How much are you willing to sacrifice to become financially independent?

Here is a hypothetical question for you – if you have to choose, which one would you pick?

Work #1

  • Your current salary.
  • 1 hour of daily commute time.
  • 40 hours a week. Flexible work hours. Can work from home occasionally.
  • Average stress.
  • About 10% of travel is required.

Work #2

  • 20% less than your current salary.
  • 10 minutes of daily commute time,
  • 35 hours per week. 9-5 Monday-Thurs. Half day Friday. No option of working from home.
  • Very low stress.
  • About 15% of travel is required.

Work #3

  • 100% more than your current salary.
  • 3 hours of daily commute time.
  • 60 hours a week. Flexible work hours. Can work from home frequently.  
  • Very stressful.
  • Minimal work travel.

Do you go with the highest salary option (#3), spend more time each day commuting and at the office with the option of working from home frequently? Or do you go with the lowest paying, low-stress job, 10 minutes daily commute, and a little more work travel? Or do you simply go with Work #1?

What if I give you some numbers and tell you that the annual salary for Work #1 is $100,000 ($48.08/hr)? That means Work #2’s annual salary is $80,000 ($43.96/hr) and Work #3’s annual salary is $200,000 (~$64.10/hr).

What if I also tell you that Work #1 is your current job?

Does any of the additional information change your mind on which work option you would pick?

The grass is greener on the other side

It’s human nature to get the feeling that the grass is greener on the other side. You see your neighbour driving a brand new car, going to exotic locations for vacations, and you think to yourself, ‘my neighbour must be making tons of money, I wish I had his/her life’. But who knows, maybe your neighbour is full of debt and has no savings. Without knowing all the information, how can you possibly conclude that your neighbour’s life is much better than yours?

Similarly, after a bad day at work, do you question yourself why you are wasting your time at your current job? Do you begin to wonder, what if I change my job? When you start looking for job openings, do you get the feeling that every single job is better than your current one, regardless of what the pay is?

If that’s how you feel about your current job, what would be your criteria for a new job? Do you only apply for jobs that pay more regardless of other factors like commute time, work hours, and how stressful the job is? Or do you apply for jobs that have shorter work hours, less stress, and forget about the other factors?

When you read stories about people who have reached financial independence and have retired early, do you ever get jealous and feel that you want to FIRE as soon as you can? So, you dream about travelling around the world like Jeremy and Winnie at Go Curry Cracker, skiing on weekdays like Mark and Tanja at Our Next Life, cruising in the Bahamas like Justin and Kaisorn at Root of Good, or RVing all over North American like Steve and Courtney at Think Save Retire.

Does financial independence retire early really make life that much better? Have you thought about the sacrifices these people have gone through to reach this financial milestone? Have you considered that there’s a significant amount of learning and adapting for early retirees when they no longer work five days out of seven days?

What if the grass is not greener on the other side? There are things that may be better than your current situation, but some things may be worse.

It’s always easier to dream about other people’s lives and another job. It can be an entirely different story when you start wearing their shoes and getting the right perspective from the other side.  

What kind of sacrifice is worth it for financial Independence?

The math to become financially independent is pretty simple and straightforward. All you need to do is have investments that can cover your annual expenses.

Investment Income > = Annual Expenses.

Using the 4% withdrawal rule, that means your investment is 25x of your annual expenses. And if you’re doing dividend investing, at 4% dividend yield, that means you need an investment 25x of your annual expenses.

To reach financial independence, it requires saving money and investing. The more money you can save, the more money you can invest. Therefore, people focus on the savings rate or the income-expense gap.

Simply put, you want to grow this gap as much as possible.

There are a few ways to increase the income-expense gap. The easiest and quickest way, typically when you first start the financial independence journey, is to reduce and optimize expenses – but you can only reduce and optimize so much. Eventually, you get to a point where you can no longer reduce or optimize further, because if you cut expenses further, you will end up depriving yourself.

Therefore, the next step to increasing your savings rate is to increase your income. Some people increase their income by having side businesses; some people increase their income by negotiating with their employers; some people increase their income by getting a higher paying job.

