Building a new generation of financial freedom seekers

[Music]

all right

stories are what connect us people love

stories especially stories about

other people so why is it

that in some of the most important areas

we retreat away from stories we start

talking about numbers and facts and

research

all of which is really important don’t

get me wrong

but sometimes in those most important

areas

we’re scared to talk about what all of

that really means

how it makes a difference for real

people

and how people use those numbers facts

and research

in their lives so here’s a story i want

to tell you

imagine if you didn’t need your job

anymore if it was

a quirky hobby and you went because you

found it interesting

and fulfilling and the money was just a

nice side effect

imagine how differently you would live

your life

if the money was taken out of the

equation

now this sounds like something that a

millionaire or a billionaire would do

but actually a lot of really wealthy

people

fail at this meanwhile regular people

can make it happen

and you get it through financial freedom

there is a whole new generation of

financial freedom

seekers they are changing their lives

because they see money as a tool and

they’ve learned

how to use it

now in my job i am all about personal

finance

i write about it for a newspaper column

i talk about it on a podcast i wrote

about it for a book

you might think i’m someone who’s pretty

focused on money right pretty interested

in it

but i actually don’t care about money

i don’t i care about what money

can do for me currently when you go to

work you exchange your time

for money every dollar that you earn is

a percentage of your life

that you gave to a company so

what if you could use your money to buy

back your time

you can you just have to change the way

you live your life

change the way you handle your finances

decide what matters

to you and laser focus on that

so one of the stories i want to tell you

about is the fire movement

which stands for financial independence

retire early

and we’re going to start with the big

version of this but there are also

easier versions cheat versions to help

you get there faster

and it’s based on a couple of pieces of

maths that you will need to learn

and i know maths i hate it too

which is ironic because my mum was a

maths teacher

she used to try to tutor me in high

school

and i do not recommend that for a

healthy teenage parent relationship

however this mess is so simple

even i can do it so you’re going to be

okay i’ve got you

so the first piece of maths is the 25

times rule and this is your goal you

need a nest egg of 25 times what you

spend

in a year and the standard plan is to

invest it

into low fee index funds which is just a

simple way

of investing in shares now

when you buy shares you are buying a

little piece of a business

those businesses then go to work make

money

and you as a partial owner get a little

piece of that profit

and then it compounds now compound

interest means you invest money that

money goes to work

it makes profit you reinvest that profit

and then you’ve got profit making profit

all you need is time think of it like a

rolling money snowball

where the longer it has to roll the

bigger it will get with

more picking up more and very little

effort from you

or think about what happens when you put

two rabbits together

how quickly you’ll get more rabbits and

then more rabbits from those rabbits

now whether you’re thinking snowballs or

rabbits

what’s important is that you’re sending

your money to

work so that it can make money for you

while you get to sleep in

and the invention of low fee index funds

has made this accessible

to just about everyone you do not need a

business degree

or to hire someone with a business

degree anymore

you just follow a few simple rules and

you’re an investor

and you can see again how your money and

your time are so closely linked

you can use your money to buy back your

time

and the more time you have the easier

you can make money

thanks to compound interest when you are

young

and broke is the perfect time to start

investing because you have

so much time so you need so much less

money

in order to get that snowball rolling or

your rabbits

cuddling now the second piece of maths

is

four percent once you hit that 25 times

goal

you can theoretically withdraw four

percent of that money forever

without running out now this includes

the good years where your investments

might make far more than four percent

but you are controlled and you only take

out four percent

and it includes the bad years like this

year

where your money might even go backwards

or at the very least feel like it’s

going backwards

but because you were controlled in those

good years

and you stacked it aside you can still

take out four percent

again it’s all about the story because

this is a big goal

but what can you get from it well there

are ordinary people on

ordinary salaries who have used this

method to build whatever type of life

they want

quitting their job going travelling

changing to a different job that they

always wanted but

it didn’t pay as much or

there are some people who never get

there

but create the type of stability and

security that they would never have had

otherwise

even getting only part way to financial

independence

creates the ability to survive a crash

like what just

happened with covert 19 where we were

all thrown into lockdown and nobody knew

if we would have jobs at the end of it

i’m not financially independent yet

and it was worrying but even though i’m

not

fully independent now i knew

i had enough of a cushion that i could

survive at least

several months and it was peace of mind

and a worrying time and that’s suddenly

real isn’t it

now i thought about this when i was

writing my book because to be honest

with you

there are a lot of really good personal

finance books out there and

a lot of money management is pretty

simple

so why don’t more of us read them

why would we grab a fiction book and

read it to relax but if someone handed

you a personal finance book you might

say

that sounds a bit full on no thank you

well a lot of those books dive straight

into mortgage structure

debt management interest rates savings

rates

data numbers

and suddenly we’re right back into those

high school math lessons that we

hated it’s a lack of stories

it’s a lack of making it real what’s

more powerful

is talking about how people are using

those lessons

you might have a general idea of what

you should be doing with your money but

how

are other people making that work around

real life

that’s the secret source so as i was

writing my book

i was writing how you can feel more

comfortable with your money

and how you can make it work harder for

you i also wrote

how at each step these techniques had

changed my life

and i wrote how the experts that i

interviewed had changed their lives

because it is life-changing you start

with less stress and you gradually take

back

more and more control of your life

do you best believe that when i am

organizing my finances now

