Myths and Misconceptions | Diania Merriam
Episode 306
Episode Guide
Episode Timestamps
Show Notes for ChooseFI Podcast - Episode with Diana Merriam
Episode Summary:
Diana Merriam, founder of the economy conference, joins hosts Jonathan Mendonsa and Brad Barrett to discuss common myths and misconceptions surrounding the financial independence (FI) movement. The conversation emphasizes that FI is not just for high-income earners, nor does it require extreme frugality. Diana highlights the importance of financial literacy and community in pursuing various paths to financial independence.
Key Topics Discussed:
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Diana's Journey with the Economy Conference
- Reflection on successfully hosting the economy conference just before the pandemic.
- Positive feedback and community impact highlighted.
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Myths of Financial Independence
- Addressing misconceptions that FI is exclusive to wealthy individuals or requires stringent frugality.
- Financial independence is accessible to everyone at different income levels.
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The Importance of Community in FI
- Encouragement to find local FI groups for support and idea exchange.
- Community aspect drives motivation and resource sharing.
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Defining Financial Independence
- Reframing FI as a mindset focused on financial literacy and personal choice.
- It’s about increasing income, reducing expenses, and investing the gap.
Actionable Takeaways:
- Evaluate your savings rate and explore ways to optimize spending .
- Attend a local FI meetup to connect with like-minded individuals .
- Redefine your understanding of retirement; engage in fulfilling opportunities now instead of waiting .
Key Quotes:
- "I feel like I dodged a bullet." - Diana reflects on the successful planning of the economy conference before the pandemic .
- "Money is only as valuable as your clarity on how you're going to use it." - Diana emphasizes the importance of understanding one's relationship with money .
- "Why would you wait to 65 to flex that power?" - Diana challenges traditional views of retirement .
Related Resources:
- Optimal Finance Daily Podcast: Listen Here .
Discussion Questions:
- How can we redefine our relationship with money?
- What steps can you take to pursue your own financial independence today?
Conclusion:
Diana's insights into the FI movement help listeners understand its inclusive nature and relevance to diverse income levels. This episode emphasizes the importance of community support and taking proactive steps towards financial stability.
Podcast Extro: "You've been listening to ChooseFI Podcast, where we help middle-class America build wealth one life hack at a time."
Unpacking the Myths of Financial Independence
The financial independence (FI) movement is blossoming into a community that reaches individuals from all walks of life. Yet, despite its growth, misconceptions about what financial independence really means persist. By dispelling these myths, we can better appreciate the unique paths each person can take towards financial freedom.
Understanding Financial Independence
Financial independence is often mischaracterized as a destination exclusively for the wealthy or those who practice extreme frugality. However, it is essential to understand that FI transcends income levels and lifestyle choices. It fundamentally revolves around increasing financial literacy and fostering a mindset of ownership and empowerment.
- Myth 1: Financial Independence is Only for the Wealthy
Many believe that only high-income earners can be financially independent. This is a misconception. FI is about creating a gap between income and expenses, which can be achieved through a combination of increasing income and reducing expenses. Even those who earn modest salaries can work towards FI by making conscious financial choices.
- Action Step: Assess your current savings rate and identify opportunities to optimize spending and increase revenue. Consider side gigs or leveraging your skills to enhance your income.
The Impact of Community
Community plays a vital role in the financial independence movement. Individuals seeking FI often find themselves in social circles that celebrate shared financial goals, foster motivation, and provide support. The connections made within FI communities can encourage individuals to stay focused on their goals and inspire them to take action.
- Myth 2: Financial Independence Lacks a Support System
Contrary to popular belief, adhering to the principles of FI does not mean isolating oneself or joining a cult-like group. Instead, the FI movement emphasizes inclusivity and community building. Events such as conferences or local meetups encourage people to share ideas, strategies, and successes, creating an empowering atmosphere.
- Action Step: Explore local financial independence groups or attend events to connect with like-minded individuals who can offer support and friendship on your journey to FI.
