Budgeting Before And Budgeting After Financial Independence
I’m realizing that after achieving financial independence, it doesn’t matter whether I budget or not. It’s partly because I’m an experienced budgeter, having done it daily for nearly 5 years and also because I no longer have any particular financial goals to strive for in this pseudo-retired situation I’m in.
When you’re trying to create a secure retirement or reach financial independence then you have to keep track of a whole lotta moving parts. Once those goals are achieved, it really doesn’t matter what you do with your income. Feel guilty that you’re a rich mofo? Donate that shit. Feel like you’ve been counting your penny-pinching for too long? Spend until you run out of ideas.
When I became an attending, I thought for too long that I had suffered something wicked to get to where I was and therefore deserved to let loose and enjoy the kind of lifestyle that few around me could afford. I felt entitled, there is no other way to describe it. I was finally a doctor and had achieved something quite rare and important, I deserved to treat myself. I wanted to finally start living instead of waiting to live.
I was a diligent budgeter and saved as much of my income as possible, starting sometime in later 2012. I tried to keep things simple because I wanted most of my focus to go towards earning the highest income possible.
Many around me told me that I should loosen up and stop thinking about money too much. Looking back, I don’t think I was suffering in order to reach my goals of financial freedom. It was a sweet dream to follow, it meshed well with my ideals and now that I’ve achieved it I’m fucking high on it.
Budgeting During Your Working Years
Well, you know how strongly I feel about budgeting during your working years. There are so many damn forces trying to get you to part with your income. Wealth isn’t what you earn, it’s what you keep.
Budgeting helps you turn income from just a spending account into an asset which can earn you more money in the future. Dealing with income/expenses is not something we’re taught, maybe even something we’re discouraged from thinking about too much. Why should I feel guilty for wanting to plan for my future? There is no need to be greedy. It’s important to be strategic with your income.
Budgeting means that you have a plan for your income and have preplanned your spending. It doesn’t much matter what you spend on, whatever the fuck makes you happy and which matters to you. What makes a difference in the big picture is the ratio of what you spend and what you earn.
If you love spending on a hobby then perhaps you’re okay with working a touch harder in order to cover that expense, while still saving for your retirement goals. I would have done anything for my auto mechanic shop, those first few months it was expensive as shit buying hoists and paying for licensing and hiring people. I gladly worked 60+ hours in order to afford it, all the while, saving and investing for my financial independence goals.
I would have done anything for my auto mechanic shop back in 2013, those first few months it was expensive as shit buying hoists and paying for licensing and hiring people. I gladly worked 60+ hours in order to afford it, all the while, saving and investing for my financial independence goals.
Budgeting When You’re Financially Independent
Being financially independent means that your assets can generate enough income to cover your basic expenses. Some are aiming for the kind of financial independence that also covers their entertainment budget – I think this is futile, I’m a very imaginative mofo and even $100 million wouldn’t generate enough income for me to spend on all the possible entertainments out there.
Your Own Definition Of Financial Independence
I have one life to live and what I do with my time is really valuable to me. I would rather have more fun spending my time than spending my money, even worse spending my time earning more of it. For those of you who think you need a $5k/month traveling budget, let’s chat after you’ve traveled for a year and ready to throw up upon seeing yet another TSA agent.
When you’re financially independent you likely have achieved all your major financial milestones. Maybe you haven’t quite saved that $250k for you kid’s college education, but you’re okay to have them pay their own way. If you happen to find some work which you love doing during your early retirement then you’re happy to put some money aside for the little ones.
When you are ready to take your early retirement, having achieved financial independence, you probably have enough money invested that you could easily cover your basic housing, food, health, travel, and communication expenses. It doesn’t mean that you have to stop working, it doesn’t mean that you have to stop being productive.
But it does mean that you no longer need income from your job, it’s now optional. The budgeting you used to do in order to get you closer to your financial goals, is now optional as well.
Budgeting For A Secondary Cause
Maybe you want to start a business in your new situation, help an organization you believe in or fund your child’s business ideas. Sure, you may need to start budgeting again for such causes but it won’t look anything like what it was before.
You’ve spent decades studying and working, it’s now time to enjoy your free time. You might still be working a few hours a month generating income. You can do whatever you please with this money. Chances are you won’t care if you get a pastry with your coffee, you’ll even get the fancy pour-over instead of the sour drip.
My budgeting in retirement looks something like this: pay my main bills out of whatever money finds its way into my checking account and do whatever I please with the rest.
You might take your family out for a weekend trip because you have no other pressing matter to attend to. You now work per diem, picking up shifts whenever you feel like it, ideally last-minute. Weather look good? You’re off to the mountains. Nothing fun to do? Pick up a shift in the urgent care.
Whatever Money Is Left Over
Budgeting in retirement for you could look like this: you pay for your family’s basic living expenses and whatever you feel like spending on. Whatever is left over you’ll do something interesting with. Hopefully, you’re going to do something productive with it but maybe that’s not part of your long-term plan.
The point of getting to this point of abundance is to no longer worry about income, to no longer have the fear that you may not be able to cover your monthly overhead. In this state, you can do so much good for those around you, maybe even start some enlightened businesses and improve the world.
With your leftover money, you start tax planning by donating any excess income to charities. This keeps your income low enough to get the maximum tax benefits for your household. Did you know that only the uber-wealthy have such problems? They have too much income, needing to give away or write off so much against their business or else face paying major taxes on it.
Did you know that it’s often the uber-wealthy who have such problems? They have too much income, needing to give away or write off so much against their business or else face paying major taxes on it.
It’s Okay To Still YNAB, Nobody Will Know
I’m still working on forcing myself to be less productive in retirement. I do urgent care shifts because I don’t want to lose my skills, less so for the income. I’m trying to work on 5 projects at the same time because I want to produce – it’s a bit of an annoying habit. It takes more effort than I realized to reset one’s mind out of work-mode into chill-the-fuck-out mode.
I am still using YNAB. I actually don’t know why, I could easily stop and I’d be fine, it’s not like I have any major debt to pay off or an important savings/investment goal to accomplish.
I think it helps me feel normal. I’ve budgeted for so long now, it makes me feel as though I’m in charge of my money. Perhaps it’s one of those habits that’ll eventually go extinct.
Budgeting is an incredible skill, probably one of the most potent predictors of success for any entrepreneur. We docs already got the hard work part down, we endured a higher level of education, mastered time management and know how to manage others. We have discipline, work ethic and we give a fuck. What we have the least of are time and financial acumen. Budgeting helps me put the least amount of time/work in, in order to achieve the highest returns. It also helps me become savvier with my personal finances.