I’ve been Financially Independent for over 2 years now. I remember my journey from when I graduated college with no money and no job up to the point where I realized I could keep living my life exactly the same without needing to go to work. Upon reflection I see that it was inevitable I would end up here. I didn’t follow any guide. There weren’t any rules I obeyed. Only by being myself I was able to accomplish the most difficult task people have on their quest to Financial Independence: not spend money.
After I had already become Financially Independent, I discovered there were many communities on the internet trying to do the same thing. Mr. Money Mustache is very popular. The Reddit FIRE(Financially Independent Retiring Early) message board is very active. I notice, not surprisingly, the majority of people flocking to these sites like the idea of Financial Independence, but are having trouble making it work in their lives. This makes me wonder if there is a unique personality trait which can pre-determine if someone will be able to retire early.
I suspect delayed gratification is a major component to those who are successful at attaining Financial Independence. The Stanford Marshmallow Experiment was a psychological study in children to determine if they could resist eating a marshmallow for 15 minutes so they could receive a second marshmallow. Only a third could resist eating one marshmallow for the 15 minutes to get the two. To amass enough resources to retire in your 20’s or 30’s would be like the Marshmallow Experiment on an extreme scale.
Imagine if in the experiment that each of those children were able to receive a new marshmallow every 15 additional minutes they waited. They could come in 8 hours every day and wait for their daily 32 marshmallows. After a child amasses 100,000 marshmallows they would have so many they will be set for life and will no longer need the researches to give them any more. This would take about 8 ½ years if a child never eats any of them. In this analogy it’s ridiculous to believe that any of the children would ever accomplish this. Yet this isn’t that much further than what is required for someone to become Financially Independent.
The delayed gratification required for saving a ton of money is both extreme and more ambiguous. Currency only works because it’s a social construct that everyone believes in. Money’s value only comes from what people will let you do with it. The value of money is always changing. You can invest it to potentially make more money; or it could become worthless. In the marshmallow example, children receive a tangible reward. Amassing more money gets you more of the abstract concepts: security and freedom; which both disappear as you lose money. The point I’m trying to make is that we already know delayed gratification doesn’t come easy to people, and delayed gratification with money is even harder because of the nature of how we perceive money.
Fundamentally, I don’t believe everyone is capable of the restraint required to retire early. The baby boomer generation is currently heading into (typical)retirement age in droves. The average boomer has saved only $163,577, with many having saved close to nothing. And this is okay! We should have a safety net in place to protect people who are too old to work and neglected to save any money throughout their lives. Punishing them is harmful to everyone and it wouldn’t have any effect on making people more serious about saving. Difficulty setting money aside for retirement is human nature, and the people like me who naturally have a predisposition for holding onto money are rare outliers. In fact, we all depend on the very people living paycheck to paycheck to keep driving the economy forward with their reckless spending. Their money is creating jobs for more people so more money can be spent! If everyone suddenly started saving money at the same percentage I did, the economy would crash and people would lose the jobs they needed to help them save money in the first place. It would be counterproductive.
If you’re someone interested in becoming Financially Independent but are having a hard time saving the money required for it. Don’t worry about it. It’s just fine if you’re like you and not like me. I’m counting on it.