The 4 elements of the FI Superpower

In part 1 of the series “FI, a superpower to make the world a better place”, we’ve visualized how much potential to do good the FI community could have. In this post, we’re going to dive deeper into what gives us such incredible potential to do good.

I like to breakdown the FI superpower into 4 elements:

Time Freedom: the most valuable resource

The reason we decide to pursue FI is because we’ve cracked the code to unhappiness. It does not mean we’ve cracked the code to happiness but at least we know that the never-ending pursuit of more money to buy more stuff is not making us happy.

Instead we shift our attention towards buying more time freedom, by saving, investing and creating passive income that frees us up from our jobs.

Time is our most valuable resource. And in the FI community we have found a way to buy back time. Some of us get to free up decades of time, when compared to a more traditional retirement age.

Now, think about what you’ve been able to accomplish in the past 10 years. If you’ve recently reached FI, you’ve accomplished something truly astonishing. But even if you haven’t reached FI yet, you have most likely done a lot of incredible things in the past 10 years.

Well, imagine what you could accomplish with time freedom in the next 10 years! You could pick up a new hobby or start a new career and become an expert in something completely different in 10 years! And with FI, you can almost pick anything as you don’t need to necessarily need earn money from it..

Being able to choose what we do with our time freedom is an incredible advantage to live a happy and fulfilled life. Without the usual constraint or criteria of having to be a well paid activity, the possibilities of how we use our time freedom are almost endless.

What we do with this time freedom can be truly powerful. And it can be used to do a lot of good if if you think through it carefully and decide to use it wisely.

As a matter of fact, what to do with our time post-FI is a question that most people seeking FI will have to answer someday. And my best advice is to not wait until you get to FI to know what you will do. If you’re planning on stopping work, knowing what you’re retiring from is not sufficient. You need to know what you’re retiring to. You need to know what you will be using your time freedom for.

If you want to have a positive impact post FI, we will discuss exactly how to answer those questions in part 5 of this series.

Abilities Freedom: the great untapped potential

The truth is that, in our current system, not everyone is capable of reaching FI on their own. We need a minimum level of competence and skills.  In addition to a specific mindset (which we discuss later), we need to be able to be productive and competent in a specific activity, enough to be competitive and earn good money from it. This requires high value skills and competences. At the very least, we need to have a solid understanding of how personal finance work and how to generate reliable passive income.

We know our skills are valuable because we are being paid for what we do and that is how we reach FI. We tend to be good at using these skills towards increasing our earnings and accelerating our progress to FI. Some of us are able to get to FI in just a few years! This is not something an average individual can achieve.

Here is an example from Mr. Money Mustache: 34% or his readers are professionals in the fields of computer science, engineering or high tech industry. This is a uniquely gifted and intelligent audience!

We’re blessed with incredible abilities (often thanks to a combination of good genes, a good learning environment and hard work) and we’ve learned how to use them to accumulate wealth and buy our freedom. These are the skills we use at work or in our own businesses to solve problems and create value for ourselves, our bosses and our clients.

As we build financial resilience and reach financial independence, we free up those skills from having to be dedicated to making money. We acquire what I like to call abilities freedom.

Post-FI, we can choose to use our abilities the way we want, and not necessarily in exchange for money. We can decide how we use our abilities based on other criteria. We could, for example, decide to use those skills to do good around us. In many cases, the very same skills and competences the helped us reach FI can be used to solve the most important and most pressing problems of the world.

And with abilities freedom, we also have the option to learn new skills and competences, irrespective of employment constraints. Here again we can choose to learn to serve other objectives.

Imagine if we could direct the brain power of the FI community to ending world hunger or world poverty. I am certain we would have a big impact! That’s how we can make the world a better place!

Money Freedom: there is more of it than you think

It is fairly obvious that we have money. And this money has a purpose (sustain our FI status) so it isn’t originally available for other things. But there is more money than you think.

The FI community is great at planning for the long term and for the worst-case scenario. Many of us reach FI through stock market investing using one version or another of the 4% rule of thumb. Unless we go for what is known as lean FI, our financial plans are often built based on long-term worst-case scenarios. For example, I follow the guidance of the conservative (read “very risk averse”) Karsten or “Big Ern” from Early Retirement Now. His analysis is very detailed and his advice is excellent if you want a practically fail-proof FI plan.

While it makes total sense to plan for the worst case scenario, it also makes sense to expect that the worst case scenario is not actually going to happen. In my case, the worst case scenario has less than 1% chance of occurring based on the back testing done with 145 years of market data.

