Staying Focused on the Path to FI
Pursing financial independence can be challenging — here are 3 ways we stay focused.
The path to financial independence can prove to be challenging at times, and while I’d love to say that we’re able to stay 100% committed to our goal all of the time, I’d be lying.
Overall, we’ve been able to meet our annual savings targets and stay on track with our plan, but there have certainly been challenges along the way.
Busy week? Ordering takeout is so much easier.
Stressful year? We need a vacation.
It’s not hard to find ways to spend money, and we certainly aren’t immune to the temptation.
There are months when we overspend — and there are even months when we consider whether we should adjust our timeline for financial independence.
But that always seems to be followed by some sort of event that reminds us just how valuable financial independence is to us. It only takes one bad day at work to remember that for us, financial independence is not a sacrifice, but a reward.
It’s the freedom we so desperately long for. The flexibility to live where and how we want. The security to know we never need to work again.
And while we know that financial independence is absolutely worth it, it can still be challenging. Here are three ways we stay focused on our path to FI:
Avoiding the Lure of Instant Gratification
No matter how committed we are to our long-term goals, there are moments when we just want something.
And this makes sense. After all, our minds are hardwired to prioritize immediate needs over future gains. In other words, we’d rather have $5 today than $10 tomorrow.
This is thanks to a phenomenon known as hyperbolic discounting.
Hyperbolic discounting drives us to prioritize instant gratification over long term goals — it’s why many of us find it hard to save for our future when it means missing out on something we want now.
And while we may not be able to change the way our brains work, having an awareness of it can help us think things through and make more rationale decisions.
Rather than giving in to our urge to spend right away, we try to take time before making a purchase. This gives us the space we need to consider our options without the lure of instant gratification.
Reframing Our Long-Term Goals
One of the most important things we’ve implemented to stay motivated on our journey to financial independence is a way to track our progress — not just annually, but on a biweekly basis.
Every other weekend we take 30 minutes to an hour to review our spending and updated our financial spreadsheets. This allows us to monitor our progress on an ongoing basis.
Doing this helps us turn our long-term goal of reaching financial independence into more immediate goals that we can work towards on a daily basis.
We know that overspending will have an immediate impact on our progress and prevent us from meeting our savings target — something that feels much more powerful than simply focusing on our long-term goal.
Considering the True Cost of Financial Tradeoffs
Another tactic that has helped us keep our focus is considering the future value of money when making financial decisions. Overspending by $50 today does not just mean we’ll be saving $50 less.
When you consider the future value of that money, the loss becomes much greater. This is especially important when we are talking about money that would be set aside for retirement and have years to grow.
For example, if that $50 earned a return of 6% each year, it would be worth over $200 in 25 years.
The future value of our money is something we try to consider when making financial decisions. Rather than asking ourselves if it’s worth spending the $50, we consider whether or not we’d be willing to give up $200 later on.
Thanks for reading! To learn more about our journey, visit Financially Free 2033.
