Why Financial Independence (FI) Comes Before FIRE

Here at The Motivated M.D., we talk a lot about personal finance and physician finance. Inevitably, we discuss financial independence and the FIRE movement (financial independence, retire early). There are many milestones on the journey toward financial prosperity; however, many conversations can descend into semantics. Overwhelmingly, those who wish to take control of their finances want financial independence. This is the most essential achievement; everything else is just trappings. With this post, I seek to explore financial independence and why its pursuit should take priority. This is why FI comes before FIRE.  

What is financial independence (FI)?

As with any of my blog posts, it is essential to clarify what we will discuss. In particular, we will be addressing the concept of financial independence (FI). One of the first articles I ever wrote for this site was titled What is Financial Independence? In that, I created a definition that sums it up. It went something like this:

Financial independence is having enough money saved to live the remainder of your life without relying on continuous income from a career. Stated in another way, it is having enough wealth to pay all your living expenses for the rest of your life without depending on a ‘9-to-5’ or another individual’s assets. Essentially, you have enough money hoarded (i.e., savings, investments, real estate, etc.) to support your living expenses for the rest of your life—no more job needed.

Financial independence isn’t necessarily about quitting your job (often called ‘FU’ money). Financial independence is about having enough to work because you want to, not because you must. That is a necessary clarification. For many individuals, their job is their motivation. For individuals who love their careers, achieving financial independence should not disincentivize you from pursuing long and prosperous careers. Reaching FI will make you enjoy your job more!

The ‘Why’ is just as important

One aspect of financial independence is why one would want to achieve it. The why is just as important as attaining FI itself. We all have various intrinsic and extrinsic motivators; however, if you are going to drastically alter your quality of life in pursuit of financial independence, you need a strong motivator. For physicians, this ‘why’ can be deeply personal, career-related, or entirely different.  

Job security is an illusion

One strong motivator is job insecurity. Physicians often assume their job security is unwavering due to the perpetual demand for medical professionals. However, recent developments in the healthcare industry have demonstrated that job security should not be taken for granted. Economic shifts, changes in reimbursement models, and the evolving healthcare landscape have left many physicians facing unexpected career challenges.  

In such a dynamic environment, it is crucial to have a solid financial foundation. Financial independence becomes your safety net, providing a buffer against unforeseen circumstances that could impact your medical career. 

FI offers a more tangible security

Financial independence is about more than just achieving a lofty financial goal or number. It is about gaining control over your financial well-being. When you’re financially independent, you no longer rely solely on your job for financial security. You’ve diversified your sources of income, reduced your dependence on a single paycheck, and amassed a level of savings that can protect you from financial turmoil.  

This tangible security offers peace of mind, knowing that you have the means to weather unexpected financial storms. Whether it is a recession, a personal health crisis, or a desire to pivot your career in a new direction, financial independence equips you with options, regardless of your profession. It is a proactive approach to securing your financial future, ensuring that you are in the driver’s seat of your life and career rather than being at the mercy of external circumstances.  

Your ‘why’ for pursuing financial independence as a physician isn’t just a motivational mantra; it is your insurance policy against unforeseen professional challenges and a critical step in securing a prosperous and fulfilling future. 

Burnout prevention

In the demanding world of medicine, burnout is a well-recognized issue that can have severe consequences for physicians and their patients. Achieving financial independence can be a pivotal step in mitigating and preventing burnout, making it a crucial aspect of your journey.

The physician burnout challenge

Physician burnout is a multifaceted problem that often stems from the high stress, long hours, and emotional toll of the profession. It’s exacerbated by the expectation of continuous patient care and the ever-increasing administrative burden placed on healthcare professionals.

Burnout can be severe, impacting not only your well-being but also your ability to provide quality patient care. It’s a dilemma that many physicians face, and it’s why financial independence is critical in this context.

Financial independence: A solution to burnout

Financial independence allows you to make choices that directly address the factors contributing to burnout. Here is how:

Reducing work hours

With FI, you have the option to scale back your work hours. Whether you choose part-time work or fewer shifts, the reduced workload can help alleviate stress and prevent burnout.

Sabbaticals and time off

FI also provides the means to take extended breaks or sabbaticals. These periods of rejuvenation can rekindle your passion for medicine, allowing you to return to your career with a newfound energy and enthusiasm.

