7 Downsides Of Working Towards Financial Independence

Financial independence is, on the surface, a wonderful concept and attractive to almost anyone. When you discover the term you start to hear stories or reports of people who have managed to retire early, in some cases very early, and have all the time in the world to pursue their personal interests without ever being beholden to a company or a boss. Thus, you begin your own journey and start to take the steps that will lead you towards that same level of freedom. You're prepared to face the challenge and understand that it's going to take some time, but what are the downsides you're likely going to face?

The strong desire to finally be financially free will make you obsess over your bank balance, how much you're earning and saving in comparison to how much you're spending, and how much longer you still need to keep working. You'll start to feel anxiety whenever you're spending money - even if you've budgeted for it - and will never be satisfied as you begin to compare everything and wonder why you're not closer to your goal. Eventually the concept of gaining financial independence can consume you and may have a negative impact on you as a person in addition to the relationships you have with the people around you, if you're not careful.

Be careful of the numerous psychological traps you can fall into when working towards financial independence. Image credit: Brook Lorin
Be careful of the numerous psychological traps you can fall into when working towards financial independence. Image credit: Brook Lorin

Obsessively comparing numbers

The start of the journey will almost always involve calculating your current position in terms of financial freedom. How much do you have, how much do you owe, and how much do you ultimately need.

Knowing these numbers will effectively give you the ability to calculate the distance you are from financial independence, and opens the door to further calculations that help you bridge the gap in theory.

"If I manage to save and invest £X every month for the next 10 years, and assuming an average annual real return of 6% from my investments in that time period, I will be Y% away from reaching my target."

And thus a potentially toxic cycle begins.

Every month when you get paid you will recalculate your position and try to figure out how much further you need to go. You check every account, tally up all the numbers, and try to figure out if there are ways you could "speed things up".

You look at what you spent, and wonder if you could've gone without it.

"Did I really need to take my partner out for a meal on that Saturday?"

In hindsight you convince yourself it wasn't worth it and you'd rather have the money back in your account, but you've completely discarded the non-monetary positives that were brought into your life - as intangible as they may be.

Your mind has switched into a mode where everything is reduced down to a price tag that could either push you forward or set you back on the journey, and it will consume you.

You're basically constantly reminding yourself that you're not financially independent yet, and will mentally trap yourself into a space that's extremely demoralising.

Pressures of increasing the savings rate

When calculating and re-calculating your numbers you're really trying to do one thing - increase your savings rate.

This is the amount of money you're able to save and invest each month in comparison to what you're earning - the higher the rate, the sooner you will reach financial independence.

You basically have two choices - increase your earnings or reduce your spending.

A combination of both would obviously be most effective, but for many people the latter will appear to be easier than the former and so another potentially hazardous habit could be formed.

The things you used to enjoy doing, you'll do less. You'll start over-sacrificing in other areas where you really shouldn't.

"I'll stop going out with friends - we only ever do the same things over and over anyway."

"We'll stop doing date nights."

"We should avoid turning on the lights or the heating to trim the costs."

You start to make poor choices in the name of saving money - such as buying foods of low nutritional value rather than good quality ingredients, just to save a couple of pennies.

Or you'll buy poorly made items that will break easily and require replacement in the near future - which could ultimately cost you more in the long run.

You're so focused on raising that savings rate by one or two more percent that you won't realise that it's coming at a greater cost to you - your happiness in life and even possibly your health.

Anxiety when spending

A staple of financial independence is having a well defined budget where you've allocated your income towards various things in life.

First comes your needs and essentials - housing, groceries, bills, debts.

Second comes your future and wealth - emergency funds, savings, investments.

And lastly the remainder is supposed to go towards enjoying life - going out for dinner, having that beer, taking a holiday, or anything else of leisure.

Yet what could happen is a sense of "anxiety" whenever you spend money on anything that isn't needed.

"This is taking away from my future and wealth."

You won't buy any more books to read, despite it being one of your favourite pass times.

You'll stop paying the subscription on the video game you really enjoy, missing out on a key stress reliever in your life.

