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Nine to Five to FI

Can financial independence (FI) and working for a salary coexist peacefully?

In the FI community, there’s often an underlying current that the achievement of financial independence requires you to quit your job and become an entrepreneur.

Today, it’s just your side hustle. But as soon as you can, you’ll leave your day job and pursue the dream of self-employment. And it’s this self-employment that will lead to riches enabling you to call yourself financially independent.

But what if you actually like your day job? What if your career not only pays the bills but provides you with intellectual stimulation? Or allows you to contribute to a societal cause that you value?

Or is just flat-out fun to do? 

What if you simply have no interest whatsoever in ever being a business owner, with all the responsibility that entails?

In the popular narrative of side hustle success, we tend to forget that 50% of new business ventures fail within five years, according to the Bureau of Labor Statistics.

Does this mean financial independence is not for you? Of course not. We need to separate the decision to pursue FI from the decision to be an entrepreneur. Your nine-to-five job can be an excellent bridge to financial independence.

african american woman working solo at computer in large dark office

What is FI?

Let’s start by getting on the same page about the term “financial independence.”

I define it as the point at which you have the financial wherewithal to make your most important life choices largely unconstrained by money.

The exact numerical goal will be unique to every individual; if going to sub-orbital space is an important life goal for you, your FI figure will be larger than mine.

My FI is a state in which you have created consistent positive cash flow such that you can live in the city or town you enjoy, in a home you like. The contours of your daily life – the places you go, the recreation activities you pursue, the food you eat – are pleasurable for you. In this version of FI, you are likely debt-free, perhaps just carrying a mortgage if you choose to buy a home.

Very importantly, in addition to the above, you’ve also built up a bedrock of savings so that if your goals change and your income goes down, you could continue to have an enjoyable lifestyle.

This ability to pivot to pursue new goals is a key feature of FI.

Pursuing FI

As much as you enjoy your current employment, that may not mean you desire to do it for the next 30 years. We live in a world of infinite possibilities, and you may want to try your hand at another career.

With the constancy of a regular paycheck (and benefits), you can lay down a solid foundation for your next adventure. Just as you have set up an automatic deposit to your retirement account, consider setting aside a set amount each month to fund the shift to your next pre-retirement phase (even if you don’t know exactly what that will be or when).

The salary of your current job can allow you to create a “transition fund” to carry you financially through your second or even third professional chapter. This next phase may indeed involve entrepreneurship…or not.

The act of building up a transition fund is a tangible, practical way to define the parameters of a lifestyle you enjoy today and yet is not so extravagant that you limit your options for the future.

Letting it ride

Your 9-to-5 path to financial independence may culminate with what many in the FIRE community call “Coast FI.” This is the point at which you have put aside a sufficient amount of money to fund your non-working retirement years such that you can now completely stop contributing to your retirement account and let your investment balance ride, re-directing that contribution to support your current lifestyle.

The power of compounding is such that if you invest heartily when you’re young and then stop, you can actually be better off than if you save small, steady amounts over a long number of years.

For example, investing $6000 annually for 30 years nets you far less than investing $12,000 annually for 10 years and then stopping. (You can see the math here quite easily.) Kudos to the employers that match 401(k) contributions, shortening your journey to this financial independence milestone.

More than money

It’s not just about the money, of course.

What skills and experiences can you build today in your current role to set you up for your next chapter?

Working for an employer can be an excellent “safe space” that allows you to explore your capabilities and interests, as well as grow your professional network. When the time does come to pivot, you have a clear idea of what you are turning toward.

I am well aware that not all of us are fortunate enough to have a job today that we love. One approach is to view your career as something to endure. This, when paired with extreme frugality and a robust devotion to side hustles, will allow you to achieve complete financial independence quickly so you can retire early. Call it “classic” FIRE.

On the other hand, if you truly embrace the idea of YOLO, would it not make more sense to devote your energy to finding and embracing an occupation that brings you joy today? And use it as a springboard to other equally enjoyable possibilities in the future?

While you may not achieve the “retire early” part of the FIRE acronym, you may end up creating a life that you will not want to retire from. 

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