Exploring alternative careers

I recently wrote about this with the article Medical Legal Consulting is a Great Physician Side Gig. Having achieved financial independence, you’re not confined to your current medical role. You can explore other career paths, such as teaching, research, or healthcare consulting. These are options that may be less stressful and more fulfilling.  

Pursuing non-medical interests

Financial independence empowers you to invest time in non-medical passions and hobbies that provide an outlet for stress and a sense of fulfillment. Whether art, travel, or community service, these pursuits can be essential for maintaining balance and preventing burnout.  

Balancing work and life

Achieving financial independence can help you strike a better balance between your professional and personal life. It means having the freedom to spend more time with family, engage in activities you love, and maintain a healthier work-life equilibrium.  

Financial independence isn’t just about accumulating wealth; it is a proactive approach to securing your overall well-being. By preventing and mitigating burnout, it safeguards your career and ensures that you continue to provide excellent patient care, all while maintaining a satisfying and balanced lifestyle. It’s a step toward preserving your passion for medicine and securing your mental and emotional health.

Choose happiness

While FI is often associated with financial security, it also has a profound impact on your overall happiness and well-being. For physicians, who frequently experience high levels of stress and pressure, this aspect of the financial journey toward financial independence is particularly significant.  

Physicians often face intense stress, long work hours, and the weight of making life-changing decisions for their patients. The demands of the job can take a toll on mental and emotional health, affecting both professional and personal life.  

The link between FI and happiness

Research consistently shows a strong correlation between financial independence and increased life satisfaction. Here’s how achieving FI can contribute to your happiness:

Reduced financial stress

For starters, financial independence eliminates the stress of living paycheck to paycheck. You no longer have to worry about bills, debt, or unexpected expenses. This financial security promotes peace of mind and a sense of control of your life.  

Freedom of choice

With FI, you can make choices that align with your values and desires. Whether pursuing a passion project, spending more time with loved ones, or traveling the world, financial independence enables you to shape your life according to your preferences, not someone else’s.  

Reduced career pressures

Knowing that you are not solely dependent on your medical career for financial well-being can alleviate career-related stress. It empowers you to focus on your professional growth without feeling trapped in your current role.  

Enhanced mental and emotional well-being

FI provides a buffer against the mental and emotional strains of your medical profession. It equips you to manage stress better, build resilience, and maintain a positive outlook. It allows you to shed your financial pressures to boot.  

Why FI comes before FIRE

When conversing about FIRE, my advice is always the same. Achieve FI, then decide if FIRE is right for you. The idea of retiring early is great, but only for some. And honestly, it is for less people than most realize. Professions, like medicine, are for more than a substantial paycheck. As the cliché goes, it is a ‘calling.’  

Many in healthcare professions felt compelled to pursue careers that allow them to impact people’s lives in meaningful ways. Despite a burnout epidemic in our profession, leaving medicine entirely is (usually) not the correct answer. Sure, there are many reasons to be frustrated with our careers. The long hours, the call, the ability to be reached 24/7, the expectation of charitable giving, lifestyle creep, asking to work for free… it never ends. However, I would imagine that if you no longer had financial stresses or concerns, your view of your career would change.  

So, for anyone thinking, FIRE is the way out. Listen when I say, ‘Achieve FI, then wait and decide if retiring early is the right decision.’ Spend time falling in love with your career again before you drop it like a bad habit. Medicine is an ever-evolving field and can prove challenging to return to after you have exited. Lastly, it can be an adjustment from being a busy physician to retiring altogether. Please do not retire to nothing. Take the time to ensure you have goals and aspirations even in retirement.  

Take home points

Financial independence is not just about the numbers; it’s about creating a life that aligns with your goals and values. It paves the way for happiness by reducing financial worries, allowing you to pursue your passions, and enhancing your overall well-being. For physicians seeking a more balanced, fulfilling, and joyful life, financial independence is not just a financial goal but a pathway to happiness and life satisfaction. It is a journey that offers not only financial security but also the opportunity to live a life that truly makes you happier.

So, for any physicians considering FIRE, first, stop and focus on reaching FI. Then, take the time to decide what you want your career to look like. With your financial worries gone, maybe you can better mold it into something you are excited to wake up to each morning. If not, then you can permanently retire early! As always…

Stay motivated!

The Motivated M.D.

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