So, if I plan for the worst case scenario, and that it is very unlikely to happen, the most likely scenario will lead the portfolio to grow to much higher levels than required, allowing us to spend more than planned, or do something else with the money. But plenty of money is what we should expect in the most likely scenario, especially if our lifestyle remains as planned.

In addition, FI people also often develop activities on the side that bring income: a part time job, a side hustle or a hobby business. Sitting around doing nothing productive is rarely something we enjoy doing for very long! Plus, this provides additional flexibility and security to the plan. And increases our expected portfolio growth even more.

When pursuing FI through real estate investing, we often reach FI when our net worth starts growing faster than we can spend the money. The growth of net worth does not stop at that point: the mortgages are getting paid and we keep building equity in our properties, creating an accelerating growth of our portfolio over the long term.

In summary, FI people have money and in the most likely scenario, we will actually have more money than we need just a few years after reaching FI. This is indeed assuming we do not inflate our lifestyle alongside that growth.

So, right when we reach FI, assuming we’re on a tight budget to make it work, we’re not really free from worries. But after a few years of not-worst-case-scenario compounding, or after adding an unexpected income stream from a fun activity, we reach what I like to call Money Freedom: we have the money we needed for FI, and we have more to spare.

Given how we build our plans, and despite what Suze Orman likes to say, most of us will have more money than we need to fund our carefully planned “retirements”.

What do we do with that money? We’ve already established that we don’t need it to be happy. It’s nice to have a buffer and flexibility for some “luxuries”, but is that really the best use for it?

This is where the power of Money Freedom comes in.

If we don’t need the money, then what? We ask the question: what is the best use of this money if I don’t use it for myself?

Some of us integrate charity donations in our FI plans or have built a habit of donating over the years. But for those of us who didn’t, it is important to think about how we can best use our money freedom and think about what sort of positive impact we could have with the money we don’t need.

It’s a pretty extreme example, but with FI and Money Freedom, we all can become sort of mini Bill and Melinda Gates. We may not have the same level of wealth, but we can use the same thoughtful approaches to use our time, abilities and thinking and do the most good we can. This can make a huge difference in the lives of others can really contribute to making the world a better place.

Thinking Freedom: the secret ingredient

Whether we like to admit it or not, being employed, getting paid by an organization or a client and being part of those organizations makes us biased. We adapt our thinking and our behavior to the workplace and this is often detrimental to the pursuit of truth and a better world.

When we’re employed, we find ourselves silencing our inner critic. There can be several reasons for that:

  • We’re social animals and we want to be accepted by the group, so we tend to be more agreeable and repeat what others say, even if we disagree. This phenomenon is called Normative Social Influence.
  • Our earnings and good fortune depend a lot (often mainly) on our employer or clients so we tend to do and say things that are in their favor (especially when seeking to be recognized or promoted).
  • We’re constrained by the industry’s “consensus” and “best practices” and it is often professionally too risky (and not worth) to challenge them.

So, we often say and act in ways that are expected of us rather than inline with what we truly believe is true and right. And this can go as far as eventually convincing ourselves of these “adapted” truths.

It is difficult to get a man to understand something, when his salary depends on his not understanding it.” ― Upton Sinclair

With financial independence, we are freed from these constraints! We don’t depend on our employer or client to make a living and we don’t need extra money! Each of us can become an independent thinker. We can choose to seek the truth and do what is right, based on our inner principles and our core values and not based on our own selfish interest (money or status) or the interest of our client or employer (which is often money first, everything else second, even in many NGOs and charities).

If we can free ourselves from those influencing factors, this can be a tremendous advantage in how we help society progress. This is Thinking Freedom and it’s probably the most important element of the FI superpower. It can help us see the bigger picture, think outside the box, continue to challenge the status quo, question everything and find better answers.

And Thinking Freedom is essential if we want to make the world a better place effectively.

So the question is, what will you do with your superpower?

We will explore some of the most impactful options in the upcoming post of this series. Stay tuned!

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Special Thanks

I would like to thank Araminta Robertson (Financially Mint), Caroline Derom (Quarterlife Quest), Odin Mühlenbein (Odin Mühlenbein and Ashoka Germany) and Sanjay Ratna  for their constructive feedback and their enthusiasm.

Check out the rest of the series!

Sebastien Written by:

Founder at Founder at (UAE chapter of ChooseFI and Bogleheads) Aspiring Effective Altruist Former manager in energy management consulting

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