What if there was a way to live your life uninhibitedly, freed from financial stress?
Join me, your personal money coach, as I unravel the intriguing concepts of financial independence and the FIRE movement. Reflecting on my 25th wedding anniversary getaway, I delve into how the principles of financial independence can grant you the liberty to live life on your own terms, without the constraints of money. From a look at the Financial Stress Index to the escalating grocery costs, we'll scrutinize how these financial pressures weigh on Canadians, and I'll offer my nuggets of wisdom on crafting a life of freedom and self-reliance.
Links mentioned:
30 Day Fall Money Tune Up
FP Canada Stress Index 2023
Join the The Financial Moment community on:
Instagram
Facebook
Website
Email: info@thefinancialmoment.com
Grab this FREE guide with 10 easy tips to keep your budget on track!
Submit guest suggestions HERE
What if there was a way to live your life uninhibitedly, freed from financial stress?
Join me, your personal money coach, as I unravel the intriguing concepts of financial independence and the FIRE movement. Reflecting on my 25th wedding anniversary getaway, I delve into how the principles of financial independence can grant you the liberty to live life on your own terms, without the constraints of money. From a look at the Financial Stress Index to the escalating grocery costs, we'll scrutinize how these financial pressures weigh on Canadians, and I'll offer my nuggets of wisdom on crafting a life of freedom and self-reliance.
Links mentioned:
30 Day Fall Money Tune Up
FP Canada Stress Index 2023
Join the The Financial Moment community on:
Instagram
Facebook
Website
Email: info@thefinancialmoment.com
Grab this FREE guide with 10 easy tips to keep your budget on track!
Submit guest suggestions HERE
Hello everyone. My name is Carolyn. Welcome to the Saving for your First Home podcast. I am the CEO of the Financial Moment. We offer money coaching for those who are ready and willing to make financial changes in their lives. For the most of us, there comes a point in time where we think to ourselves it would be really nice to own property, but it sometimes can feel like a pipe dream and not very easily obtainable. So I created this podcast to give you all the information and tools you need to take the steps forward toward home ownership. Take it from me my husband and I started our lives together, working part-time jobs with a young child. Fast forward, through many hiccups and failures, we stepped our feet into our very first home. For us it was a pile of dirt, but eventually our family home was built on that dirt. Now we are in the midst of growing our investment property portfolio. I created the savings for your first home podcast to give you easy, actionable tools for you to do the same. If you have that same gut feeling that I did and want to create a life for yourself and your growing family, but don't know where to start, you are in the right place. Let's do this. Hello everyone, welcome back to the Saving for your First Home podcast. I'm Carolyn, your money coach, so if you're listening to this podcast on its release, I have just come back from a week vacation.
Speaker 1:My husband and I we took a trip. It was our 25th anniversary. Can you believe that 25 years? We've known each other a very long time because even before we were married we were dating probably for like five years. So it's been a long time with him, but it's been all good. There's always ups and downs. We have two beautiful children who are now young adults, and so I couldn't be happier.
Speaker 1:But after being away and you're on vacation and you're living a different life than you do normally, I find that you think about all sorts of things. One of the things I'm sure that has crossed your mind when you're on vacation is couldn't this just be my life all the time? Right, like traveling different destinations and just visiting different places and having that freedom and independence to do what it is that you want to do. And it kind of got me thinking about the fire movement and now I don't know if any of you have ever heard of that term before. So fire stands for financial independence. Retire early Now it's kind of like a movement. I think it was popular, maybe not so many years ago, but it really is a different type of lifestyle, and what it does is it aims to retire quote, unquote people and give them financial independence, typically when they're in their 40s or 50s Now I'm not going to tell you how old I am. However, I'm definitely within this range. So it is very interesting to me this concept.
Speaker 1:But I thought I kind of just go over what financial independence really is, because, even if we're not totally on the side of the fire movement, I think some of the principles that are behind it, we can take a few things and learn from them and implement that into our own lives. So let's just talk about what is financial independence and why do we need that, other than going on vacation, going on vacation every month? So I guess the first thing, and the most obvious thing, is that it gives you freedom and autonomy autonomy to do the things that you truly want to do, right. You're not dependent on a paycheck per se to cover your basic expenses. Now, this could mean that you have more autonomy over decisions that you make, what you do with your children, how you raise them, what you can do with your passions or your pursuits or your interests. You have more freedom to decide what it is that you want to do. Basically, you're making choices about your life, not dependent on money.
