Joining a Cult: The Financial Independence Counterculture

Financial Planning for Doctors

Counterculture (Coun-ter-cul-ture) – “a way of life and set of attitudes opposed to or at variance with the prevailing social norm.”

When you hear the word counterculture, you may think of famous philosophical movements – like the Enlightenment, Romanticism, or even the Hippies of the 1960s. Regardless of the images that pop into your head, the idea remains the same. These were times and groups of people who acted differently than the current norm.

Today, we are going to discuss the current financial norm in America. We will then discuss seven characteristics of the counterculture of the financial independence community.

Are you a part of the counterculture of money?  Read on to find out!

Defining the Norm:
The Current American Financial Picture

It’s hard to “buck the trend” if we don’t know what the current trend looks like.

To help us, here are some baseline statistics that describe the typical American household:

  • The average American household earns a little more than $70,000 annually.
  • ~80% of Americans have not retired by aged 60 (1% of Americans retire by age 50.  ~5% retire by age 55.  And only 18% retire by age 60).
  • As of 2013, those aged 56-61 (who would now – 5 years later – be retiring) had an average retirement account balance of $17,000.
  • 44% of Americans could not cover a $400 emergency expense.
  • 28% have zero retirement savings
  • 53% of people feel “uncomfortable” or “slightly comfortable” when it comes to making the right investment decisions about their retirement accounts.

The Ugly Truth

Is there an explanation?

Maybe Americans really love their jobs and simply stay in the work force until they get kicked out between the age of 61-65? Or maybe being dependent on part-time work seems like a great way to provide the retirement of our dreams?

The truth is that, as a people, the current financial norm consists of having no financial plan and being financially enslaved well into our 60s.

The real reasons for the sad state of American personal finance includes an unintentional financial situation, spending too much, saving too little, keeping up with the Joneses, and living a life outside of our means.

Does it have to be this way?

Lawrence B. KellerWhile poor financial planning may seem as common as catching the cold, there is a movement sweeping across the country that is just as viral – but a lot better for us.

Let’s dig into the seven ways that the financial independence (FI) community sets itself apart and creates a counterculture bent on showing others a better way of life.

Number 1: Using Money With a Purpose 

The FI community understands that money is a means to an end.  It is not the end itself.  Money saved can be used to purchase the time we need to live the ideal life.

FI minded people flip the script on typical American spending by choosing to save first for their future, and spend second on current wants & needs.  When we do decide to spend money, we spend it intentionally on people and experiences.

Why? Because money spent on people and experiences is more likely to produce long-lasting satisfaction than money spent on “stuff.”   Money has a purpose.

With today’s immediate gratification consumerism, intentional saving and spending couldn’t be more counter cultural.  Instead of financing the big house, nice car, or newest tech – we choose to own our happiness and our future.

Number 2: The Wealth Building Gap

80% of people haven’t – and likely cannot – retire by age 60. What many of these people are lacking is an understanding of the Wealth Building Gap.

This gap is the difference between someone’s income and their current spending habits. In other words, it is the amount of money that they have each month that could be put towards building wealth.

In the form of an equation, it might look like this:

Wealth Building Gap = Income – Spending

The problem is that our opportunity to build wealth is linked to our income only if it is accompanied with a commensurate decrease in spending.

Even when we receive a bonus or promotion in pay,  many people fail to build wealth.  Like the Notorious B.I.G. taught us, mo’ money usually means mo’ problems.

The reason for most people’s financial failures comes from a single source – our stupid spending.  We cannot build wealth with our income if every extra dollar gets spent instead of saved.

This is why we decouple the ideas of wealth and income in the FI community. We understand that having a high income does not make us rich.  (Trust me, I know lots of doctors who do not use their income to build wealth.)

After a pay raise, we can build wealth only if we choose to optimize our spending and increase our savings rate.

In the FI community we do this by promoting minimalism, avoiding consumer traps, living frugally,  and – of course – through The 10% Rule.

Number 3: Frugal, Not Cheap

In the eyes of the world, many decisions made inside the financial independence community make us look like cheap skates.

I get it. We discuss ways to decrease our cell phone bills, many of us ride bikes instead of driving cars, and we intend to spend substantially less in retirement even if our annual incomes are high.

The common counter argument in the FI community is that we are “frugal, not cheap.”  In fact, there have been many blog posts written on this exact topic, including these two:

The point is this. The financial independence community may not always have the best offensive squad out there (in terms of income), but – man, oh, man – we always play good financial defense (frugality).

Frugality is our counter cultural key to success.

Number 4: Anti-status symbol

Do you want to know the opposite of frugal?  Status symbols.

Status symbols may involve living in a certain part of town, driving the right kind of car, or dressing the right way at work.  Many people in my line of work (physicians) can’t help getting sucked into the status symbol vortex.

All of these decisions are bent on impressing other people and making others happy.  While they often do very little for our own happiness, that doesn’t stop us from thinking it should.

The call of the status-symbol siren might be alluring, but the FI community is strong enough to withstand it.  Others can have their Dr. Jones homes and fancy cars.  We will keep our financial freedom.

Number 5: Frugal Friends

Fire your financial advisorThere is science out there to suggest that we mirror the habits of the people we most closely and deeply associate with on a day-to-day basis. These people could be friends, family, or framily (i.e. friends that are family).

The point is this.

If the people we most deeply and emotionally connect with are big spenders, we are likely to be a big spender, too. If our friends are frugal, then we will feel less of a need to keep up with the Joneses of the world.

Frugal friends do not cast stones at you for driving a less expensive car, living in a smaller home, or encourage you to buy the newest tech.

