Why you should think about financial independence and mini-retirements | Lacey Filipich | TEDxUWA

‘Time poor’ is the catch-cry of our era, and yet end-of-life retirement means we have an average of two decades of feeling time rich to look forward to… when we’re old. In this talk, Lacey shares how combining financial independence and mini-retirements is one way to bring that time rich feeling into our youth.  Lacey Filipich started her entrepreneurial journey with a hair wrap stall at 10 years old. Today, she is the co-founder and director of two successful businesses; Money School and Maker Kids Club.

A decade ago i was the definition of time poor i was on the fast track to a vp role and a major mining company and i thought my work was so important that i could not afford to take even a single day off so i didn’t 18 months i was working my butt off sadly only in the metaphorical sense in the literal sense my butt was expanding thanks to my neglect of everything

Not related to work that all came to a halt when i fell ill and not just a little bit ill i was bedridden for five weeks if you’ve ever had an experience of being ill for longer than you thought of you know like a common cold you think is gonna be one week drags into two drags into three some of the feelings are experienced with things like helplessness like i

Had no control over my body like i could do nothing to get myself out of bed like all that motivation and get up and go that had got me so far in my career was going to be no use to me i also felt hopeless like that bed was going to be my future i was just going to be surrounded by tissues from crying my eyes out for the rest of my life and it got so bad that in

Week four i stuffed myself full of every drug they’d given me and got myself on a plane and flew 4,000 kilometres home to my mummy so she could look after me it turns out that it was a virus that sent me to bed but it was my poor health choices and my lack of energy reserves that kept me there as a result of that sickness i’ve lost half of the hearing in my right

Ear and i now have brown or gold crowns which i call my mouth bling on my rear molars because i split my teeth into grinding them in my sleep from the stress having your health irreversibly damaged when you’re 26 years old there’s no fun at all but it was the wake-up call that i needed i decided to take leave without pay and went travelling to south america with

My partner and having now seen it i can say there’s nothing quite like a man-made marvel such as much you pitch you to put the insignificance of your work into perspective three months later i had seen six countries and my eyes had been opened to a world beyond work and beyond australia and i thought about why i had made work such a big part of my life when there

Seemed so much more to be discovered alas all good things must come to an end i flew home and back to work when i got back to work it was a bit of a shock but i soon fell into my old routine until three months later my little sister megan committed suicide she was 24 years old and i thought she had everything to live for megan’s death brought that idle pondering

Into sharp focus i became consumed with questions about why we work ourselves to death why we spend so much of our time at work not enjoying it and sacrificing so much my life to that point was an example like a textbook i had allowed myself to be worked to the point of physical and mental collapse for a company that would have replaced me within a week if i’d gone

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Under a bus it seemed like a waste of my time and like most people in personal crisis i went looking for help and i started in the self-help section of a book store back when you used to like actually go into a bookstore and that’s when i came across tim ferriss 4-hour workweek and it was a revelation particularly on the topic of time it’s no surprise that time poor

Is the catch cry of our era because it’s our most precious non-renewable resource we lament the lack of hours in the day to do all that we could want to do never mind that you and i have the same 24 hours a day as beyonce or barack obama it just never feels like we have enough time and that’s over the microscale of a single day over the macroscale of our lifetimes

We spend 40 plus of our best years grinding away sometimes our teeth at work and then finally we reach the official retirement age and we get to stop we’re finally at i’m rich instead of time poor we can do whatever we want with that time we could travel we could volunteer we could spend time with our families only now we’re old what we wouldn’t give at that point

To have some of that time rich feeling when we were young the thing is we made end-of-life retirement up it’s not compulsory retirement was invented in the 1880s in prussia in response to socialists demanding more for the public and at the time they sent the retirement age at 70 years old and that was the approximate lifespan in that era so not everybody got to

Retire they didn’t actually get to have what we have now and when they did retire they probably only got a few years retirement became widespread in the works guest times following the great depression when it was seen as a way to get all the members of the workforce out of the way so that younger people could come through because they needed that money to raise

Their families times have changed lifespans have increased and yet end-of-life retirement remains and the retirement age is pretty comparable around the mid 60’s for most developed nations so now instead of having a handful of years for a handful of people to look forward to most of us are looking at two decades of that time rich feeling when we rolled in the book

First ask the question what if we could take some of that end-of-life retirement and bring it forward into our youth in small chunks so we could have that time rich feeling when we’re young and healthy he called these small periods of respite mini retirements my trip to south america had a new name it wasn’t a holiday it was a mini retirement and i was thrilled

By the idea of making them a regular part of my life so i said about redesigning my lifestyle and my work i promptly quit my job and in five years i took five mini retirements totaling 22 months off in between those periods of mini retirement i would do consulting gigs in the mining industry and i would also tinker with my startup which later became my business

Now the question that might be rising in your minds right now and it’s a logical one is how does someone in their late 20s afford to take more than a third of their time off work how do they forward a roof to sleep under or a car to drive how they afford to eat it’s a really important question in the book ferriss talks about a muse an online business that can be