Speaker 1:Now, it's funny actually I don't know if I've shared this, but the financial moment has a meaning behind it, because there is always a point in time, or what I call a moment, where you need to make a decision in life and when money becomes a factor in those decisions. I call those financial moments because you can want to do things, but perhaps money could be a barrier. Money could be the thing that triggers you to actually make a decision. Money seems to be involved always in even simple day to day decisions. So we can even take grocery shopping. Now, right, it's so expensive to buy things out there, and so we're definitely more conscious than we used to be about picking some up at the grocery store and making sure that we eat it all and not just throw it out when it spoils, right. So that's why I actually called my business the financial moment, because I want those moments to be different for you, where you don't have to rely on money to make your decisions and you make your decisions for yourself and give yourself that freedom and autonomy. So that aligns perfectly with financial independence.
Speaker 1:Now the next thing that financial independence can bring is reduced stress. Now the financial planners of Canada. They release a financial stress index every year. I'm going to link it in the show notes so that you can take a look at it, but this year it has some interesting stats that I want to share with you. So the first is two in five Canadians say money is their top source of stress, and this is the first increase since 2020. So from 2020 to 2022, it was having around 38% and now we're up to 40%, and that obviously, I think, is the result of inflation, but it is the number one source of stress. Money. And then that tops personal health, your work, relationships, all those things, other areas that you can that bring you stress. Money seems to be the top of the list. Now we did talk about the rising cost of groceries. They say that 69% is impacting Canadians financial stress. The others are interest rates, the gas prices and mortgages right, but grocery seem to be 69% on top of people's minds. And then this is a kind of a sad stuff, actually. It states that Canadians are feeling less hopeful about their financial futures. Right in 2022, it was about 39% and now we're up to 44%. That is, almost half of the Canadians out there feel that they're less hopeful about their financial futures.
Speaker 1:Come talk to me. You know I'm so passionate about this, like, even though the current economic climate is not ideal, we still can put into place practices that are going to make our financial futures better than they are right now. But you have to start now. It's not like something that you can just, you know wish away oh, I'll do that in 10 years, or oh, I'll do that when I have more money or when I'm in a better position, I'll start working on that. No, we need to work on these things now, in our current state, so that when the time comes, when you do have additional money, when you are in a better position, you are ready to move to the next level. So I stress that so much that you need to start working on the stuff right now to make your futures better than they are right now. So, anyway, those are some of the stats that I wanted to share with you.
Speaker 1:If you take those people that took this survey and you said to them okay, we're going to give you financial independence. Would their answers to the survey change? 100%, right? Financial independence reduces that financial stress and anxiety, right? Not worrying about the day to day, the paycheck to paycheck, the unexpected expenses that may come up or even fear of a job loss. Financial independence takes away all of that. Now, what else does it do? I say it allows you to pursue personal goals, right, you can focus on the things that inspire you.
Speaker 1:Now, for me, obviously, traveling is one of them. I love to travel. I love to experience new places, new cultures, food, different things, activities. Funny story we decided to take an e-bike tour of Hollywood, and Hollywood is filled with hills. We're climbing up and up with these e-bikes and it's pretty cool. I'm used to just bicycling on a regular bike. To have the added assist was like yes, let's do this. Actually, that reminds me of coaching, right, because when you're doing it on your own, you're pedaling, it's so hard, you're trying to get over the bumps and just climbing that hill is difficult. But when you have an assist it is so much easier. But for you it may be something else. Right, you just want to be able to put your time and your resources to whatever it is that matters to you most. Okay.
Speaker 1:And then the next thing that financial independence can bring is early retirement. Now, I know a lot of you may not be in that boat to even thinking about early retirement just yet, but shaving 10 years, 15 years, 20 years off of your traditional retirement age sounds heavenly right To be able to do some of these things that you want to do when you're still relatively young and healthy. That is the ideal. So if you're young enough and you're not even thinking about retirement at this point, you need to start planning from now. You need to try and implement some of these things so that you can gain the financial independence to be able to retire when you want to. And if you're in my boat and you're kind of, you know, getting into that stage where it's closer than you think, then it's absolutely the time right. You cannot wait. You cannot afford to wait and say that you know, later I'll take care of my finances. The time is right now.
Speaker 1:Some of the other things that I thought of is the flexibility of your career, right? Financial independence also gives you the choice of choosing the career that you want, or maybe waiting for that particular position, or starting a business or something that lights you up right. Your not desperate to take the first thing that arises, because you have a nest egg in the back waiting to cushion you if something doesn't work out. You don't have that added pressure. And I think this is very important, because choosing what you want to do in life should light you up right. It should give you joy and passion. You should be helping others doing the things that you really love to do, because that's what life is really all about. You know, making an income is great, but if you are making an income and you're also giving back or feeding your own personal self, then you're going to enjoy that time that you spend on that career much more.
