Today is the first full day of the Financial Blogger Conference, an annual gathering of bloggers who write about personal finance, investing, and other related topics. This is the second year of the conference’s existence, and hundreds of bloggers, writers, and representative from financial service companies are here at the hotel in Denver. The conference provides an opportunity for a community that relies mostly on online communication to meet face-to-face, to discuss ways to seek improvement of their websites, and for some, their businesses.
This morning, I will be moderating a panel about financial independence. The panelists are Mike Piper from Oblivious Investor, Rob Bennett from Passion Saving, and Todd Tresidder from Financial Mentor. The panel aims to explore how the concept of financial independence and retirement has changed, how those in the audience can adjust their plans to achieve financial independence earlier, and how bloggers and writers can address these topics in a way that is relevant to their readers.
This is a big topic. Financial independence is the Holy Grail of personal finance. It is the difference between working because you need money to pay for your basic necessities and being able to choose to work, how, when, and where you want — if you want. Financial independence is the idea that the money you earn by trading your time and effort does not need to be transferred to someone else: bill collectors, banks and lenders, or anyone else other than the government for tax purposes. When 90 percent of your income every month is dedicated to paying bills, you are not financial independent; you don’t have the ability to stop working when you need to.
Many people in the United States are living paycheck-to-paycheck. They’re unable to amass significant savings, and investing for the long-term is out of reach. That’s the first hurdle on the way to financial independence. It’s not really much different from indentured servitude, or to take a crasser comparison that I don’t particularly like, slavery. To be fair, living paycheck-to-paycheck in the United States isn’t exactly the worst financial situation one can be in. It might stifle personal economic growth, but it’s not poverty. It’s not destitution. Earning just enough to pay your monthly bills, or even going slightly further into debt each month, is a vast improvement over living conditions in much of the world.
We’re not in much of the world, however; we’re in the United States, and we’re living in a place in time where individuals can build financial success and achieve independence from those who have financial power over us. I just need to check my social networking feeds every day to see people complaining about their middle-income, corporate jobs, where they receive little respect, no advancement opportunities, and deal with middle-management bosses who take out their own job-related frustrations on those subordinate to them.
(Of course, many of these people would be in a better financial situation if they spent less money and spent more time focusing on their work than playing games on Facebook, but I digress. Everyone deserves a choice to determine how to spend their own time.)
Financial independence is what allows any person to design his or her own life without needing to answer to a boss. Everyone who has a business has a boss. Even business owners have to answer to clients, if not shareholders or a board of directors. In life, one may have a family to answer to, as well. Financial independence is having the flexibility to make decisions — important life decisions or small choices everyone faces every day — without needing to worry about the financial consequences.
Different families can have different requirements for financial independence; a family with two children may not consider themselves financially independent until both children do not need to be concerned about being able to pay for their college education years in the future. One family might be happy reducing living expenses to such a point that a relatively small amount of savings would enable them to live the way they want without concern over their next paycheck. Another might have a target of having $5 million safely invested such that they can live off dividends and interest without needing to touch the principal of the investment. To some, financial independence means simply being able to retire early and not need to work for a boss again.
The panel discussion at the conference today is going to focus on what someone at any age can do right now to achieve financial independence. The audience is mostly bloggers, many of whom operate websites in their free time while working for another job. Some write for a website that helps their own business grow, and others have made or would like to make their blog their primary business, as I had done with shizennougyou. The mix of financial situations in the audience will make for a lively discussion.
In addition to today’s panel, I’ll be a panelist tomorrow in a session about building “million-dollar blogs” with Jim from Bargaineering and Will from Wise Bread, and yesterday I organized the Plutus Awards ceremony. There are many other sessions to see, of interest not only to bloggers but to anyone wishing to build a business or learn more about personal finance. To see the sessions if not already at the conference in Denver, visit EventBrite to buy a virtual ticket.
What does financial independence mean to you? How are you going to achieve it or how did you achieve it?
Updated June 23, 2016 and originally published September 7, 2012.