Redefining Retirement and Choices
One of the most significant misconceptions about financial independence is the conventional view of retirement. Many envision retirement as a time of idleness, waiting until age 65 to "relax" after working for decades. However, this mindset could detract from the potential joy and fulfillment that life can offer much earlier.
- Myth 3: Financial Independence Means Not Working at All
Financial independence is about creating opportunities for a fulfilling life, regardless of whether that involves traditional employment. It gives individuals the freedom to choose how they spend their time, whether that means pursuing their passions, volunteering, or launching a new career venture.
- Action Step: Reframe your understanding of work and retirement. Instead of waiting for a mythical retirement age, consider what choices you can make today to enhance your quality of life.
Your Unique Path to Financial Independence
Financial independence is not a one-size-fits-all journey. Each person has unique circumstances, preferences, and aspirations, which should inform their approach to FI.
- Myth 4: There’s a Prescribed Path to Financial Independence
The reality is that there is no singular route to financial independence. Various strategies can lead to similar outcomes, and it’s crucial to design a path tailored to your individual goals.
- Action Step: Take time to explore what financial independence looks like for you. Identify your values and align your financial goals with what truly matters in your life.
Moving Beyond Traditional Views of Money
Many view financial stability through the lens of scarcity, focusing solely on saving and frugality. However, a more balanced approach that includes investment and wealth building can enhance your financial journey.
- Myth 5: Money is King
Money should not be the only focus; what matters more is understanding your personal relationship with it. Money's value lies in how you choose to use it, whether to explore passions, support causes you care about, or invest globally.
- Action Step: Reflect on your goals regarding money. Clear, intentional planning around your finances can empower you to make meaningful choices that enrich your life beyond accumulating wealth.
Conclusion: Embrace the Journey
As you explore the world of financial independence, remember that it is a flexible, personal journey. It offers you the opportunity to shape your financial future, enhance your quality of life, and build a resilient community around you.
By shedding the outdated myths associated with FI, you can embrace a holistic approach to financial freedom that truly caters to your unique needs and aspirations. Begin your journey today, knowing that financial independence is accessible to everyone, regardless of income or background.
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Diania Merriam
- Website: EconoMe Conference
- Podcast: Optimal Finance Daily
What You'll Get Out Of Today's Show
- Diania Merriam is the Chief Economeist behind the EconoMe conference, a two-day event at the University of Cincinnati whose roots are in the FIRE movement.
- In 2019, Diania was preparing for the launch of EconoMe in the spring of 2020. She could not have anticipated the risk of a global pandemic impacting her conference, but it was successfully held on March 7, 2020, just before the event location's shut down. The 2020 event hosted 250 attendees and nine expert speakers.
- After putting 20 months of work into the conference, Diania was gratified to hear that 90% of participants loved the event and would recommend it to a friend.
- Getting together as a community is something that has been missed in the financial independence community over the last year. While some may label the movement as a cult, that is s misconception.
- Like many others in the financial independence community, Diania felt the need to share content to make it accessible and help those receptive to the message get their financial houses in order, much like Mr. Money Mustache did for her.
- She finds that many people have preconceived notions and assumptions, thinking that it won't work for their personal situations, but Diania believes putting more content out there will help others it's a mindset and there are no hard and fast rules.
- Although some may believe you have to be a white 3o-something male with a tech career to be in the FIRE movement, Brad points out that is far from the reality ChooseFI sees in its Facebook and local groups. Brad says that 90% of the responses to his weekly email are from women.
- Financial literacy is for everyone and FIRE is merely an aggressive and enthusiastic brand of it.
- Though there seems to be an assumption that those in the FIRE movement earn high incomes while eating rice and beans, Diania says in truth, it is rather agnostic when it comes to income. It might be easier for those with high incomes, but those with lower incomes can also improve their finances.
- The way to improve your finances is to increase income, decrease spending, and invest the gap. What is most important is the gap.
- The loudest voices in the space tend to talk about frugality because it's the easiest thing you can do when first starting out, however, ideally, you should be doing both.
