Improving Financial Intelligence One Friend at a Time

Six Months. Check!

We’re six months in on our journey to become FI/RE community members. And while I do believe we’re six months closer to earlier retirement, the truth is the what and when financial independence and early retirement looks for us is still a moving target. The good news is we’re executing to the plan that we’ve created, we’re tracking and reviewing it, and we’re adjusting as necessary.

An interesting dynamic we’ve discovered is the sharing of our FI/RE plans with close friends. When we share that we hope to retire in about 10 years, reactions vary from astonishment to nonchalant acceptance. However, there’s hardly any follow up or probing to better understand how we could possibly do this. Do they think we’re stupid rich* and just bragging? Out of our mind and don’t want us to feel bad? Or do they just not care? *For the record, we are definitely not stupid rich.

My hunch is most people generally don’t feel comfortable talking about money and finances. While I respect that somethings are better kept private, I also believe that the financial IQ of society is severely lacking. Think about it: we ask our friends and neighbors for advice on all sorts of things – house projects, gardening, service providers, medical providers, places to visit, recipes – but when was the last time you asked them who they bank with, if they use a financial advisor, how they diversify their portfolio, or what their savings rate is. Why is that?

I feel like the lack of conversation on money contributes to the fact that many Americans make bad decisions with their money. And as a result, many struggle paycheck-to-paycheck, and many more will struggle as they approach retirement.

Money  Among Friends

I recently grabbed a beer with one of my closest friends. My friend is a very successful sales executive. He talks much more freely about money than the typical friend. I think this is in part because he makes and keeps a lot of it – he’s an excellent saver. But I would classify his financial intelligence to be basic.

Most of his money is tied up with a big firm in mutual funds, and then a significant chunk of cash… way too much cash! He’s made one or two higher-risk investments on the side, which are doing well. He’s going to be just fine to retire whenever and wherever he wants.

So, what’s wrong with this? Technically, nothing. But what if he better understood truly what he has and what else he could be doing or striving for.

When I started chatting with him about FI/RE, I introduced the concept of “f-you money” – which in my book means having enough money that you can walk away from anything you want to without any repercussions to your lifestyle. So, in my book, f-you money and FI are the same thing. Based on my assumptions of my friend’s income, expense, and wealth, he likely has or is very close to having sufficient wealth to be financially independent at a very early age. He could probably leave his sales job and focus on anything else that would give him greater pleasure.

I didn’t want to push the topic too far, since finances are unfortunately a faux pas in a social setting. But he did mention that he wanted to talk to me more about what I’ve personally learned and am doing about it.

Perhaps when we sit down and talk to him, I’ll use our conversations to help build out a framework that I can document here. That way our friends and family can read this in private, and hopefully we can all become a little more financially intelligent together. Plus, that way I more regularly communicate to this blog in the next 6 months!