i have those fire numbers in the back of

my head

freedom and independence to do what i

choose

without money dictating to me it needs

25 times

what i spend in a year now

you might be hearing this and thinking

that’s very nice francis

you do make a good pitch but i just

quickly did some maths in my head

and 25 times what i earn in a year is

well over a million dollars to which i

say

first of all well done for doing maths

in your head

now secondly that’s why i say 25 times

what you

spend in a year not what you earn now

i’m not about living a life of

deprivation and that is

not what budgeting is about it is about

deciding

what is meaningful to you and what’s

just

meaningless nonsense that runs the risk

of crowding that out

what do you want in the story of your

life

and what’s just a scribble in the margin

so here’s how you write a budget you do

not start with a budget

you start with a money diary write down

everything that you spend for a week

no cheating now next to it

write down how much you needed to spend

that and i am talking here

true need so shelter food getting to

work that sort of stuff

now also write down how happy it made

you

because i do not want you to cut the

things that make you happy

but at the end of that week there will

be some things there that you don’t need

and

don’t make you happy and that’s easy cut

them

now the needs and the things that make

you happy

how can you keep them in your life in a

smarter way

let’s start with the needs we spend most

of our money on housing transport and

food it’s about 60

of every dollar we spend for the average

new zealander although i would point out

that is an average figure

so what can you change there

do you need a big house or could you

downsize

knock 10 years off the mortgage is a

spare room

that you never go in with extra years of

your life

spent at work it’s up to you

i chose to move to a lower cost of

living area

where i live in a relatively small house

now i’m not saying that was easy

and it did take literally a couple of

years of negotiating remote work options

but it was worth it

what creative ways could you use to

change your core living costs

a five dollar coffee doesn’t matter

if you just save two hundred dollars on

rent

now what about what makes you happy i

know what makes me happy

i am slightly vain and i like nice

clothes

so at the beginning of this year i set

myself a challenge

and i decided i was only going to buy

second-hand clothes

all year and i set myself this challenge

and i put something up on my instagram

as almost an afterthought

and i was blown away by the response

i got requests for media interviews

about my big sacrifice

and i was asked how i do it

i do this because it doesn’t feel like a

big sacrifice

this feels like i’m having my cake and

eating it too it feels like i broke the

system

i get to have all the nice clothes that

i want without worrying about the price

tag

and without feeling like i’m getting in

the way of my own

long-term goals

now when you live like this you’re doing

two things that are really important one

your life now costs less

so you need less to get to that 25 times

goal

and two you are saving and investing

more with what’s left over

so you’re making progress faster

and here’s where i want to address the

retire early side

because personally if i hit financial

independence tomorrow

i would not do the second half and

retire early

i find my job fulfilling and interesting

i feel like i make a valuable

contribution and honestly

how much would you pay for that feeling

i like my job i just don’t want to be

dependent on it

or beholden to it

so the fire movement has been going for

a while now and while

some people have hit that big 25 times

goal and quit their jobs

gone on to do amazing things others

haven’t

but you can change the job you always

wanted to try but that pays less

you can change your hours work different

times of the day or go part-time

you can go remote you can take a break

of several years

spend more time at home with your kids

you have the freedom to

leave at any time and i’m sure you can

imagine

how that changes negotiations with the

boss

so if you don’t want to quit your job

you just want the stability and freedom

to make different choices well

that 25 times number shrinks again

and the work you’ll need to put in to

get there

is so worth it when you think about what

your life would look like

once you have financial freedom

do you want a big petrol-gasoline car

and then to spend your life in the

office working overtime to pay for that

car loan

would you want something smaller maybe

to get rid of it entirely

and spend time at home with your family

or maybe

lock up and leave go traveling for weeks

at a time

when those borders reopen

[Music]

sometimes we need a hand to remember our

goals

we are marinating in a culture that

wants you to spend

on things you don’t need so that other

people can be rich

and it is hard to deprogram that need

to mindlessly spend

well the new generation of financial

freedom seekers have got that sorted

communities of people are springing up

online and they are sharing tips for

saving money making money investing

money

they share knowledge which is great but

more importantly they share how they use

that knowledge

they share their stories research

and data becomes real when you see how

people are

using it this is why my own approach as

a personal finance journalist is

a little different from the generation

that went before me

i want to meet people where they are

i want to share all the best ways to

manage your money definitely

but i also want to share how people are

putting that into practice

the stories and i will share those

stories with you

wherever you like in a newspaper

on a podcast on social media in a book

when you talk to people about your money

you are vulnerable

sure but you also take the opportunity

to each lift each other up now i spend

all day every day talking to financial

experts

one of the best tips i ever got was from

a friend

who i went to university with and who

doesn’t work in finance

now she told me to rotate what you cut

back on each month

so that you never feel deprived overall

so

one month no social life the next month

no new clothes but

you can go back to the pub i quite liked

that

so i shamelessly stole it i put it in my

book as a budgeting tip

and it is the number one thing that

people contact me about

to say it was a tip that they

appreciated

from a regular conversation with a

regular person

because when i started having open

vulnerable conversations with my friends

about money

i gave them permission to do the same

and so we both shared stories and we

both

learned something

when i’m losing focus the people i’ve

surrounded myself with

and the conversations that we have pull

me back

so i want you to think about what your

life would look like

if you didn’t have to care about money

if it was no longer a factor a barrier

a worry what would you

do i want you to care about anything

but money but use money as the tool

that gets you there thank you