You'll stop going on trips or holidays, opting to stay stranded at home instead.

Soon you'll find yourself not able to spend anything without feeling a sense of guilt, because you feel bad for not delaying your gratification.

You've trapped yourself in a future that never seems to arrive - even as you grow wealthier and wealthier over time - which ultimately takes away your ability to enjoy life in the present.

It kills your passion for work

The idea of early retirement or being completely free from ever needing to "take orders" again comes almost hand in hand with the subject of financial independence. After all, this is one of the main selling points - the idea that you're completely self sufficient when it comes to your finances.

You're so eager to reach that status that you start to feel a sense of loathing for your present situation.

"Can't believe I have to go back into the office on Monday."

"Wish I could just tell my boss my honest opinions about them."

"I'd work on my personal projects if only I didn't need to spend as much time in my job."

A job you once enjoyed and provided a sense of fulfilment has slowly turned into a source of depression and misery.

You lack the same motivation you did just a few months ago to get your work done to the highest standard.

You're often distracted, looking at the clock, waiting for it to end. Your colleagues might be doing the same, but while they're waiting to clock off you're waiting to f**k off.

There's a bit of a downward spiral as this continues to go on - you don't want to show up to work anymore as you want to FIRE, but you're not there yet so you must. What you once enjoyed working on becomes a dreaded chore, and you're only suffering through it for the pay check.

Every new task or project given to you, every meeting scheduled, or any negative feedback will further add to your discontent.

You'll start wondering what other people are getting paid and whether or not it's in line your own salary - "Are they getting paid the same to do less?"

Ironically the shift in attitude makes you less of a candidate for better opportunities to grow your earnings, and you remain stuck where you are - unhappy.

And since you're still a while away from your goal of financial independence, you're going to be suffering for a very long time.

Never being satisfied with the stock market

"Compound interest is the eighth wonder of the world" - you quote the famous Warren Buffett in your mind and place all your hopes on the runaway returns from your investment portfolio to break you free of the rat race.

It's true - the ever increasing returns will indeed make you incredibly wealthy given enough time in the market. But it won't be that way at the start, especially when you're impatient and anxious about every little move that happens to your investments.

Every morning when you wake up the first thing you do is check if the stock markets are forecasted to open up or down based on overnight activity.

The market only ever does three things - it goes up, it goes down, or it goes sideways. You won't be satisfied with whatever happens.

You log into your investment accounts far too often to check what the change has been on your portfolio and experience only disappointment, despite notching gains for the entire week.

"I knew I should have bought more back then... "

You're now certain the boat has been missed and the market is definitely too high to put all your money into at once.

A 15% year to date gain in early December won't feel good enough, because you're looking at the monetary value which reminds you that you're still not financially independent.

Plus, you were secretly hoping for a 20% growth based on your "optimistic forecast".

When there's a single red day you also feel disappointment.

"Why couldn't the market just keep going up... " - again ignoring the entire week of green days.

And when there's multiple red days you feel a slight unease, a bit of dread, perhaps even a slither of panic. You're now wondering if you're the unlucky person in history who has to experience a stock market that never comes back up again.

But wait... weren't you waiting for the drop so that you could get more of your money in at a lower price?

"I'll wait for things to become a bit more steady, it's definitely too risky right now."

When the market starts to move sideways it makes you nervous - you don't want to be fooled into getting in when there's still a chance it could drop.

"Best to wait and see..."

And when it does bounce back up you'll have hesitated and missed your chance to "time it perfectly" - like you even had a chance.

You'll find yourself spending way too much time consuming financial "news", regardless of the source or its authenticity, in an attempt to try and get one step ahead of the market. Yet you'll always seem to be a step too late compared to everyone else.

No matter what you try or what the market does, you never seem to be fully satisfied.

Feelings of inadequacy

Similar to viewing someone's Facebook or Instagram profile you only really hear about the "wins" from other people on their journey to financial independence.

"I hit a £100k net worth by the time I was 25!"

"Just became mortgage free at 30!"

