Anyone heard of F.I.R.E, put your hands up!
So I’m a little older (ok - a lot older) than many of you here. And whilst I understand that retirement is far from the top of a student’s list, I feel that it should be something that is, because of the magic of compound interest, and the great financial discipline that it will teach you over the next important years of your life. I wish I had this advice when I was your age.
It’s NOT socking away money into your pension and waiting it out until you’re 68 (though you should do this)
In a nutshell, with smart investments in relatively long term low-risk investment vehicles (e.g. index funds wrapped in a stocks and shares isa - not as scary as it sounds), and if you can consistently save and invest a good chunk of your income over the course of a short period of your life (say 10 years as a rule of thumb) , you could be in a position to be financially free, or darn close to it. The idea being that you’ve invested Enough, and compound interest has had enough of a snowball effect to get your investment to critical mass where you can comfortably take out a % as income without harming your main investments.
What is financial freedom? It’s the freedom to be more daring in the route you want to take in life, without worrying about consequences or the stress of food on the table or bills to pay.
It’s could be the decision to take a few years off to travel, or retrain to do something you’re passionate about, without the need to factor in the salary.
It’s the option to buy back your freedom and the option to quit the rat race (unless you’re amazingly doing a job that you absolutely love and wouldn’t consider changing)
Financial independence is for all,not just the people on 6 figure salaries. It’s the discipline to say that you choose future freedom, over unecesary material purchases now.
It’s not about scrimping and saving and being a miserable miser, rather it’s a conscious decision of where you place your hard earned cash - and prioritising it whilst still budgeting for the fun stuff.