When the British still ruled over the Indian subcontinent in the late eighteenth and early nineteenth century, the British colonial government grew concerned over the amount of cobras in Delhi. From a preventative public health perspective the Raj, allegedly, decided to pay a bounty for every dead cobra. As you might guess, this strategy proved highly succesful and drastically reduced the population of the venomous snakes.
Ofcourse, it didn’t take long for a select few entrepreneurial people to breed cobras for the income. When the colonial rulers got wind of the ingenuity of the local population, they promptly scrapped the bounty, leaving the cobra breeders with worthless snake pits. Not being able to monetize their investment any further, the locals saw no other recourse than to release the snakes, thereby increasing the wild cobra population beyond any level previously seen.
Even though this anecdote from economost Horst Siebert probably is ahistorical, there are plenty of other contemporary examples of good intentions leading to unintended or even undesireable consequences. It’s true that the road to hell is paved with good intentions, but sometimes we also forget why we decided to travel down a specific road at all – who wants to go to hell anyway?
And that’s how it feels with financial independence sometimes, at least to me.
I’ve been going down the saving and investing road for over eight years now, almost on auto-pilot, but I don’t fully remember why my internal GPS decided to point me this way. Or it feels like I forgot. I tell myself I do it to become financially secure and independent, so I can have a relaxed or even luxurious life afterwards, but over the years I believe more and more that financial independence isn’t a goal to reach by a certain date, but a process.
Of course, being in debt, feeling stuck in the 9-to-5 grind, or not being able to enjoy your free time the way you want are horrible cobras to have slithering about, but it’s an illusion to think you’ll be rid of all venomous snakes in your life by reaching financial independence, let alone early retirement. The cobras will still be there when you reach your magic number. Maybe they won’t be as numerous, but the fear of running into just one might be enough to undermine the supposedly exhalted feeling of not being beholden to anyone else.
My critical oversight
So what went wrong?
Essentialy, I don’t like my job. It feels like an obligation. I don’t believe it adds much inherent value to society. There’s barely anyone around that I learn new things from. My abilities are not being pushed to the limits. I feel hardly any challenge. As a result, I don’t feel valued and sometimes even doubt my competence.
To me financial independence has become an escape route, even though I never intended it to be nor can it be one. It has become a finish line made up of rainbows with a unicorn leading me to paradise. Early retirement is the happy ending that will solve all my problems.
This kind of thinking is self-deception of the highest order.
It offers us the mental comfortability to not look at the way we are living our lives. We stop asking questions about what makes us happy. We forget which activities bring us the most joy. We don’t actively surround ourselves with people we really value anymore. And we stop trying. Because once we reach 25 times our annual spending level, we are set for life and those problems will sort out themselves. We’ll then finally be able to focus on what truly matters to us.
The point is, money still doesn’t buy hapiness. It won’t now and it also won’t in the future.
Disconnecting life and money
How does this reasoning emerge? It happens when we causally connect our lifestyle and problems to the amount of money we have. That way we introduce a confounding variable into our thinking.
When you’re hungry or thirsty, you solve your hunger or quench your thirst by eating and drinking. We can satisfy an on going visceral need like hunger in the short term easily. It’s a straight arrow from hunger to food to not being hungry anymore.
In the example of me not liking my job, the need is not as visceral nor is the arrow straight. I won’t die in a week if I still have to go to the office. Neither does not being financially free fully capture my problem as mentioned in the questions above: what and who make me happy? Yet, some reptilian part of our brain still treats the problem the same way: being miserable in a job equals feeling hungry, and financial independence stands in for delicious food.
We replace the hard question “what do I need to be happy?” with the easy question “how can I get rid of this job?” Kahneman and Tversky have called this kind of problem-solving ‘heuristics’: mental shortcuts to find a quick solution to a complex problem. In the diagram below, we take a shortcut by erroneously connecting the miserable job with financial independence and happiness, forgoing the unidentified issues. On top of that, it’s highly likely that the unsolved deeper questions keep us in a miserable job instead of the other way around, but we think it’s the other way around.
Instead, the truth is that financial freedom is only one of the aspects that could make us happy. It allows us to do more of what we already love with who we love, but it’ll never be able to define those things for us. Furthermore, waiting for our wealth to catch up to our expenses to start being truly happy is completely irrational. Why not start living a happy life now? The two aren’t mutually exclusive.
Focus on the hard questions
So what’s the point of financial independence then?
There probably isn’t one right answer for everyone, but for me at the moment its point is very clear: we can leverage financial freedom to make it easier for ourselves to live more purposefully. But to do that we first need to figure out what gives us purpose.
Purpose is the hard questions:
- What do I really enjoy doing? What makes me feel on top of the world?
- When do I lose track of time? When do I feel like the best version of myself?
- What would I do in life if I was sure I couldn’t fail?
- Who would I be doing those things with? Who for?
- What scares me and why? How do I overcome these fears?
- Who do I look up to? How can I be around them or people like them (more)?
I have been struggling with these questions for a while now – they’re really hard. But after a while common topics and patterns emerge. You’ll find it easier to name what you should be doing in life and who you should be doing it with to feel happy. So please don’t sell yourself short by satisficing with a simpler heuristic.
And financial independence? It’s a powerful tool you can leverage, but it’s nothing more than a tool. Don’t think you need to reach it first before you can be happy, because you’ll find nothing at the finish line that’s worth your time but the hard questions.
There will always be cobras and no amount of bounty hunting will eradicate them all. Enjoy your life to the fullest, be grateful for every amazing moment you enjoy, and treat financial independence like a background process that’s working for you, diligently and silently making every day even better than the previous one.
Thank you for reading. This article is the reason why I started blogging again. I have felt stuck for a while now, but the insights I have tried to convey here helped me to start asking the hard questions. My sincere hope is it triggers the same thought process in you too. Do you know what financial independence means to you?