Judging by the numbers of comments and e-mails I receive every day, there’s a lot of folks out there looking for information on financial independence and how to achieve it, preferably sooner rather than later. Of course, for every believer of financial independence and early retirement, there are a thousand non-believers out there. I’d like to respectfully call these people cavemen.
Don’t think I’m jumping on my financial high horse to look down upon the rabble, of course not. I’m simply applying the insights of Plato’s Allegory of the Cave to personal finance and investing. Even though Plato, one of the best-known Greek philosophers, died over two millenia ago, he wrote a remarkable volume of allegories and metaphors that still apply to our modern day world.
In the Parable of the Cave, Plato presents the reader with a dialogue between his brother and his mentor Socrates to explain the effect of education. Socrates describes a cave which holds a group of imprisoned people, unable to move and facing a wall. Shadows formed by objects and noises from passing people make up the prisoners’ reality. He then explains what happens when one of the prisoners is set free.
When reading the Allegory, it becomes quite clear that the people chained inside the dark cave falsely believe that the shadows and background noises constitute reality. Of course, they are not to blame because it’s the only reality ever known to them. A curious thing happens if we release one of the prisoners though.
Because the prisoner is not accustomed to the strong lighting outside of the cave, it’s likely that he won’t be able to properly see the objects that previously cast the shadows. On top of that, the harsh light possibly hurts his eyes, which makes him run back inside the cave, the only safe reality known to him, to look at the things that appear clearer to him because he is accustomed to them.
Now imagine that we drag the prisoner into the direct sunshine and wait for his eyes to adjust to the strong light. Ultimately, his eyes will adapt and he’ll be able to look at the objects and people that previously made up the shadows inside the cave. Only now does he understand reality and is he able to properly reason about it. He’ll also think that the real world now shown to him is vastly superior to what he experienced in the cave.
Financial independence works very much the same way.
Many of the people around me live their lives like the imprisoned cavemen described above. Day-in day-out they enjoy the shadowy reflection of what their life should and could be like. They wake up in the morning, work at least 8 hours, spend their money, then go to bed. Rinse and repeat – ad infinitum.
And when you drag them out in the direct sunlight and try to show them how frugal living, saving, and investing could drastically enhance their experience of reality, they scurry back to the safety of their caves. Back to the weak imitation of living they perceive to be the norm.
Like our prisoner couldn’t see and understand the objects outside because his eyes became accustomed to the darkness in the cave, many people can’t grasp the concept of building a passive income stream because they are used to living by the work-reward criterion.
Contrary to Plato’s Allegory we obviously can’t force people to see the light of financial independence, nor is that necessary. What we can do, however, is educate others that show interest in what it has to offer. Above everything, the Parable of the Cave explains what education and the lack thereof does to us.
Socrates believed that the remaining prisoners are likely to kill anyone wanting to drag them out of their false reality because they probably believe the first prisoner, who now cannot properly see in the darkness of the cave, was hurt when dragged out. I believe that to be true to a certain extent. Not everyone will be open to the idea of financial independence, but show your friends another way than what they think is normal and their perception of reality will slowly start to shift.
You’ll be surprised to find how many of my acquaintances think that I’m stupid for living car-free, until they hear I save about €400 every month. If that’s not enough for them to see huge Euro signs everywhere, you should see their reaction when I tell them I use that money to make even more money.
That’s why you and I are possibly the biggest force behind getting other people on board and propelling them towards financial independence. All too often I receive messages from people who show a genuine interest in living within their means and financial security, but who simply lack the education to get there on their own. It’s up to us to share and expand the knowledge required to get there.
I hadn’t noticed it at first, but last week marked the sixth month of my blogging effort. An effort I undertook because I wanted to show other people what I had learned. I wanted to help them throw off the shackles of their past caveman-like existence so they too could start to enjoy real living instead of the consumerist shade they were accustomed to.
And it’s been an absolute blast. Not only have I grown as a person, I’ve also met a couple of new friends along the way and motivated some readers to start their own financial independence journey. Leading by example is one of the few principles I always make sure to uphold while at work, but it applies here too. In doing so, I hope to show the feasibility of financial freedom and help others see the light.
Do you remember when something or someone kicked you out of the cave and onto your own path towards financial independence or early retirement?