The Financial Model I’m Working Toward that isn’t FIRE or Traditional Retirement
I read a lot of finance books and blogs in my free time. For a while, I was captivated by the FIRE movement and studied it closely. As I became an entrepreneur this year, I’ve been thinking about my own financial model and how I haven’t seen/heard many people talk about what I’m trying to do.
I don’t think it’s groundbreaking; it’s just not talked about often.
The two financial models I hear about most often
We’re raised with one primary financial model: work a traditional job until you’re roughly 60 or 65, then retire. We’re told to seek stability in traditional ways. Employment gives you great benefits and a steady income. With that stability, you can build a budget that sets you up for ample savings and eventual retirement. Makes sense.
Then, many people in our generation were disillusioned with their careers and wanted out. That’s how the FIRE movement began, which stands for Financially Independent, Retire early. In that financial model, you:
Radically reduce your spending so you can save a ton of money every year
Build your net worth and investments up to a certain calculated number called your “FIRE number”
Retire and live off of the income from your investments so your net worth never goes down (but also never goes up unless assets appreciate significantly)
The problem with these models
In both of these models, you’re required to work a job just for the money and wait to retire. Just in one model, you’re retiring a lot sooner.
They’re both very corporate.
They both minimize the workers’ agency in building their own wealth outside of working a job they dislike for the steady paycheck and benefits.
They also hold “retirement” in very high esteem.
What is retirement and why is that the goal?
“Retirement refers to the time of life when one chooses to permanently leave the workforce behind.” -Investopedia
But can’t you leave the traditional workforce (perhaps as an entrepreneur) and not be retired?
If you quit your job to write a book, are you retired? On a sabbatical? Working?
I recently read Psychology of Money by Morgan Housel (the best finance book I’ve ever read). In the book, he explains that we tend to believe having more money will make us happier, but that’s not true. What actually makes us happier is control over our time.
Oftentimes, when people successfully achieve FIRE, they quit their jobs, but they don’t quit working. They finally use their time to build what they want to build. FIRE isn’t about a bunch of 40-year-olds sitting on a beach being lazy. They leave their jobs to do more meaningful things with their time. I once read a blog that asked the question: can you imagine the world if more people could financially afford to do what they actually want to do? We’d have more art, more innovations, and more small businesses. We’d have more parents who can afford to spend meaningful time with their children, and so on.
Creating my own financial model
Leave the traditional workforce
Learn the skillset of creating a steady income as a business owner / entrepreneur
Live below means
Create a sustainable schedule with lots of flexibility and free time
Build wealth within the business, savings, and investments
Build wealth via larger “sales” i.e. selling a book to a publishing house and/or selling a business itself (you can do this again and again)
I suppose you could call my financial model “entrepreneurship” but I think it’s a few shades deeper than that: not raising capital, being a lifestyle business owner, creating a sustainable schedule with free time (it’s not profit over everything).
The beauty of building a business is the ability to step away from it over time. You can delegate. You’re also building an asset you can sell. We were raised to think that only big businesses sell to other big businesses, but that’s not the case anymore. I love reading the reports at They Got Acquired where they write about mostly bootstrapped companies that sell for anywhere from $100k to $50M—life-changing deals for the founders.
I don’t think my model is for everyone, but I enjoy discussing possibilities. We’re taught to be terrified of not having a steady income, terrified of not having benefits. There are other models. I’m glad FIRE started the conversation about leaving the status quo behind, but I think we can take it a step further. We don’t have to do unfulfilling work, radically limit our spending, and wait to “retire.” There are other paths forward where we get to own our time starting now.
My guiding light
There is no one wealthier than the person who chooses how to spend their time.
Isn’t that retirement, after all?