Speaker 1:This is one of the trips where we didn't take our children with us, which also had me thinking about the legacy that we're leaving for them. Right, financial independence also enables you to build the wealth that will not just benefit you and all your travel plans and everything you want to do, but it's also going to benefit your future generations. And, speaking from someone who is black, first generation Canadian and the daughter of immigrant parents, I can say that generational wealth is not something that is very common in my community, and it's probably my generation, and maybe the next, that really will be starting to build wealth for the generations to come. So if you're in that position as well, you know you've got to think it forward. You want the next generation to be able to do better, to do more and to be able to contribute to society to make a change and difference in the lives that they're living, and so, by leaving a financial legacy, you're giving your children and their children's children the ability to do that as well.
Speaker 1:And also, what came to mind was having control over your finances. That's a luxury, actually, for a lot of people. Most times, your finances are controlling you, and being financially independent means that you can make decisions. You can make decisions on how to invest, how to spend your money, how to manage your money, without being told Right. It's that initiative that you can take for yourself and that gives you peace of mind. Right, being able to control your finances gives you the peace of mind so that you can enjoy the time that you spend with your family, the time that you spend at work and anything that you do.
Speaker 1:On this particular trip, we traveled to California and we drove down the coast from San Francisco to LA, and we made a few stops along the way. But it really required a lot of planning because there was timing, involved flights, buses, picking up, car rentals, hotels, all these different things that had to line up in order to make this trip a successful one without having a lot of stress, and because of the preparation that we took to really plan out the trip, it made it so much easier, right. It gave us so much peace of mind. We decided to hop from one thing to the next and unexpected things happen. But really, to be honest with you, this is probably one of the first trips that we've been on where things went fairly smoothly. So it kind of just leads me to say that preparation, planning, having financial independence, gives you a peace of mind that is so satisfying when you are living your day to day life and, finally, it gives you super resilience, right. So when you do have unexpected things that happen, you are prepared and ready to be able to react in a way that is not with panic. So you know that always goes back to what I preach, and that is to having an emergency savings fund. So when things go wrong, you are ready and prepared. Okay, so now we know why we need to be financially independent and all the benefits that it comes with.
Speaker 1:But let's go back to what the fire movement is. Remember it's financial independence retire early. So the main goal of the fire movement is to achieve financial independence right, which means having enough savings and investments to cover your living expenses without the need for traditional employment income. Now that seems kind of farfetched, but people have done it. So when I started researching this, I discovered there are a few things that they implement when they are trying to achieve this particular goal. The first thing is to really be aggressive with your savings. So normally they advocate for a very large percentage of their income to be saved, and that's often 50% or more. Now, like I said, for the most part most common budgets, 50% of your income is going to your major expenses, and that is your rent, your mortgage, you know things that are for your living right. That is typically the amount that you are going to take from your income and put towards those types of living expenses. So people that are really ingrained in this movement take that 50% of their income and they live super frugally, right. So perhaps they live in a place where they can walk to work, they don't take any transport, they don't have any car expenses, but they really prioritize saving over excessive spending. The next thing they do is they really start to invest that money right.
Speaker 1:So most people that are following the fire movement focus on investing their savings in a way that generates passive income and long-term wealth growth. Now, I've talked about passive income on this podcast before, and what that means is its income that's coming to you without you having to do physical work for it. So if you are investing in something and it's giving you a dividend or return, you can use that as income and you didn't necessarily have to work for that. And then there's the long-term wealth growth. So a lot of people you know these days they're all about the short shorting in the markets, but long-term wealth growth is important as well, and that is just kind of riding out the wave. So there's always going to be high times and low times in the markets, but you just continue to ride out the wave until you're ready to really withdraw those funds and overall, you're most likely going to gain in the end. So that's kind of like long-term wealth growth.
Speaker 1:Now the types of investments that they do are like low cost index funds, some maybe stocks, bonds, even real estate, but really the goal for them is to maximize their returns while they're minimizing any fees or taxes. So the investing component is actually quite important. And then the next thing that they focus on is minimalism and frugality. Now, if you Google, I want you to Google and go and look up the fire movement, and they have lots of bloggers out there that talk about what they do to save money.