To be efficient on the financial independence journey, we must strive for both steps – reduce and optimize expenses and increase income simultaneously.

Increase income is great and all, but it begs the question – at what cost?

Back to my 3 hypothetical work scenarios above. Although Work #3 has a much higher pay, you are spending a lot more of your waking hours for the sole purposes of your job.

For Work #3, you are spending 60 hours a week at work, or 12 hours a day. In addition, you are spending 3 hours each day or 15 hours each week on commuting. This means you are spending a total of 15 hours for work each day. If you sleep for 7 hours each day, you are left with only 2 hours each weekday to do things. So during each workday, you have 2 hours to spend with your family, exercise, watch TV, read books, eat meals, etc. Personally, I think that’s not a lot of “spare time” at all. In this situation, I would go as far as saying that your sole purpose of life is work. Work is your life.

For Work #2, while the salary is the lowest of all 3 scenarios, you are spending 7 hours each day at work and only 10 minutes each day commuting. If you sleep for 7 hours each day, that means you have 9 hours and 50 minutes each day to spend on various activities. Due to the low-stress nature of your work, work is simply something you do to earn income. Work does not define you.

For Work #1, you are making a good salary, you are spending 9 hours at work and 1 hour commuting each day. If you sleep for 7 hours each day, that means you have 8 hours each day to spend on various activities.

Now consider the following additional info. The time to become financially independent for each work option is:

Work #1 – 15 years

Work #2 – 20 years

Work #3 – 5 years

While Work #3 has the highest income and therefore results in a faster time to reach financial independence, ask yourself – is the sacrifice worth it? Maybe it’s worth it if you are single. You most likely will stay single for the 5 years because you won’t have any time outside of work to date anyone. What if you are married and have kids? Can you live through 5 years of 15 hours of work-related activities and only get 2 hours of free time each workday? Will your kids know who you are? Or would they think that you’re a stranger in the house?

Or is it better to take a longer FI journey approach and enjoy your life with Work #2?

This is a very simplistic view of FI, however, since there are more things to consider than just work hours, salary, and how fast you reach financial independence. What if you are bored out of your mind with Work #1 and Work #2? Although Work #3 has ridiculous work hours, what if the work that you do is something that you truly enjoy and makes you excited every single day? Does this additional info influence your decision?

Finding the right personal balance

Needless to say, whenever we make a decision, we must factor in all the different options and make a decision based on what makes sense for us personally at that very moment. My decision may be different from yours, because our situations may be different.

Life is about finding the right personal balance. For me, it doesn’t make any sense to take Work #3 despite a shorter path to financial independence. Because Work #3 means I won’t have a life outside of work. I won’t have time to spend time with my family during weekdays. On weekends, I would probably be so tired and burned out from work that I would be spending quite a bit of time sleeping. I don’t think putting myself and my family through 5 years of hell is worth the eventual outcome of financial independence, despite that the job itself is extremely exciting.

Between Work #1 and Work #2, I think it’s a coin toss. Again, it comes down to personal preferences of what you’d pick. For me, if the work tasks are equal, I’d probably pick Work #2 over Work #1 to have more free time on my hand, despite a 20% lower salary. Work #2 would also give me more time to spend with Mrs. T and the two kids.

Given all the information provided, which work would you pick? I’d love to hear your rationale.

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28 thoughts on “How much are you willing to sacrifice to become financially independent?”

  1. I had subscribed to your blog recently and was wondering why did not receive any notice of new posts (especially when I just checked and saw you had several new ones since the last one I visited). Well I re-subscribed so hopefully won’t be an issue in future.

    What you have presented is the dilemma many people face: work hard for more money in a short time or have an easier work life at lower pay but have to do it longer.

    There really is no right or wrong answer as it really depends on the individual who faces these choices.

    Sometimes you get lucky like I did and choose a place that has great lifestyle and great pay (though my commute is a little longer but not onerous (37 miles which takes me 40 min).

