Estimated reading time: 9 minutes
Growing up, I thought financial independence meant paying the bills and setting aside money for a rainy day.
As the years passed, it became clear that my way of thinking was far from reality.
There was always a sense of potential financial doom that my parents would talk about.
“You never know what will happen tomorrow,” my father always told me when I asked why people save money.
Since the Covid pandemic, Canadians have endured a jolt of reality and what can happen financially and without alarm bells.
If the pandemic hasn’t heightened Canadians’ financial independence awareness, I don’t know what will.
We must stop the habits stalling the road to financial independence and take action.
Today, I want to discuss actions you might not be aware of that could be putting the brakes on your journey to financial independence.
The F.I.R.E Movement
Since I was born in the 70’s financial attitude has significantly modernized due to improved investment vehicles, technology, and overall retirement outlook.
So many things can happen as you age that we must consider along with retirement affordability.
- How will I/we pay off the mortgage if I lose my job or get sick?
- Can I/we afford to retire early or at all?
- What happens if I’m put into long-term care?
- Who will care for our adult children with disabilities who still live at home?
- What happens if I/our investments take a nose-dive before retirement?
We don’t want to retire like our grandparents did because we want to be better.
The only difference is that we don’t want to work 40 hours full-time until age 65.
Today’s generations want to gain financial independence faster, which has generated an F.I.R.E. movement.
Financial Independence Retire Early is the motto, and honestly, I’m standing in line waiting for my turn.
Honestly, retirement reminds me of the first in, first out motto where you go to work, do what you have to, and be the first one to leave.
Here’s the thing: how many of you exhibit habits that are stopping you from moving toward financial independence?
Sadly, when doom blankets us, such as during the pandemic, we have three choices.
- Sit in the dark and complain that you’ll never get ahead because life is unaffordable.
- Take action and kick bad habits, pulling the stops in your mind.
- Make sacrifices
Let’s run through some habits you might be exhibiting that are holding you back from making your financial dreams come true.
Spending More Than You Can Afford
Yes, it still happens and will continue to occur unless Canadians stop making excuses.
- I need it
- The low price won’t last long
- I will buy it now and pay later
- My friend has it, and I want it too
- I don’t want to look cheap
- I’m not going to be rich, so I might as well spend my money while I can
- It’s our dream home
All of the above are emotions taking over the reality of your wallet that can turn ugly.
Letting your emotions take the wheel means you make more excuses than concrete plans.
What will happen if you lose a job and can’t afford that dream home you bought because you just had to have it today?
It would be best to consider the future and possible scenarios that could impede cash flow into your bank account.
Ideally, budgeting will help control overspending, allowing the user to make better use of their net income.
No Retirement Financial Plan
If you’re not investing something into your retirement, you’re missing years of growth.
Although investing is long-term, switching your mindset to think that way is essential.
Those who don’t invest will have to live on whatever money they have and government pensions.
Well, that’s up to you, depending on whether you want to stay in it or plan to downsize.
General ways to invest today for your retirement:
- Real Estate
- Defined Contribution Plans or Defined Benefits Pension Plan
- W.S.I.B. Loss of Retirement (LIR) Benefit for permanently disabled workers
- Registered Disability Savings Plan (R.D.S.P.) for those approved for the Disability Tax Credit.
- Registered Retirement Savings Plan
- Tax-Free Savings Plan
- Dividend Paying Stocks
Failure To Make Sacrifices
We both lived a frugal life starting in our 20s, which helped us to pay our mortgage in 5 years.
We had to make many sacrifices to get ahead financially, including going without what our peers had.
Anything we could scoop up for free was a bonus, whether garden tools, furniture, groceries, or using discounts, coupons, and rewards points.
We had no shame in being frugal, which is hard for people who believe they don’t need to be.
Even having a good job doesn’t solve poverty if money isn’t managed correctly.
If you want financial independence, often giving up the luxuries means finding another way to get them for less.
There’s not a day we aren’t thankful we didn’t give in to marketing hype or social or peer pressures with our money.
We didn’t entertain the idea if we couldn’t afford something in our budget.
Living For Today And Not Tomorrow
Your mind can be hostile if you let it go there and plan to stay awhile.
If you don’t care about the future and live for today, then accept your fate.
Granted, if you have retirement money and know your wealth will carry you through, you’re all set.
Unfortunately, not many Canadians have the luxury of that lifestyle, so we must save today for tomorrow.
What’s interesting is how people give up on themselves as if they have nothing to offer.
Everyone has something to offer; the worst thing you can do is let resources go to waste.
Balance is what you need in your life if living in the moment is essential.
I agree; we could die today, tomorrow in a minute, and waste our lives saving money instead of using it for experiences.
There are many ways to do both, which means sacrifices and perhaps not as many vacations as you’d like.
And if I hear one more person say, ah, well, I’m going to die at a certain age, so I might as well spend it now, I’ll scream.
Come on now? That’s not a smart money move. That’s you giving up on yourself.
Be fruitful with your money and plan to save for today’s emergencies, tomorrow’s retirement, and today’s adventures.
Let go of the need to have something ‘now’ without backing up the backup plan.
Getting Rich The Wrong Way
How many of you have heard of a get-rich-quick idea and thought it might work?
Becoming financially free takes hard work; sometimes, you fall but get back up again.
If more people put more effort into their financial outlook rather than get-rich schemes, they’d be rich.
Perhaps you are not rich, but later in life, the hard work you do today shows up in your bank account.
For example, you’re told buying into a business will make you rich; is it something you want to do?
The word “money” motivates involvement with pyramid schemes or careers that are far-fetched but believable to many people.
Ask yourself if what you plan to do is sustainable and think long-term.
I watched a video of a guy standing outside a business with a lint roller holding his arms out as people walked up the steps.
The idea was to see how many people would take action without thinking, and he proved his point.
Not one person questioned why they had to hold their arms out to have a lint roller brush over their arms to enter the building.
It was laughable at best, but so many people walk into life either with their eyes closed or focusing on too much too fast.
Slow down and focus on what being rich means and what goals you need to set to begin the journey.
Don’t feel that you will miss out because what’s even worse is wasting time and losing money.
Patience is a virtue in investing, earning money, and building wealth.
Wasting Time Talking About Financial Independence
Don’t wait around for the government or anyone, and don’t feel sorry for yourself.
There are two things to consider here: talk and actions.
It’s one thing to complain about what is not happening in your life and another to do something about it.
Doing something doesn’t mean complaining about it, either.
Unfortunately, you can moan all you want, especially when politics are concerned, and you may never get what you want.
In the meantime, what are you doing to invest in your financial future?
You have to learn, plan, hustle, engage, take risks, and put yourself first to reach financial independence.
Stop making plans and not acting on them because you’re wasting time.
Reaching financial independence is a liberating feeling for us because we owe nothing to anyone.
We’ve achieved our financial goals faster than expected, allowing me to retire early.
Considering we started saving money around 20, it has taken us almost 30 years to get where we are today.
A financial advisor manages our investment portfolio, and if all goes to plan (optimism), we should have a couple of million dollars socked away for retirement.
One little secret he doesn’t know about is this blog I started in 2012 that also earns me five figures yearly.
The best part is that I never set out to make C.B.B. a business adventure, but you never know what the future holds when investing time.
We will also have paid for our son’s life insurance and four years of University or College.
Thinking long-term has always been our plan of action, and time does buy financial freedom, provided you’re a doer and not a talker.
Discussion: What have you done to pave the path toward financial independence?