For a lot of people, money equals stress and fear. It is a constant source of worry that sits heavy in the back of the mind. It’s big enough to cause serious distress, but vague enough to be regularly pushed aside.
Why is money so complicated? It feels like it should be easy. You work, you get paid, and you buy what you need to live. But somewhere in there, things can go very, very wrong.
There’s quite a few reasons as to why average people earning decent wages end up having to work until they die.
1. Spending gives them a rush
2. They want to live in the moment
3. They worry about their image
4. Head in the sand
Of course, horrible and disruptive events crop up in life. You might lose your job. You may get sick and be unable to work. You could have had a background that taught you terrible habits. You might simply be miserable and perpetually dissatisfied – which is hardly conducive to confident and steady money management.
Great things can throw you off track too. For example, a pregnancy, or new love. The average Joe doesn’t want to penny pinch on the first date.
All of these reasons for having an out of control financial situation are valid and understandable, but they are not insurmountable and shouldn’t be used to put off dealing with debt, and creating wealth.
I used to feel like there was no point in managing my money well, as I was pretty sure I’d never make more than an average middle-class wage. My end game changed dramatically when I discovered that there are large groups of people around the world who are pursuing FIRE, or Financial Independence, Retire Early. Financial Independence means that you have sources of passive income – your assets provide you with enough money to live off. Retire Early is about as self-explanatory as it gets.
Retirement age in Australia is usually between 60 and 65. It’s slowly creeping up to 70. If I retire at 65, my partner will be 76. We will have worked our whole lives, only to have precious little time to enjoy a relaxed life together.
I’m fortunate, in that I’m relatively young and have time to steer my family onto a good path. We are financially compatible in an awkward but workable way. I manage the money, and my partner would prefer not to have to think about it.
The hurdles to FIRE are our age (mid 30s and mid 40s), our average incomes, our baby girl, and our spending habits.
The four problems I listed have all been applicable to me at some stage. I’m hoping that by teasing them out and understanding them better, I can improve my self control and stop sabotaging our bottom line.