It might be both harder and easier than you think
I think Derek Sivers nails it in this post.
It’s not how much you have. It’s the difference between what you have and what you spend. If you have more than you spend, you’re rich. If you spend more than you have, you’re not. If you live cheaply, it’s easy to be free.
Derek Sivers
I had a similar experience. My life changed in 2008 when I started thinking about personal finance, not in 2021 when we reached our ‘number’.
In 2008 I lost my job at short notice. I had been working as the ALT supervisor for Miyagi on rolling one-year contracts. After my fourth one the prefecture decided to outsource their ALTs to a private company, which of course meant that they no longer needed an in-house supervisor. I called my wife with the news and she collapsed at home. It was a horribly stressful few months.
Once the dust settled, I vowed never to be in that situation again, where someone else’s arbitrary decision could wreck our life. I started reading about money, focused on saving a bit each month, started investing, and slowly changed my life.
The most important thing that changed was my mindset. I started looking at purchases more carefully, thinking about whether they would improve my life or not rather than whether I wanted them. This took a long time because I had pretty bad consumption habits until then.
Once we got to the point where we weren’t spending all our money each month everything changed. We started building up savings and investments and everything got easier.
In 2021 the numbers on my spreadsheet reached the arbitrary goal I had set for us to become ‘financially independent’.
It was a complete nothingburger. I looked at the spreadsheet, thought ‘oh, cool’ and carried on with my day. A couple of days later I made a new arbitrary goal, one that we are not likely to reach for a while.
And the same could be said about our investments too.
My wife often comments that she has never seen our investments and savings, they are just numbers on a spreadsheet.
And we have never had occasion to use them or need them.
Other than peace of mind, they might as well not be there.
So presumably we could be just as happy and stress free without having the investments. Nothing would change about our life. We would continue doing the same things, earning and spending the same amount of money.
Makes you think.
In a decade or two we’ll start getting our pensions. I reckon they will more or less cover our living expenses (nenkin for both of us and a UK state pension for me).
So we likely won’t need our savings and investments in retirement either.
Does that mean that they are pointless, and that the effort we made to get them was wasted?
I don’t think so.
The evolution in our thinking and our habits is what made our current comfortable reality, not the fact that we have savings and investments.
I’m not sure the money is important, but the journey was.
So even if you don’t earn as much as you would like to, or if you are older than you’d like to be, or if you have disadvantages others don’t, it is still worth getting started on the path to economic security and freedom.
You won’t believe the difference it makes.
If you need a hand, please check out the RetireJapan forum and YouTube channel, and follow this blog or sign up to our mailing list.
If you’re ready to make a big change this year and can afford it, consider joining our live course Your First Ten Million Yen.
But do start. Start today. And if you are already on the path, help someone else get started.
>In a decade or two we’ll start getting our pensions. I reckon they will more or less cover our living expenses (nenkin for both of us and a UK state pension for me).
>So we likely won’t need our savings and investments in retirement either.
Really interesting point. I had not considered that the investment pile may go basically untouched.
My thinking is that the pensions may take care of very basic needs such as transportation, taxes, utilities etc. for a home, maybe food if we are lucky.
Investments will be spent down for travel and any ‘stuff’ we need along the way.
One point, if I’ve understood correctly your UK state pension won’t increase with inflation from the point you start taking it, as per the agreement between the two countries. If that is correct, worth including in your financial planning as over time it’ll be worth less in real terms and you’ll potentially need other sources of income to fill that gap
That’s true under current rules. But it will increase until I reach pension age, and given that inflation and cost of living here seem likely to rise less than in the UK I’m not too worried. The UK state pension is already more generous than nenkin and seems likely to get more so 😀.
Thanks – glad to hear you say that as my Japanese wife and I are planning to move to Japan once our kids leave home, currently in the UK and paying into the state pension but considering it as a future bonus rather than core part of our planning.
BTW – should have said in my first comment – thank you for the really insightful article and the amazing Youtube videos, really appreciate them 🙂
Thanks for the kind words Phil! Good luck with the move -you might want to come and hang out in our forum once you get closer to the time as we have a few people who are close to or have done something similar.
Hi Ben, thanks for these posts. I always enjoy reading them. Regarding your point about arbitrary goals, it seems a bit counterintuitive for me without having some data or point to work backwards from. How do you decide to set these goals, and is there any thought that goes into figuring out what would be an achievable goal that also sets you up for financial independence? I ask because I’m wondering how I might go about setting such a goal for myself. Take care!
Hi Kiel
Thanks for the great question! I started writing an answer, but then it struck me that this would make a great YouTube video. Will probably release it on Friday. Stay tuned ^-^
You could defer your UK pension and use some of your Investments and savings to live off for a number of years.
The longer you leave your uk pension deferred , the more it will be worth in the future.
And there is always a chance that the agreement between japan and uk could change to your benefit.