Speaker 1:They live very minimalistic and frugal lifestyles to reduce their expenses and, like I said, I'm not saying this is for everyone. However, I do think that we can learn and take a page from the way that they live, because obviously their goals are more important than their current situation or lifestyle. And if you want to reach your financial goals, then there has to be sacrifice involved. You cannot be living the exact same way You're going to get the exact same results. So you must make a change, and some of it does come from a little bit of frugality and it's not always the nicest thing to hear because, like there's lots of other ways that you can improve your financial situation, but it does involve watching how you spend your money and making sure that what you're where your money is going is to the things that are super important to you. And what comes along with this in partnership is the fact that they're financially aware and they're tracking exactly where their money is going.
Speaker 1:You know, a lot of us wear these blindfolds and just spend money blindlessly and not really understand or realize where it's going until it's gone right. But if you are part of this fire movement, they are regularly reviewing their progress. How are we doing? What is the numbers saying? They have budget tools, they have spreadsheets, they have apps. That makes them stay on top of their financial matters. Now, again, I always preach that you do not have to have all these tools in order to be financially aware. However, you do need to track in some way, whether that would be on paper, whatever it is you're comfortable with.
Speaker 1:You cannot just wear blinders and go out and spend money because you are not going to reach the goals that you want to reach, and you know bringing in extra money also is key. So if they're trying to save 50% of their income, right, they still need to be able to live, and a lot of this has to do with bringing on side hustles and additional income. Now I did a savings challenge a while back, and I have actually incorporated that into some of the information that I give out to people that download my guides and this is one of the key lessons is to do what you need to do to bring in some extra income to either pay off debt, to put towards your goals, to invest, and it only has to be for a short period of time. So if you feel like, oh, I don't have enough time to go out and get a part-time job or to start off side hustle, then find creative ways, and I do have a list that I share. If you want to download my guide it's the fall tune up. I will link it in the show notes as well. I actually take you through a financial savings challenge. It's a seven day thing. I give you a little exercises every day for you to work on, and there I list out tons of different ways that you can make additional money, and you can put that to whatever you choose.
Speaker 1:Now, another thing that I found interesting when I was doing this research is that they really live in areas with a lower cost of living, so a lot of us like to live in the city center, and that comes with a lot of benefits, transit lots of things. But if you have the ability to live in a place where there's a lower cost of living again, it could be for a period of time that may help to stretch that savings and accelerate your path towards your fire number. And I didn't mention that before, but there are calculators out there Now. The rule of thumb is 25. The rule of 25 essentially states when you take your annual expected expenses and multiply them by 25. And that's the amount that you need to have saved before you start withdrawing. So if you've reached the number, which is your expenses times 25, if you've reached that amount in your savings, then you are ready to embroach on retirement.
Speaker 1:Now, a couple of things that people forget is health insurance, contingency planning. You never know what life is going to dish out, and so you need to be sure you're covered health-wise and be able to cover any medical expenses that you may need, especially if you're traveling into other countries. And what I found the most interesting was the perspective of these people. Right, they're so determined to get to that number, or to save and be disciplined, that they're willing to make the sacrifices in their short-term life. Not sure if you've seen the movie King Richard, which is the story of Serena and Venus Williams and how they came up to be the tennis stars that they were.
Speaker 1:I had no idea the sacrifices that that family had to go through in order to get to the level of where they are today. We all see them winning all the championships and retiring with millions and millions of dollars, but behind the scenes, if we go back into their childhood, the belief that that father had in order to push their kids to that level is just unreal. And that's kind of how I see this community of fire people that are doing what they need to do to get to the goals and, like I said, this is an extreme behavior and I commend them for being able to do this. I don't know if I could do it to that level, but we need to take a page from this. We need to be able to say I'm willing to sacrifice X, y and Z so that I can get to a positive financial future. And yes, life is going to throw us rocks along the way, but we take them and we build a house with it.
Speaker 1:So if you're in need of help and assistance and don't know where to start, whether you're young, whether you're older. I encourage you to seek out more education, more financial literacy, and it doesn't have to be with me there are many people out there that provide this type of information. But seek it out and change and make difference in your life. There are several tools that I offer and there are different ways that you can work with me, so you have no excuses to make a change and determine what your financial future is going to be. So I'm all fired up now. I'm all well vested from my vacation, so be sure to hit me up, and I want you to feel the same excitement as I do as we move into a new season and make changes so that 2024 is going to be different than 2023. All right, take care, guys, and we'll see you next Thursday. Thank you for listening. We are committed to helping you place your very first steps into your new home. See you next time.