We are now half a year into the Covid-19 pandemic and I’m aware that many are prioritizing their health and financial wellbeing more than before. We’ve all had to adapt and reevaluate crucial elements such as personal finance over these months. Personally, I’ve recognized that the conventional financial education and guidelines aren’t enough for the current scenario. In my perspective, we all need to focus on having a bigger safety net, reduce material consumption, and cultivate a healthy outlook on financial freedom.
WHY THE FOCUS ON FINANCIAL FREEDOM?
Financial independence has always been a motivating factor in improving my financial situation and freeing myself from debt. However, the dawn of Covid-19 has given me a newfound appreciation for this goal. I’m aware that the FIRE (Financial Independence Retire Early) movement has received criticism in the past, with some arguments being valid.
Nevertheless, the sight of businesses shutting down, unemployment rates escalating, and the growing concern over bill payments among people has solidified my resolve. My aim is now to achieve financial independence – the state where one’s income and assets are enough to support one’s lifestyle without needing to work actively – with renewed vigor.
This is not fueled by fear or a desire to retire early. It’s rooted in appreciating the benefits of financial independence and aligning with my values. Here is how, amid Covid-19, I began to understand the significance of financial freedom.
THE IMPORTANCE OF BREAKING CONSUMERISM HABITS
Societal pressures often drive materialistic values, according to psychologists. This stems from our insecurities and is often compared to keeping up appearances. You may love to splurge on cutting-edge gadgets for your children, dine out daily, or splurge on luxurious items.
However, we’re aware that possessions don’t bring about happiness. Yet, the question is, why do we keep buying? The Covid-19 shutdown led us to realize we could be happy without excessive purchases. Our family spent precious time bonding at home and learning to make do with what we had.
Unchecked consumerism can lead to debt and financial distress, affecting one’s happiness and road to financial independence. If we can maintain contentment, consume less, and grow closer to financial freedom, that’s the route I prefer.
FINANCIAL OPTIONS: A PRECIOUS RESOURCE
When my husband lost his primary job in March, he still retained a part-time pizza delivery job. Analysing our budget and cash flow, we decided to opt him out of a few shifts. This crucial decision was not a stroke of luck.
We had strived to reduce our debt, save, and diversify our income over the years as crucial steps towards financial independence. The ability to choose whether or not to work amid the heights of Covid-19 was not a life-or-death situation for those who were financially independent. That’s the kind of security I want for my family.
Financial independence offers choices. These can make a significant difference during unsure times.
THE IMPORTANCE OF DIVERSIFYING ASSETS
Pursuing financial independence, in my view, doesn’t involve putting all your eggs in one basket. The unpredictability of the future means diversifying assets is vital for surviving economic downturns or significant life changes.
When the stock market plummeted, I sympathized with those heavily-invested in stocks, as well as with real estate investors who could not receive rent from tenants. These instances reinforced the idea to diversify my assets and savings as I pursue financial independence.
BEGINNING THE JOURNEY NOW
The ideal moment to work towards financial independence might have been last year or five years ago, whenever you discovered financial independence. However, the next best time is now. I’ve previously refrained from actively pursuing financial independence, thinking that my income wasn’t sufficient or my self-employed status and fluctuating income were obstacles. However, it’s important to give it a shot and uncover your potential.
A well-defined plan and perseverance can take one far. I urge everyone to try tools like Fidelity’s FIREStarter calculator as a stepping stone on this journey, envision the exciting prospects ahead, and take action to realize your financial independence dream.
