Today on Worth-it-Wednesday, please welcome Kassandra from More Than Just Money today. We are doing a guest post swap ’cause it’s just fun to mix it up once in a while. Kassandra is talking about my favourite topic and one that is near and dear to many early FI planners.
I started earning my own money at the age of 14 when I worked a paper route for the Montreal Gazette. I would wake up every week-day at 4 a.m., zip on my snowsuit and brave the minus 25°C winter mornings to
throw neatly place over 100 papers on people’s doorsteps.
Then I’d rush back home to shower, change, eat breakfast and head back out to take the bus for school. I did this because my mom wouldn’t pay for a Nintendo gaming system because she didn’t agree with my argument that it was a need. I bought the Nintendo in short order but a few months in, I gave up the fledgling newspaper career and began a new hustle babysitting for several neighbours. Fast forward 20+ years, a career change and several side hustles later, I am a self-employed EDI consultant and creating a second stream of income as a blogger and freelance writer.
While I was always focused on making money, and spending a lot of it especially during my twenties, I never stopped to consider what I wanted out of retirement.
I knew that it was important to save money for my future. I was smart enough to contribute the minimum required in order to get the company match. Sometimes I surprised myself whenever I deposited part of any income tax refunds into my RRSP account. But back then I was only focused on the here and now when it came to my finances.
So What Changed?
It was a series of events that happened in the past five years. First I realized that I was crushing any hopes of a decent retirement and a comfortable daily existence by having $55K worth of consumer debt hanging around my neck. I got rid of that beast in 3 ½ years.
I had also been reading a lot of personal finance books and sites and some suggested that I needed 70% or more of my pre-retirement salary in order to reasonably retire. When I ran the numbers I about fainted because that was not about to happen with the way I was spending money. Within that previous sentence lay the answer to my problem: the way I was spending money.
Only with time and conscious effort did I adopt a lifestyle of less is more. Along with reducing expenses and increases in income, my husband and I now save and invest a little over 50% of our combined income.
I learned through reading sites like JL Collins, Mr. Money Mustache and Mad Fientist that financial independence isn’t a pipe dream! I didn’t need to save “70% of pre-retirement salary” in order to retire comfortably. If we already managed to live well on 50% of our income, save and invest the other half, meet all of our needs and with planning indulge in some wants, then we were already on the right track.
With a commitment to living on 50% of our income, and not confining ourselves to a typical retirement scenario, it sparked discussions about what retirement would mean for us.
- We wanted to travel more frequently while we were still physically able and healthy.
- If our young son has children of his own one day, we’d love to be able to spend as much time with our grandchildren as we wanted. This desire also extends to wanting to share memorable moments with our son more frequently.
- Spending time with close friends, especially when they are in need of support during a difficult time. I also plan to spend more time volunteering.
- Establishing long-term financial security. I had experienced years of living paycheque to paycheque and hated the stress it caused me. As children, both my husband and I saw first hand the effects of financial instability. We don’t want to feel the fear of not having enough ever again.
- I wanted to work because I gained satisfaction from what I do, not primarily due to needing to earn an income.
- I didn’t foresee myself ever not working, but having the choice to take extended breaks, be location independent, cut back my hours or not work at all without a negative financial consequence really appealed to me.
- I wanted to enjoy today a level of flexibility and control in my work life that could extend into retirement. That’s one of the reasons why I transitioned from a salaried position to self-employment.
A Picture In The Frame
Having lived for 38 years, and working for over 22 years, for once I’m very excited about the future. Our financial independence is not too far around the corner as we’re aiming to reach FI before the age of 50. Yeah, I know, that sounds old given the fact that you hear some people claiming FI status at the age of 27!
Our journey with money didn’t start out with being financially astute at the age of 18. I made some big mistakes financially that set me back for years. My husband also struggled for a long time before he began to see success in his career and personal finances. Neither of us can erase the past but we did learn from our shortcomings.
So many tell ourselves that we need to save for retirement, but throw money into our retirement plans without any sense of direction and hope for the best. You need to get real. You need to run the numbers and figure out the answers to standard retirement questions such as:
- How much do you need every year to live on?
- When do you want to retire?
- How much should you contribute to your 401K and a Roth IRA or RRSP vs TFSA?
- What type of investments should you opt for based on cost, tolerance and length of market exposure?
This all goes without saying. But your reasons for retirement should be the driving force of every investment decision you make.
I often say when it comes to decision making “You need to first know your why”. Retirement should have a picture in the frame. It’s something you should want to dream about and come up with things to do that will put a smile on your face. So tell me, what is your vision of retirement?
About the Author:
Kassandra Dasent is a self-employed wife and step-mom striving to live life beyond what money can buy. She blogs at More Than Just Money and shares on Twitter about a variety of topics and personal experiences that all intersect with money.
To read my post Mentors I Admired please mosey over to Kassandra’s blog.
P.S. I did the ALS ice bucket challenge last night. Nothing else to do since we cut the cable cord. j/k
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and on Friday Jet Fuel #8