"Only 2 more years until I become financially independent - getting a six figure salary job has really boosted my savings rate!"

Needless to say when it seems like everybody is achieving what you want to do, in so little time, it's demoralising. It's going to feel like every other young person out there is living the life of their dreams while you're still slogging away at work.

You look at your bank accounts and your investments and wonder why you are so far behind. Did you start too late?

Was there something you missed, that these other people got, that allowed them to get ahead so quickly?

Or are you just simply not as good when it comes to money?

The truth is you are none of these things - because for every seemingly successful financial guru on the internet there are thousands, if not tens of thousands, of others who are in a similar boat to you.

Or doing worse.

You're either seeing the exception as opposed to the norm, or you're being fooled into believing a perfect picture that isn't so perfect behind the scenes.

The person hopping from one country to another, living a nomadic lifestyle only shows the best pictures from the best days of their adventure - not the ones where they're stranded, in the rain or the cold, still looking for their next place to sleep while the sun is setting fast.

The young 20 or 30 something who talks about making huge profits in the stock market conveniently leaves out the detail that they got lucky, lost money on other attempts, and probably couldn't repeat the same trick if they tried.

Or the person who managed to reach financial independence at the age of 40, after 20 years of burning the candle from both ends, doesn't mention that they have very few meaningful relationships and cannot fully switch off from "work mode" since that's all they really know.

Yet despite being aware of the flaws you cannot look away from the "perfection" - and you end up in a place where the only flaws you can see are the ones in your own life.

Letting it get in the way of your relationships

When you're by yourself it's really easy. You simply set your own financial goals and the method to achieve them, and away you go. You don't need to check in with anyone, or adjust to anyone, or even care about anyone else.

But things are different when you're in a serious relationship.

Now you'll need to try and match your own views and values with theirs when it comes to money, and while you're a strong advocate for the financial independence movement your partner may not see it in the same way.

And thus a rift is potentially born.

"Why are they willing to buy iced coffee on the way to work?"

"Why do they have to buy new clothes every month?"

"Why do they insist on buying stocks of individual companies instead of the index?"

From the opposite side their thoughts might be along the lines of:

"We've already put aside a bit for savings, why can't they loosen up a little with the remainder?"

"I'm not that interested in the stock market - I've got my pension set up which seems to be doing well."

While the fundamentals of personal finance are important - budgeting, spending less than you make, planning for the future - don't let it be a deal breaker for your relationship. Imposing your own views on another will rarely work well, just as it wouldn't work on yourself.

Instead focus on working towards a compromise that suits both your needs and values.

It may not be the "optimal path" towards financial independence in the way you saw it, but what's truly important is that you're both able to improve your financial health while building your relationship at the same time.

This problem also extends to other relationships in your life such as with family or friends.

With your new found focus you may start to look down on other people's financial habits, and even judge them critically.

Regardless of if you voice such opinions it'll definitely have an impact on your relationship with the other person.

Always keep in mind that everybody has their own goals and thoughts, and while advice can help in the right moments it should never come unsolicited or with any arrogance.

Final Scribbles

The journey to financial independence is something that obviously has many benefits to those who walk the path - it can help you get out of debt, establish financial security, and even make you wealthier than you ever thought possible.

But the process is long and there can be many pitfalls that I feel are often ignored or not mentioned by others in this space. Not nearly enough at the very least.

When you're constantly hearing about the success of others it's really hard not to start comparing yourself to them. It's a trap I've fallen into myself previously and it led me to some really difficult places mentally.

As a blogger in the personal finance space I'm clearly an advocate for working towards financial independence, but I think drawing some attention to the difficulties I have faced and have overcome is important.

The more you're aware of them, the more you'll be able to handle them.

Look towards the good but never ignore the bad. Preparation is always the key to success.


Don't wait for some magical number before you start "living". Life is full of surprises and you'll never be able to plan it perfectly. If you're doing sensible things with your money you'll eventually reach your goal. So start living now. The longer you wait, the less time you'll have. Money can be made, but time cannot. You are the barrier to the life you want to live, not a 4% safe withdrawal rate.

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