About Financial Freedom and Flexibility

The interest in the FIRE community (Financial Independence and Early Retirement) is growing throughout the globe. Some people are Early Retirement Extreme followers, others are Mustachians and there are those who aspire to retire in their 30s and travel the world. But what is Financial Independence in the first place and what is our take on the topic?

Financial Independence is the state in which a person is no longer required to work in order to cover their basic costs of living. It may or may not be related to Early Retirement, as some people might continue to work. However, having the opportunity not to worry about their monthly paycheck  allows them to be more selective with regard to what they invest their time on and choose an activity that truly makes them feel fulfilled. Some achieve this state in their 30s, 40s or 50s and it seems that the trend is ever on the rise, as people are finding their way out of the 9-5 jobs.

There are two interconnected ways to achieve Financial Independence:

  • Optimising expenses and achieving a savings rate of around 60% of your Net income.
  • Increasing income while keeping expenses low

By all means the people on the path to Financial Independence live substantially beneath their means and invest their savings mindfully in stocks/bonds/real estate and anything that brings in interests/dividends or any other type of income in the long run. Skipping the Rat race is incompatible with keeping up with the Johnses, buying a new car every 3-5 years, mobile phones every time there is the slightest modification or any other type of handling your money inefficiently.

What is our take on Financial Freedom and Flexibility?

Although we are entertaining the idea of Early Retirement, we are currently in a phase where our priorities are focused rather on the flexibility and opportunities coming along with Financial Freedom. Having optimized our finances, we are living well beneath our means, saving an average of around 65% of our current Net income (adjusted for one timers like wedding payments, hospital bill for the birth of Danubaby, etc.). This financial position allows us to be flexible in some areas of life, which we personally prioritise.

For example, I am currently enjoying a maternity leave and am staying at home to take care of Danubaby. I am receiving around 65% of my original pay until the sixth month of Danubaby, followed by some very minimal support from the state until the baby turns 3 years of age. However, we can afford the flexibility that I stay at home another year or so, bearing the burden of my significantly decreased income, while the implications on our lifestyle and investment plans remain insignificant.

We find the opportunity of Financial Independence fascinating and we are always on the lookout for optimizing both sides of the equation (incomes and expenses), in order to buy ourselves even more freedom and flexibility. Of course, just an efficiency mindset does not suffice in order to produce a high savings rate, although for some people that might be the case.

What drives us in this direction is having our priorities straight and following a common goal– raising Danubaby personally, with limited involvement of institutions such as day care, as well as spending high amounts of quality time as a family. Each day together is the most amazing adventure and seeing Danubaby grow in front of our eyes is absolutely fantastic!

This is precisely what the point of this blog is – to follow us along the journey of efficiency and financial optimization without compromising our quality of life, so that we can come closer to Financial Freedom. Maybe you have no interest in Financial Independence, but if you follow along with us, you might enjoy some more flexibility and opportunities which go hand in hand with the efficient handling of finances.

So, yes, this is what we are buying instead of a new car – more time with our daughter. To us the deal is more than great! How about you? What would you rather spend your time on?


Mrs. DNB

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