- Jonathan gets angry at the assumption that there's little to nothing you can do to increase your income. You aren't stuck at your current salary level.
- A lot of personal finance content revolves around sacrifice and struggle, but there is a sense of optimism in the FIRE community. You have control over reducing your expenses and increasing your income.
- Coming across FIRE content helped Diania realize how much privilege she had and enabled her to be honest about how wasteful her spending really was.
- For Brad, the heart of financial independence is optimism and an internal locus of control. You can affect change on your life with tiny actions that compound, resulting in success.
- For awhile, Diania wanted to be the female Mr. Money Mustache. It took her a while to realize she needed to be herself and figure out her own flavor of FI that was based on her own goals.
- Diania's original plan looked a lot like other bloggers, where she would reach a net worth of 25 times her annual expenses and then retire at 40-years-old. However, life presented other options and she began to ask what she wanted out of life and what she wanted to create. Now she feels like slowing down instead of just racing to meet her FI number.
- Jonathan likes to think about life in terms of five and ten-year timelines. Ten years ago, did you have any idea you'd be where you are today?
- Brad notes that just being on the path to FI gives you the space to explore what you want your life to look like and what you want to focus on. The nuts and bolts of money is pretty easy to figure out. Figuring out how you want to spend the next 60 years of life is harder.
- Like Diania, because Jonathan was on the path to FI, he was to explore interest-led learning, turn it into an income stream, and eventually leave his career as a pharmacist.
- One of the lessons Diania has learned is that your money is only as valuable as your clarity on how you are going to use it. When her work situation started to degrade and become toxic, she realized she was already at Coast FI and had enough FU money where she could take some educated risks and look at self-employment.
- Being at Cost FI meant that Diania had already saved up enough money that would grow enough to support her in retirement. In the meantime, she only needed to cover her annual expenses without adding to retirement. Her life right now looks a lot like how she would want it to look if she was at FI and retired.
- Retirement has a branding problem. Another misconception about FI is that if you are retired, you aren't working. Regardless of your age, if you are retired, you shouldn't be sitting around doing nothing.
- EconoMe was born out of Diania asking herself what she would do if she no longer had to work for money. She wanted to create a party about money.
- Why wait for retirement? Is there a way to change your life around and do it now?
- Greed is another misconception associated with the FI community, but Diania believes FI puts you in a position to be really generous. She has experienced the generosity of those in the community who have been generous with their time to help her with her conference dream.
- When you have figured out money for yourself, there's nothing left to do but help other people. For example, 20% of the EconoMe conference attendees were over 50 or had already achieved FI, but there were there to share knowledge and cheer others on.
- Diania thinks the benefit of having money is to be able to share it in some capacity through what you create and the gifts that you give.
- Brad agrees with the generosity of the community. FI allows you to rethink how you relate to people and gives you an abundance mindset.
- A quote Dinia loves is, "If you look at your inner circle and you aren't inspired, you don't have an inner circle. You have a cage". She is incredibly inspired by all the people she has met in the community.
- The three most important resources that have a huge effect on your life are time, money, and energy. The people you surround yourself with have a huge effect on your energy.
- Is FI a fad that everyone will move on from in exchange for the next big thing? Diania doesn't think so. Like time and energy, money is a resource and we'll always be fascinated in optimizing our resources.
- FIRE is an identification with something to build habits and meet goals. There has been an identity and support system created around it.
- Rather than thinking of FI as a fad, Brad thinks we are normalizing the conversation and there are more and more people to talk to about it without feeling like a weirdo.
- The EconoMe conference will be held this year on November 13-14 at the University of Cincinnati. Some of the speakers and activities have already been announced and can be found on the website. There will also be more breakout sessions to facilitate learning from each other.
- Tickets are on sale now. However, if large groups are not allowed to gather by November, EconoMe will not pivot to virtual. Instead, they have backup dates of March 19-20, 2022. The decision and notification will be made by September 1, 2021.
- Earlybird tickets are available until April 10th. 200 tickets are available at $149, and then the price jumps to $199.
