life?

A big contributor to this line of thinking, as you may have guessed, is the current situation that we have quickly come to know as lockdown. Now for my personal situation, lockdown is the opposite of being time rich, haha! For instance, yesterday I woke up and started with looking after my preschooler which if you don’t have kids, means a series/deluge of tasks with the responsibility/guilt of having someone almost totally dependent on you. Then I worked from 1-9pm. That’s my usual Friday in lockdown (and everyday is similar).

Yet, my spending has gone right down. Last month I reported a near 80% savings rate and unless a sudden large cost comes my way (which I don’t exclude), it looks set to be similar for May.

So, what’s changed? It’s interesting. I certainly don’t have more time. My time’s more squeezed than ever. Less work stress? Um, no. Stress also is possibly higher than usual. Trying to work in this new way certainly adds to the load. Also, the obvious: saving on the commute and work lunches, but that doesn’t explain all or most of the high SR.

If I was to guess, I’d seriously have thought that any savings to be had in lockdown would be negated by an exponential rise in Amazon purchases and take-aways to ease the challenges of lockdown confinement!

For me, the key change for lockdown is context! That is, the usual contexts I find myself in.

I have surprised myself, although admittedly these are unusual times. Two of my personal spends on the average week was coffee from/sat in a café at work or while working away from the office (my way of achieving temporary freedom!) and eating out (including take away) on average 2, occasionally 3, times a week (a treat of convenience/days out).

Now, I haven’t had a proper coffee for about 8 weeks! And while I miss it a bit, I don’t actually miss it all that much. I used to have a real coffee at least a few times a week and when we were first in lockdown, I even briefly toyed with the idea of buying a coffee machine. My only aversion really was ongoing cost, lol! But I’m so glad I didn’t, as I simply don’t feel like I want one now. It was more linked to where I was.

Take-out has reduced to once a week. Always midweek. This one has boggled me somewhat. Obviously, the value of sitting in a different context has gone (for now). But if I look at the contexts in which we ate out, they were mostly ‘while out already’ or in the weekend as a place to go to (for the walk/to get out). Now, we are more oriented to the home.

I’ve learned to appreciate our home more, I think, and become more centred on our home space. It’s not like we keep on top of the housework (haha) or that I’ve become a lockdown chef, but I know what’s in the fridge and feeding our family healthy meals has become more important than ever. Crucially, eating out was a ‘treat’ to avoid the things needing doing at home as the added mental burden felt too much sometimes. Lockdown means I’ve not been able to escape that and since I’ve been forced to incorporate home in normal life right now, it’s no longer an additional mental burden.

So, how does this apply to post-FI life?

By having more TIME, combined with change in the physical CONTEXTS we spend time in and reprioritising FOCUS and values in a way that’s easier post-FI (and currently hard to even know when not yet in FI life), your FI number could be much smaller. Just some food for thought.

The amount I had thought through this journey that I need to live on is £17-18k a year. But now in lockdown, I could live on £600 a month (£300 to the joint account, and some to childcare) and most precisely: I’d be absolutely fine! That’s under half what I thought I’d NEED.

While there’s always going to be some big purchases on the cards in future, this is empowering to know. It gives options – if I want to leave work soon…or get made redundant. I know I’d be pretty much okay and would gain so much in exchange for loss of loss of income. If I lived on £10k a year, my current savings would see me through 10 years until I had to plug the gap before ‘conventional’ early retirement.

While the option was always there for incredibly lean FIRE, what has changed is it’s no longer too much of a compromise. Assuming me and my family have health, I will be happy and able to pursue mental freedom.

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*I never got around to the other 2 questions (they are pretty tough!), but if you like a challenge, they are:

SECOND QUESTION You’ve just found out you have five to 10 years to live. How will you change your life? 

THIRD QUESTION You’ve just found out you have 24 hours to live. What are your regrets?

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Thank you for reading. Feel free to comment and share your experiences or thoughts!