The quest for ‘ultimate’ financial goals is a deeply personal one, as it will vary greatly depending on your individual values, aspirations and life circumstances. However, I can offer some general frameworks and examples to help you explore what might constitute your own personal financial nirvana.
Adapting Abraham Maslow’s famous hierarchy to the realm of finance, we can think in terms of stages:
- Basic Needs: Ensuring security and stability through debt repayment, building an emergency fund, and having basic living expenses covered.
- Comfort and Security: Saving for retirement, owning a home, and having adequate health insurance.
- Belonging and Love: Financial support for family and loved ones, contributing to charities, and building a community.
- Esteem and Recognition: Investing in personal development, pursuing passions, and achieving financial independence.
- Self-Actualization: Leaving a legacy, making a positive impact on the world, and experiencing true financial freedom, where money ceases to be a source of worry and becomes a tool for pursuing your highest aspirations.
My financial goals
- FINANCIAL INDEPENDENCE. I have always been a big fan of being financially independent. I like that feeling that I can say ‘No!’ to anyone at any time I want. We are on the way to financial independence (Passive Income >= Annual Spending). Based on my calculations, it is happening around this time. We are expecting to reach financial independence around when our Financial Independence Ration (FI) Ratio is forecasted to hit 100%. The forecasted FI Ratio of our family for 2023, 2024 and 2025 is going to reach over 150% each year. If you are financially independent, you can afford to do what you like, not what you have to, and work by being motivated with something else than just money. People become financially independent usually by saving a certain amount of money every month over a long period of time. In the end, they end up with a huge amount of money.
- EARLY RETIREMENT. I would love this to happen as soon as possible. By maximizing our monthly savings, we strive for financial independence that will lead us to early retirement. However, because of the current life set up (e.g. additional benefits that come with having a full-time job), we will most likely still continue working for a few more years. Financial independence often equals early retirement. This is where the FIRE movement come from. FIRE = ‘Financial Independence, Retire Early’. The idea of early retirement is very appealing to me. The most important factor that allows people to retire early is that they save a big portion of their salary every month. By maximizing our monthly savings, we strive for financial independence that will lead us to early retirement.
- FREEDOM. My ultimate life goal is to move to a wooden house in the forest by the lake, and be able to live off my own resources. Go fishing. Do gardening. Read books. Exercise. Go for a run. Sleep late. Cook healthy food. Do nothing. When you retire early, it means that you have freedom. You are also time rich. So, you can decide how to spend your time. Secondly, you are able to shape your own reality instead of reacting to someone else’s arrangements. Also, you can create valuable networks with people based on values and feelings rather than transactions dictated by money. You can abandon your tedious past to make new fantastic reality. Once retired early, we may go traveling around the world with our kids which is a very unique experience that the kids could perhaps never be able to afford otherwise. Another idea that I have is to move to Scandinavia and buy a wooden cottage by the lake in the woods. Will surely write more about this one day!
Examples of ultimate financial goals
- Freedom from financial stress: Living below your means, having multiple income streams, and never having to worry about money.
- Early retirement: Retiring on your own terms, pursuing hobbies and passions, and enjoying financial independence at a young age.
- Financial legacy: Leaving a comfortable inheritance for your children or grandchildren, supporting charitable causes, and making a lasting impact on the world.
- Travel and adventure: Exploring the globe, experiencing different cultures, and living a life full of rich experiences without financial constraints.
- Creative and intellectual pursuits: Funding your dream project, dedicating yourself to artistic endeavors, or supporting academic research without any financial limitations.
Remember, your individual values and priorities will shape your ultimate financial goals. So, do not compare yourself to others; do what feels right for you. Ultimate goals often require long-term planning and effort. Be patient, disciplined, and willing to make sacrifices along the way. And finally, financial health is a journey, not a destination. Celebrate your progress along the way, adapt your goals as needed, and do not be afraid to course-correct.