  2. Great post Tawcan. I’m starting my own FI journey and it’s nice to see an article that puts some perspective on life balance. Too many of these blogs are all about cutting everything out and not enjoying life just so you can save a ton of money and supposedly enjoy life later. As my girl Sheryl says ‘It’s not having what you want, It’s wanting what you’ve got’ that line changed my life who knew a cheesy pop song could do that.

  3. I would take the work #1 because I am still young and I have to work pretty hard now when it’s profitable when it comes to investing the money 🙂 After 10 years, I would choose the same as you would because I value my time also.
    Balance is the key, but at some points of your life, you have to make sacrifices little bit more for shorter periods of time (I.E. longer work ours).

    • Yes, your choice totally depends on where you’re at in life. If you’re young and single, you probably would be more willing to take work #3 for the higher pay.

  4. I work from home, so any commute sounds horrible to me, but I’d probably stick with # 1. $200,000 just isn’t worth the level of stress (maybe if I could still work from home the whole time I’d feel differently). I’m definitely happy with my current work-life balance because I have a job (customer service) that doesn’t follow me into my off-hours. When I’m done work for the day, it’s out of my head. And of course the aforementioned “no commute” is huge.

    I think a lot of people would take the middle ground, but perhaps there are some really driven people out there who’d take that long of a commute and that much stress if it meant a sprint to the finish line. I just can’t imagine being one of them.

  5. There are almost too many factors at work to draw a ton of meaning from the results – I think the travel and wfh wildcards you introduce make it hard for me.

    My goal right now is to maximize my time with my kids, because at 8 and 11, the point at which they don’t care much if I’m around quickly approaches! It’s hard to tell from these options which would be the optimal solution for that goal, but thankfully they’re all worse than my current situation 🙂

    • I’m glad that I introduced so many different factors to make it hard to decide which option to pick. : 😉 🙂

      It totally makes sense to maximize your time with your kids, considering they are getting closer and closer to teenage years.

    • Thanks Syd, that sounds like a great book to read, will add it to my to-read list. Also will have to find some time to listen to the podcast.

  6. It really depends on where you are in life. If I was 22, I’d take job #3, no question. I could always move to be closer to the job and I didn’t have a family. Now, my goal is minimizing stress. That’s #4, 25 hours/week working from home and get about 40% my former pay. Good post.

    • If I was 22 and single I’d probably take job #3 as well and try to move closer to the job. Now I have a family, my priorities have changed. 🙂

  7. I think I’m doing #1 right now. 1-hour commuting time per day is not too bad, it’s actually about average or even much better than average if you’re in cities with crazy traffic. As long as the job provides flexible hours, 35 vs 40 hrs of work does not make much of a difference to me.

  8. I will take the flexibility that comes with option 2 assuming health insurance is equal in all three options – I am a stickler when it comes to healthcare! Interestingly enough, if you round the 50 minute commute up to an hour per week in option 2, $80,000 / 36 hours a week will net $42.73 per hour. If you put option 1 to 45 hours to account for the commute, you also net $42.73 per hour : ) Maybe you did that by design to make it harder for us!? Take care!

    • Hehe I made it math the same so it’s harder to pick. 🙂

      I didn’t mention health insurance because it’s universal health care here in Canada, so it’s kinda given.

  9. As someone who’s already reached the fabled land of ‘FI’, none of those options look very good to me. A low stress no-travel part-time job might be more my speed these days.

    Once you’ve reached ‘enough’ the thought of spending all your days at work just to buy a fancier car to impress people you don’t care about, has very little appeal.

  10. I’m so picky I’m not willing to take any of those, which makes it hard to figure out whether I have more job options after this one. I’ve got a minimal commute, good pay, very little travel, medium stress that I can generally manage over time, and fairly flexible schedule. I’ve come to expect these as the basic requirements of work life now. 😀

  11. Honestly, the blogs you highlight in your post are all kind of annoying. They just like to put it in peoples faces about how great their lives are.

    It’s almost as if they need to show off because they are actually very insecure. The people who I know who are FI are very modest.

    As for your other question, it’s good to sacrifice. We just have to do so in a balanced manner. When do you plan to be FI?


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