058 - How I FI - Learning The Basics
27 Feb, 2018
Continuing on with a favorite topic of mine—financial independence! In last week's episode I shared a bit about what my mindset around personal finances was before I discovered the concept of FI. Tl;dr: the more I earned, the more I spent, and I couldn’t imagine a reality where things would or could be different. I’m so glad I learned that there is a better way!
For me, finding that better way came in three parts: 1) getting introduced to the idea & basic concepts of financial independence; 2) applying that information to figure out my current FI status; and 3) making a long term plan to actually work towards FI. To summarize the steps I talked about in the podcast…
1. Getting A Proper Introduction
While I’d love to take the credit for making a conscious decision to improve my finances, the credit actually goes to the book The Four Pillars of Investing by William Bernstein, which I got on a whim when it was on sale on Amazon. This book covers all the basics & history of the stock market.
Most importantly, it gave me understanding and the confidence to realize I can manage finances pretty easily on my own, and set myself up for a comfortable retirement without paying a lot for professional help.
Once I understood this I fell down the rabbit hole and found an endless supply of other great resources to learn more about personal finances, FI, investing, and more. Check the links below for some of my favorites.
2. Applying The Information
Once there was a basic understanding of how it all works, I took a look at my own situation to see how I stacked up. Some basic questions needed to be answered:
- What is my net worth?
- How are my employer retirement accounts invested? Are they invested? What fees are they charging?
- Do I even remember all of the accounts I have out there!?
Full disclosure: this may not turn out to be a pretty picture but at least you know where you’re starting, and can then figure out how to make it better.
3. Put A Plan In Place
While answering the questions above, it’s helpful to gather all of the information into one place. Tools like Mint and Personal Capital make it really easy to do if you’re based in the US. Since some of my accounts aren’t in the US, I just used a good old Excel spreadsheet to collect the information.
Once I had everything in one place, it was easier to figure out how I could make changes, and also how to think about my day-to-day spending and saving. I’ll be talking more about that in depth next week so stay tuned!
Show Links & Additional Resources To Check Out:
- Book: The Four Pillars of Investing by William Bernstein
- Book: Your Money Or Your Life
- Bogleheads Web Forum
- Mad Fientist blog and podcast
- ChooseFI Podcast, and check out their local listings to find a meetup group near you
- Plain English explanation of how to achieve FI
- Mint online personal finance tracker
- Personal Capital - another online personal finance tracker (I personally like this one better)