In a world filled with advertisements constantly telling us we need to buy the latest and greatest, frugal friends help sustain the FI counterculture.

Number 6: An Intentionally Designed Life

In this community, we write our own story. The ideal life doesn’t happen by accident. It happens when people are willing to have tough conversations with loved ones about the life of their dreams.

Once we have defined the ideal life, we can intentionally set ourselves on a path to achieve it while we ensure we are enjoying the journey along the way.

This is counter cultural to the typical “live for today and fail to plan for tomorrow” mantra that results in an average savings of $17,000 for people who are only five years prior to retirement.

We recognize that we only live once (WOLO?), but we want to live this life intentionally.

This is why we are hell bent on designing the exact kind of life we want to live, instead of letting life pass us by as we go through the daily motions of work-sleep-work-sleep-work-sleep-weekend.

When you are financially independent, every day can be a Saturday.  We can choose to work, or we can do whatever else we want. Regardless of what we choose, it will be intentional.

Number 7: We are Financially Prepared

The financial independence community is built on being prepared for future possibilities – both good and bad. It’s all about laying down a plan and creating the means to deal with the curve balls that will be thrown our way.

We have emergency funds (most of the time), and sequence of return risks are a favorite topic of conversation. We also take into account the various opportunities we have to protect our income through side hustles.

As seekers of FI, we tend to be Do-It-Yourself investors who often retire in our 30s and 40s. Compare that to the average American (and average doctor) who cannot retire at age 60, and it might seem like apples and oranges.

Take Home

We started with a definition.  So, let’s end with one:

The Counterculture of Financial Independence  – a way of intentional life and set of solid financial attitudes opposed to or at variance with the prevailing social norm of perpetual debt, failing to plan, and living paycheck to paycheck.

Living a life of perpetual debt – and eventual burnout – may be a common theme today, but it doesn’t have to be this way.

If you aren’t part of the counterculture of financial independence, what’s stopping you?

Join us and you’ll find yourself with a group of norm-breakers who have intentionally designed their dream life and have created a financial glide path to keep them there for the rest of our lives.

How many of your friends are a part of this community?
Are you a counterculture financial independence vigilante?
What are some stark differences that you notice between their life and that of the financial independence community?
Leave a comment below.


22 thoughts on “Joining a Cult: The Financial Independence Counterculture”

  1. As a kid who grew up pretty straight-laced and mainstream, I never would have imagined being part of a counterculture. But here I am. Although I’m still nowhere near as cool as those kids who worked at the independent record shop, and never will be .

    Thanks for the shout-out and Happy New Year!

  2. Great post. As you know, I struggle with the arrogance of some in the FI community. Your review is balanced and highlights the good things about it. The principles are sound and hard to argue against. I’ve written in favor of them myself.

    Balance is the key. You have it and many you’ve mentioned in the post do too.

    Thanks for the props and the link. Blessings to you and your family in the coming year.

    • Completely agree, Fred. It’s all about balance. I just want people to make decisions for the right reasons. I don’t have to agree with what they decide, but they should understand the forces at play.

      Happy New Year to you and yours, too!

  3. To paraphrase Dave Ramsey, in order to live like no other you have to first live like no other.

    If you want to plod along and follow mainstream America, you will be stuck in a job until you are in your late 60s and then live a spartan life primarily supported by social benefit programs.

    If you choose to buck the norm and branch out on your own, FI gives you a way to regain a lot of those years and have a far better retirement outcome/lifestyle.

  4. Wonderful post. It might as well have been written by me because it speaks to almost all of my beliefs. Intentional purchasing, frugality, prioritizing savings in order to be free of dependence on a W-2 income, and not caring about what the Joneses are doing.

    I’m happy to be a member of this cult and wear my membership as a badge of honor. Great post, one I need to emulate for my site. It really speaks to my ethos and I feel it is a message which needs to be shared.

  5. The funny thing is that the way we think should be mainstream and NOT counterculture.

    The world of marketing and advertising has messed with everybody’s psyche to the point that people feel compelled to live a life of excess just to feel adequate when in fact they are “enough” with much less.

    Glad to be a part of this counter culture cult!

    • It definitely should be mainstream, and as the message spreads hopefully more people will figure it out.

      For now, I get to continue to have the “I am frugal, not cheap” conversations because people don’t understand our perspective.

  6. I love this community. In real life, I feel so alone as the only doctor driving an old beat up Honda. It is good to know, there are people like me out there!

    • While I buck the FI trend with my car choice (I am a blasphemous car financer), many of the other things I did (like living in a $120,000 house for the first couple of years as an attending) drew some funny stares.

      Having this community is vital to our success. I am glad that we are both a part of it!

  7. I love this community. In real life, I feel so alone as the only doctor driving an old beat up Honda. It is good to know there are people like me out there!

  8. The point on having frugal friends really hits home. You can be a financial ninja with the discipline of a monk when it comes to money. But if all your friends are the kind that like to throw cash around for the fun of it.. many steps backwards, despite your best efforts.

  9. I love this, especially how you said when people in the FI community spend money, they typically spend it on experiences with people.

    As my life & money habits have changed so have the people I associate.

  10. I too either riee a bike or drive a busted Honda Accord that is so dinged up that I routinely get stopped by people offering to fix it (for a fee of course).

    This car lives on a city street. Fixing the dents and scratches seems like a waste.

    We are thinking of buying a home and are looking at some of the cheapest houses in the area we want to live in. Still 600k, but we could easily double the budget if that’s what we valued. Instead the wife is going to work part time and chill with Baby Kpeds the rest of the week!

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