As you’re reading this, I imagine you’re pondering the the incredible sense of control which financial freedom will grant you (or perhaps already has). But how the blazes do you get there before your pension kicks in? Well, in our own long, dragon-battling quest to discover the same thing, we’ve un-earthed a simple secret to how it is done, and here we will share that secret with you, free of charge:
Change who you think you are.
This single statement underpins how normal people (as opposed to entrepreneurs, which most of us aren’t) go from being perpetually in need of the next monthly salary payment, to never having the need to work again. It appears time and again as I think about our own path to freedom, and as I study how others have done it. It explains some of the mysteries around why others, those with apparent means to get the job done, don’t get the job done. But OK, I admit it’s an opaque little statement on its own, so here’s what I’m really talking about:
People who are financially free have usually broken the link between how people expect them to behave with money, and how they actually behave.
Let’s take a couple of engineers as an example. These two ladies are identical in terms of their skills, salary, and the fact they have no kids:
- Engineer #1 hasn’t broken the link. She lives in a 4 bed detached house with her husband. She works hard and plays hard. She and her husband buy new cars every two years, have gym membership, they use a cleaner and pay for someone to come and redecorate the house every few years. Engineer #1 looks, to the outside world, like she is a very successful person, which she enjoys (and why shouldn’t she?). She is also perpetually skint.
- Engineer #2 has broken the link, she has changed who she thinks she is. Engineer #2 lives in a single bedroom apartment with her husband (which they feel is easily big enough), and has sold most of her unused possessions to do so. The apartment is on a bus route, so the couple only have one car, which is second hand and replaced once every ten years. The apartment being small means that Engineer #2 can quickly clean or redecorate the place with her husband. Engineer #2 looks, from the outside world, much less successful than Engineer #1. And her income is spiralling upwards.
And yet (assuming she invests correctly) Engineer #2 will achieve financial freedom decades quicker than Engineer #1. She’s stopped thinking “I am a successful engineer and I can reward myself by buying this stuff” and started thinking “I am a successful engineer and I can get financially free all the quicker because of it, stuff what the world thinks”.
This also has the HUGE benefit, by the way, of making ‘retirement’ feel luxurious, rather than a lifestyle dead-end.
In my last job I drove to the big corporate office in a ten year old Smart Car, which attracted a fair few jokes. I drank the freebie coffee from the vending machines rather than £1-a-go coffee from the canteen. This also attracted a few jokes. I took my own breakfast and lunch. More jokes. I wore old shirts and trousers. No-one joked about this, but this was in IT and I don’t think anyone noticed. While a colleague of mine showed off a 5 bed detached house he was about to buy, Ju and I were living in a 2 bed rented semi (which felt huge to us).
I’d altered the way I thought, and with it, the want went, and the freedom landed, with a resounding BOOM.
I no longer saw myself as an ‘IT Project Manager’ but as someone chasing down a goal to be financially-free. I ignored the jibes and focused on the prize of freedom. It wasn’t as hard as you might imagine. As soon as I’d shifted my mindset (Ju did this way before me, by the way) it became all-but-inevitable that we’d be ‘retiring’ early. I simply no longer wanted the stuff. I saw a gleaming motorbike and my thought process went something like this:
- Bloody hell, that’s a beautiful bike.
- But if getting and keeping it means I lose my freedom, then I might want it, but not that much.
And that went for pretty much everything, which drove more and more money into our Spiralling Wealth Machines, and inevitably, eventually, set us free. And the weirdest thing of all: we now have enough cash knocking about to buy and run that shiny bike, but nah, I’m still not fussed.
If you’re after more real-world (albeit from the USA) examples of how this works, I can highly recommend The Millionaire Next Door – a study of how Americans got rich by thinking differently to their neighbours. Or if you don’t want to shell out a tenner for the book, just read the Wikipedia summary here.