This really riles me up.

I hear people say things like..

“I don’t earn enough to be financially independent and retire early”

“You’re a high income earner, it’s easy for you”

Often said after I’ve had a unamusing conversation about how awesome their new $50,000 dollar car is that they bought with a loan that they can “afford”. Sometimes after they’ve wowed me describing their weekend brunch of quinoa, rhubarb & chia seed porridge, washed down with the finest cat poo coffee, or perhaps green juice served in a jam jar…there are some true battlers out there.

Jesting aside, there are some that want financial independence but don’t see a path there. It doesn’t rile me up because I am offended, but because these are potential fellow shufflers!

If you live in Australia (or any other developed country ), then there is a 95% chance you can FI/RE (financial independence/retire early). There are outliers such as those with expensive health conditions or those single parents on absolute minimum wage with 2 or more children. There are also some that just absolutely can’t seem to find full time work, despite being keen as mustard. I feel for these people who have the desire to FI/RE but find themselves up against seemingly insurmountable odds.

If you are one of these people then I can only hope that my writing inspires and gives you some tools, however small, to help you along your way.

However, these are truly the exception. I hold no sympathy for those who claim to want to FI/RE, but continually and consciously make decisions that are counter to this goal and yet feel hard done by. For the vast majority of Australians, the only thing in the way of our financial independence is ourselves.

So without any further ado, let me tell how you…yes you, can also attain FI/RE.

“I don’t earn enough to FI/RE”

I hear this all the time from people on lower incomes. This is a sort of half cooked thought/rationalisation. It all boils down to how much you decide to work.

If you are not prepared to work greater than full time to reach the FI/RE goal, then it is not that you can’t FI/RE, it’s only that you don’t really want to or you have other priorities.

When I suggest working more, people look at me as though I have asked them to sacrifice their first born child.

They often reply with something like:

“I could never work my weekends” or

“life is too short, you need to enjoy yourself”.

These are perfectly valid and respectable opinions. However, FI/RE is an extraordinary outcome and so will require you to take extraordinary action.

The thing is, it isn’t actually that extraordinary. Many people all over the country do overtime to reach their financial goals.

Having other priorities such as time with children or hobby time is fine, unless of course they involve excessive consumerism, or irrationality. That is then not fine.

Furthermore, these are exactly why I do work so hard to reach FI/RE. I want to be able to enjoy myself even more than I am now (because I am having a blast on this journey).

“You’re a high income earner, it’s easy for you, most of us don’t have that option”

You are right. It is easier for me to reach FI when compared to another person on a lower income.

Now that we have that out of the way and we all agree, let’s get to actually breaking down one of the factors that leads to my high income that you can emulate to increase your income.

Here is a reality about high income earners most people forget to consider. I know no high income earners that work a 38 hour week…absolutely none. All of them are doing overtime – it is just unrecorded overtime.

Society is filled with roles where people are expected to work “enough hours” to get their job done. My contract stipulates “38 hours per week plus any additional reasonable overtime to complete your work”. This often means working 10-12 hour days, on occasion working even longer and working from home on my time off.

I have a friend in law who left the office for dinner one evening in the city and went straight back to the office afterwards to finish his work. This was after a full day of work!

Despite 5 years of university, a $50,000 debt and 5 years of lost income and investment returns on that income, I am still not privileged enough to have all of my weekends to myself. I know university was a great life decision, providing me education, critical thought, friends etc but I am still not sure if it is necessarily the best financial decision.

So it would seem that working long hours is synonymous with earning more to make FI/RE more easily achievable.

This lifestyle isn’t for everyone, it is indeed hard and time consuming. I personally choose to continue it now to reach my goal faster.

Some may choose to quit and do something more low key. A close friend of mine just resigned from one of my previous workplaces. He has taken 2 months to travel and is going back to university to do teaching. I feel for him, I remember the stress and pressure in that job being soul crushing. For some, choosing something less intense and taking a bit longer will suit them better. However, even someone working a ‘low key’ job can dramatically increase their savings rate just by doing a few extra hours or getting a side hustle.

A working example

Australia’s absolute minimum wage for a full time employee is AUD$17.70 per hour. This amounts to about $35,000 per year. After tax that is $31,553 or roughly $1,198 per fortnight.

Someone on the Australian minimum wage working full time and who lives on my current working budget will have a savings rate of almost 11%. This is with a $100 per fortnight discretionary budget and a $100 per fortnight holiday fund!

Throw in 8 hours of overtime per week at a 1.5 penalty rate or 12 hours in a second job at normal rates and this savings rate climbs to almost 30%.

But you’re a low income earner, and you don’t get the tax advantage of health care that I do. So drop the health insurance and your savings rate inches up to 31%.

If you are in a low income job that only pays $17.70 per hour, then I am going to be bold and suggest that you can find that sort of work anywhere. This makes it quite easy to find a job near where you live. So you can probably get rid of your car. That will shoot your savings rate to 40%.

According to my savings rate graph, a 40% savings rate will have you retiring in under 20 years!

Living in a country where a single minimum wage earner can still FI/RE in under 20 years is nothing short of extraordinary. All this while taking a $2,600 holiday every year, living in the most expensive city in this country and assuming that this hypothetical low income earner never has a pay rise more than inflation in that time!

I feel like this is quite an extreme example, and a mathematically possible path to FI/RE can still be demonstrated.

“But I live in a regional area without good public transport so I need my car to get around!”

If that’s the case, you will keep the car but you will pay far lower rent than someone who lives in a high cost of living city. Much of a muchness.

“But we have children!”

It is often assumed this becomes nigh on impossible with children, but this simply is not borne out by the statistics.

These show that for low income earners, the government gives more in subsidies than a low income earner spends on their first child. It then indicates that for a second child up to the age of 18, the government foots more than half the bill. An average low income family spends $55,000 in total after government subsidies on their average “slightly less than” 2 children. That is total over the full life of their 2 children. As shown below

A second casual income started after the kids reach school age will more than cover these additional costs. If the family income increases far enough, the government subsidies will reduce and other costs such as childcare and the need for a car may increase, however on average overall take home pay continues to go up.

Seeing others trying to juggle work, children and FI goals almost make me want to run into a corner in the foetal position. It seems like damned hard but awesome and rewarding work. Understandably, the pros and cons of taking on extra work need to be weighed up as the children get older. I would like to be in a position where my finances are as sorted out as they possibly can be so I have the luxury of focusing all my energy on my family.

Final Thoughts

The goal of this post isn’t to have a stab, but to help get people out of self defeating thought patterns.

I feel like I have just described a kind of typical worse case scenario here. Things also become easier with a partner who has the same aspirations. Cost of living does not scale linearly with number of people in a household.

Feel free to let me know in the comments how I am wrong or how there are very common even worse scenarios I have not considered.

Chances are someone who wants to FI/RE will do far better than the scenario I described above. They will increase their income, increase their happiness and achieve FI/RE far sooner than 20 years.

Shuffling through excuses.

Pat the Shuffler

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