Used to fund your mini retirement so that you can be off sipping cocktails on the beach while money is pouring in from the sky from the web but that’s just one way to make many retirements a part of your life there’s another alternative and it’s called fire what does fire stand for financially independent retiring early it’s a term coined in the mid 90s by vicki

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Robin and joe dominguez and it’s a very simple which is not to say easy concept basically you stop spending so much on stuff you take the money you would have spent on stuff and you save it and once you’ve saved it you then buy assets with it assets are things that pay you things like property shares bonds index funds and you keep going like that through your

Working life and eventually you reach a point at which the income from your assets is enough to sustain your lifestyle at that point you don’t have to work anymore because you don’t need a wage to survive working becomes a choice let’s use an example i’ll talk about fred fred’s a software engineer he graduates from university and gets his first job and he does

Not make the mistake that most of us make which is going out and spending every cent he then earned because he was so excited to finally have an income instead he keeps living like a student you know baked beans on toast that kind of thing and he keeps going like that and he manages to save 60% of his income think about for that for a minute living on a 40% of

Your wage he keeps that up for 10 years he takes the money and puts it into an investment property and into some index funds and then at 30 years old suddenly the income from his assets is enough to meet his living costs which are about half of those of his peers because he hasn’t gotten into the habit of spending so much money at 30 he can choose to stop working

He can retire fred’s a real person his name’s actually pete adonai and it goes by the moniker mister money mustache and he’s one of a slew of vloggers out there who’ve been through this experience they’ve had the chance to reach fire and now they teach other people how to do it lucky for me i came to fire and my beginning of that journey much earlier i started

When i was 10 years old my mum taught me the importance of saving and taught me about the power of compounding and as a result i saved half of every dollar that i ever got from that age whether it was from pocket money or birthday money or the profit from my first business which i started at that point when i was 14 i was old enough to get a job i got to and i

Kept saving and then at 19 years old i was in the second year of my degree in chemical engineering and i had a pretty impressive bank balance and i was going to buy a car with that bank balance and it wasn’t going to be a crappy old bomb like my friends were driving it was going to be gorgeous is at least going to have air conditioning and power steering and i was

Very excited about the fact so i showed my mom i said mom look what i’ve saved i’m going out to buy this car my mum said one sentence that changed my life said lacey that could be the deposit on a home my mind was blown i planted a seed which took root and within a couple of weeks we were out apartment shopping and a few months later i was the proud owner of the

Ugliest brownest crappiest tania palmer you have ever seen but at 19 years old that was pretty exciting a couple of years later i graduated from university i flew 4,000 kilometres away to the wild west of australia to join the mining industry and because i did a bit like pete adonai i didn’t extend my living to the income that i had i was able to save quite a bit

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Of money and so i bought another property when i arrived couple years later i bought another property then my employer introduced a share scheme and so i started learning about shares and i got interested in that so i started trading in shares as well i kept going with property and shares and so by the time i was 26 and i had that experience of the health breakdown

I was actually well on my way to financial independence and that’s a point that i reached when i was 31 years old which was fabulous timing because that’s when i had my first child and i had the luxury of being able to stay at home with her and not have to think about how i was going to earn an income because my assets were paying my living costs after about 18

Months at home i finally got some sleep as you do and i started thinking about the meaning of life and what i wanted to do which is also what you do when you’re at home with the toddler it turns out and i was growing increasingly frustrated with my friends who had been making terrible financial decisions getting into bad debt paying way too much for things that

They really wanted like cars and not saving and not investing and i look back on our school system and realize that we are not getting taught about money we’re not even taught that fire is an option at school i’d never even heard the term and so my life became about teaching young people the skills they need to become financially independent so they can have what

I’ve had at that point i moved full time into my startup money school and a couple of years later i started a second business make a kids club which tackles the same problem from a slightly different angle and that those two businesses plus being a wife and a mother and a handful of volunteer roles are where i spend most of my time now that doesn’t sound too much

Like retirement does it here’s where fire falls down sipping cocktails on a beach gets boring eventually you’ll have to take my word for it young people when they reach fire don’t actually retire just read their blogs these are not the kinds of people who surround twiddling their thumbs or doing nothing or watching endless reruns on tv they’re out changing the

World the difference is that their work is not motivated by money it’s motivated by other rewards they aren’t retiring early they are in fact time rich they get to choose how they spend their time and that’s the point of this exercise it’s to be able to choose how you spend the seconds minutes hours and days that will make up your life you choose if you work when

Where how on what and perhaps most importantly with whom you work you get to choose when you stop working and you get to choose when you start again you get to choose because you don’t need a wage to support your lifestyle so if you’re thinking this fire idea sounds fabulous don’t make early retirement your goal make your goal time reach and if you’re still not

Convinced here’s why we all need you to be time rich humanity has pressing problems overpopulation pollution homelessness war food production the list is endless if we can’t solve those problems all of our time will be meaningless we need our brightest minds focused on solving these problems not working out how to get us to click an app so i implore you save and

Invest catch fire become time rich discover the joy of work that is not motivated by money and start solving those problems that fascinate you we humanity need you – thank you

Transcribed from video
Why you should think about financial independence and mini-retirements | Lacey Filipich | TEDxUWA By TEDx Talks