Money Toolbox

Building a Rich Life

In their classic Your Money or Your Life, Joe Dominguez and Vicki Robin argue that the relationship between spending and happiness is non-linear.

More spending brings more fulfillment — up to a point. But spending too much can actually have a negative impact on your quality of life. The authors suggest that personal fulfillment — that is, contentment — can be graphed on a curve that looks like this:

[The Fulfillment Curve]

Beyond the peak, Stuff starts to take control of your life. Buying a sofa made you happy, so you buy recliners to match. Your DVD collection grows from 20 titles to 200, and you drink expensive hot chocolate made from Peruvian cocoa beans. Soon your house is so full of Stuff that you have to buy a bigger home — and rent a storage unit. But none of this makes you any happier. In fact, all of your things become a burden. Rather than adding to your fulfillment, buying new Stuff actually detracts from it.

The sweet spot on the Fulfillment Curve is in the Luxuries section, where money gives you the most happiness: You’ve provided for your survival needs, you have some creature comforts, and you even have a few luxuries. Life is grand. Your spending and your happiness are perfectly balanced. You have Enough.

According to Dominguez and Robin, “Financial Independence is the experience of having enough — and then some.” This is achieved when your savings has reached a level that will sustain you at the peak of the Fulfillment Curve indefinitely.

So, what happens once you have enough — and then some? What happens after you’ve achieved financial independence? Many people reach this place only to find themselves wondering, “What next?” It’s an important question, one that’s often tough to answer.

I believe that the answer to this question ought to be: Once you have Enough, you build a Rich Life — for yourself and others.

A Rich Life

Here’s the truth: You don’t want to be rich; you want to be happy. You don’t want money for the sake of money. You want money for what it represents: freedom, fulfillment, and a Rich Life.

Fundamentally, money is a tool. And like any tool, it can be used constructively or destructively. Most people never master money as a tool. But because you’re interested in financial independence and early retirement, you’re motivated to do so.

When you achieve financial freedom, your frame of reference changes. You move from a world in which work is the center of everything, the driving force in every decision, to a world in which you and your goals become your core concern. The fruits of your labor no longer go to your employer. They go to you.

At this point, you’re focused on creating what Ramit Sethi calls a “Rich Life”.

In his book, I Will Teach You to Be Rich, Sethi says that a Rich Life is built with your values and purpose in mind. A Rich Life makes room for pleasure but it’s not solely about self-indulgence. Instead, it balances personal gratification with personal growth, extraordinary experiences, strong relationships — and perhaps some sort of lasting legacy.

The Fog of Work

Many people enjoy rich lives while they’re working, no question, but financial independence allows you to pursue your aims without the ever-present “fog of work” clouding your decisions.

You’re surrounded by the fog of work when your mind is so occupied with the day-to-day busy-ness that comes with a job that you’re unable to productively plan for your future. It’s tough to make and execute long-term plans because you’re so focused on today.

Doug Nordman, author of The Military Guide to Financial Independence and Retirement, says that sometimes this fog of work is lifted and you can see clearly. You go on vacation. You have time off for Christmas holidays. You enjoy a weekend with your high school friends. At these times, you leave “work mode” behind and you’re able to see clearly what motivates and excites you.

When you reach financial freedom, this fog of work is lifted forever. Financial freedom gives you the ability to live your life as you want to live it without the obligation to give the prime hours of your life to enrich somebody else.

The Best Use of Your Time

As you might guess from all of the talk about time in this course, I believe that a Rich Life is abundant in both money and time.

A lot of people get lost in the financial aspects of financial independence and early retirement. They’re caught up in the numbers. Saving rates! Index funds! Inflation! Sustainable withdrawal rates! But in many ways, the time freedom of early retirement is more important (and more valuable) than the financial freedom.

Grant Sabatier, author of Financial Freedom, asks his readers: If a ninety-year-old billionaire offered to swap bodies with you in exchange for $100 million, would you do it? Of course not. That’s because time is more valuable than money.

Because time is more valuable than money, it’s crucial to use it wisely. It’s a genuine privilege to be able to retire early. So many things have to go right for this to happen! I think it’d be a mistake to squander the opportunity you’ve been given (or have given yourself).

When it comes to making decisions, I’m a fan of a technique I learned from author Derek Sivers in his book, Anything You Want. “When you’re deciding whether to do something,” Siver writes, “If you feel anything less than ‘Wow! That would be amazing! HELL YEAH!’ — then say ‘no’.”

While you’re still lost in the fog of work, making “HELL YEAH” decisions is difficult. A lot of times, you don’t have the freedom to use that as a guiding principle. You have bills to pay! One of the many benefits of financial independence is that you can use “HELL YEAH!” as a way of deciding how to spend your time.

Even if you’re still working, though, you can think about what you might do if you could use the “HELL YEAH!” method as a guiding principle. In Cashing In on the American Dream, Paul Terhorst suggests that readers — before they reach financial freedom — brainstorm a wishlist of all the things they’d do in retirement. This is a great exercise, and reminiscent of the three questions we explored during lecture two about the power of purpose.

Building a Rich Life

A Rich Life looks different for everyone. In my work over the past decade, I’ve met thousands of early retirees. No two people has opted for the same path after achieving financial freedom. That’s great! The world has a lot to offer. Each of us wants something different.

That said, there are some common themes that appear for folks who reach financial independence. In is book You Can Retire Sooner Than You Think, financial planner Wes Moss shares what he’s learned from surveying 1350 people about what’s involved in a happy retirement.

Moss says that happy retirees have a sense of purpose. Great! In this course, we’ve talked at length about the importance of purpose. Moss says that happy retirees are driven by what he calls “core pursuits”. Core pursuits are like hobbies on steroids. They’re activities that monopolize the time and energy of happy retirees.

Moss says that the happiest retirees are three times more likely to volunteer than unhappy retirees. Other studies have shown similar results. In an article from Psychological Science, researchers found that “giving time gives you time”. The authors found that spending time on others (instead of yourself) boosts how much time you think you have — in both the present and the future.

My experience backs up these studies. The happiest FIRE folks I know are those with dedicated core pursuits (surfing, skiing, parenting, writing, dancing). And the happiest of all are those who are in some way giving back to the world. I love that Vicki Robin, one of the first proponents of the FIRE philosophy, is a vocal advocate of using early retirement as an on-ramp to improving the world.

But it’s not just Vicki. Younger early retirees such as Tanja Hester (author of Work Optional and the upcoming Wallet Activism) are also engaged in this work.

If you’d like inspiration for possible volunteer work, check out sites like VolunteerMatch and Idealist. And no matter where you live, your local United Way chapter can make use of your time and talents.

Additional Resources

Finally, here’s a list of additional resources if you’d like to learn more about the concepts in this lecture. First up, here are some books on this topic:

If you’d rather read material on the web, here are some related articles and sites:

And don’t forget: If you’d like some general resources for financial independence and early retirement, I’ve created a page here at Money Toolbox that links to useful FIRE apps and tools.

© 2021 J.D. Roth