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Happy International Financial Independence Awareness Day!
Didn’t know that was a thing? Well, it wasn’t – until today. A number of people from the financial independence community, led by Get Rich Quickish, are launching this today, April 25, 2019.
How was the date chosen? It wasn’t random! 4 and 25 are both important numbers in financial independence.
I’ll explain a bit more about that, and why I chose to participate in launching International Financial Independence Day in today’s post.
Aren’t There Enough “Days?”
There sure are. Just about everything has a day. Here is a list of national days in April.
- National Sourdough Bread Day (April 1)
- National Tweed Day (April 3)
- National No Housework Day (April 7 – celebrated more often in our home)
- National Peach Cobbler Day (April 13) Yuck.
- National Amaretto Day (April 19) Yum.
- National Lima Bean Respect Day (April 20) What does lima bean disrespect look like? Uh oh, did I just do it?
- National Help a Horse Day (April 26) Wait, what?
It’s easy to laugh and poke fun at the present trend of naming awareness days. But, it’s important to realize that all these things are important to someone.
And, I know financial independence is potentially game-changing for people, so I’m glad to be part of raising awareness.
Why April 25th?
The 4% guideline is a cornerstone of financial independence planning. The overly simple explanation is that you can safely withdraw 4% of investments annually to fund your retirement and increase this amount to cover inflation. So, if you manage to build a portfolio of $1 million, you can withdraw and live on $40,000 in the first year, and increase for inflation each year thereafter.
Another way to think of this concept is multiplying annual expenses by 25. If you need $40,000 to live on each year: $40,000 x 25 = $1,000,000.
4% and the rule of 25 are expressions of the same concept.
April is the 4th month of the year. 4/25! Thematic and easy to remember!
You can read my post on setting your FI Target to understand how we apply these concepts.
If you want to understand the reasoning, I suggest reading Big Ern’s series on Safe Withdrawal Rates. It will take you down a rabbit hole, but did the most to help me deeply understand the concept. (Oh, and fair warning – Big Ern doesn’t necessarily endorse 4%.)
4% and 25x.
4/25 is International Financial Independence Awareness Day!
Why Financial Independence?
Obviously, this whole site exists because I believe financial independence (FI) is important. I could (and do) write in incredible length about it. For now, I’ll just share what FI has meant to me.
I discovered financial independence a little over 2 years ago. I wrote about my Why of FI here. As is often the case for me, I went all-in on it and became obsessive. What isn’t typical is my enduring commitment. That’s because awareness of FI really has changed how I approach and experience life.
I Understand My Finances
Okay, this is an obvious one. But the concept of FI gave me a framework to examine and understand all aspects of my financial life. As an educator, I know learning sticks best when tied to a larger concept.
Income, spending, saving, investing are all huge areas of knowledge on their own. Very few people are deeply aware of one, let alone all four. FI provides a framework for learning about each.
I Enjoy My Work More
I’ve always enjoyed aspects of my job. Working with kids is amazing, and supporting teachers is fulfilling. Yet, the pressures and stresses have weighed heavily on me throughout my career. They increased as I chose to take on more responsibility. The mission-driven choice was worth it, but wearing on me.
Related Post: Fear is the Money Killer
Having a financial independence plan, and a potential exit date, releases some of that pressure. Since finding FI, and realizing that I’m not required to work much longer, I’ve enjoyed my job more.
I’m Better At My Job
My current role requires making high-stakes decisions that inevitably anger some stakeholders. If I’m reliant on the job to secure my future or provide for my family, there is incentive to make decisions based on political factors. For example – opposing my Board could result in firing.
Fortunately, I’ve always been mostly immune to these pressures. Financial independence removes it entirely. I can make decisions based on what I believe is best for students and staff.
A Stronger Relationship
Financial independence is a shared goal with my partner, TFI. It has led us to have more frequent and deeper conversations about our future goals, plans, and needs. Together we’re designing our future ideal life instead of just stumbling along the normal paths. It’s made a great relationship even better.
Optimism about the future has never been a strength of mine. While I’ll always fight those darker pessimistic tendencies, financial independence has improved how I look at the coming decades. I’m optimistic that I won’t work until I die, that I will have years to focus on what I love, and that I will have the freedom to make a difference in ways that are important to me.
International Financial Independence Awareness Day
So, for all those reasons I’m thrilled to be part of spreading the word about International Financial Independence Awareness Day!
Check out 425Day.com. Spread the word in your own network by sharing this post, or your favorite FI site.
If FI is entirely new to you, I wrote a quick and simple Financial Independence Primer for New FI Seekers. There are literally hundreds of other sites out there for your to explore, too.
As one example, if you are interested in talking more about this with friends, A Purple Life recently wrote How To Teach a Curious Friend About Financial Independence.
I hope FI awareness changes your life in the way it has changed mine.
Oh, and after celebrating financial independence awareness today, don’t forget to help a horse tomorrow.