A Theology of Financial Independence

While many of us dream about the ability to scrape together enough to cover repairs the next time our car breaks down, there is a growing community of people pursuing a different dream—financial independence.

Financial independence (or FI) is the financial status when a person has enough savings and investments that the dividends, or growth, each year from the portfolio are enough to cover annual expenses.

FI might seem like a distant issue from culture, theology, and normal Fathom fare, but integrating theology with business and finances often hides in the shadows. Consider this an effort to shift the spotlight and discuss a Theology of Financial Independence.

What is financial independence anyway?

Abundant calculators and systems lurk online for determining when you have reached financial independence, but the simplest method the FI crowd advocates is the 4% rule. The 4% rule says that based on the average growth of the stock market over the last century and with inflation factored in, you can safely withdraw 4% of your portfolio each year without the principal decreasing (i.e., your money will never run out).

Therefore, in order to reach financial independence your investments need to reach twenty-five times your annual expenses, or when your annual expenses equal 4% of your portfolio. Hypothetically speaking, a family that lives on $40,000 a year could be financially independent if they are able to accumulate $1,000,000 in investments. Then the family takes advantage of the “4% safe withdrawal” amount in perpetuity.

Insert portfolio theories, market analyses, lifestyle and personal expense considerations ad nauseum. As the numerous bloggers and forum participants will attest, this subject has (nearly) no bounds.

This idea of financial independence has a captive following online across numerous blog platforms and at least one bestselling book. Early Retirement Extreme, Mr. Money Mustache, MadFIentist, Afford Anything, jlcollinsnh, Go Curry Cracker, and a very active subreddit. 

These websites write on topics like minimizing expenses, post-tax and tax advantaged investment accounts, optimizing your housing choices, transportation costs, and more. Many of them have already achieved financial independence and are sharing about their experiences. Others, on the way to FI, are describing the journey.

I didn’t know this world existed until a couple years when I stumbled across one of the blogs while searching for help saving money. It was intriguing to begin to read their stories and catch a vision for how they do life. For many of them, financial independence is much more than a personal financial goal; it’s an entire lifestyle philosophy.

After reading about FI for a few months, my initial intrigue gave way to a new set of questions. Can or should a Christian pursue financial independence? Are there ideas inherent in FI that are contradictory to Christian ethics? No one in the FI blogosphere was reporting any sort of theological or Christian conviction behind their lifestyle and financial decisions. 

I began to chew on some of the implications to the pursuit and achievement of FI. These websites preach heartily of the virtues of FI, but no one really talks about some of the less ideal aspects or, what could accurately be called, side effects of such a mindset.

Virtue No. 1: Stewardship

Pursuing financial independence demonstrates excellent stewardship of resources. 

At the very core of this movement is a shift in how people manage their resources. Primarily, it’s helping people do a better job with how they use, apply, invest, and not waste their time, energy, and money. If the goal is to reach FI in 10–15 years, then you must maximize the resources you have at your disposal to the utmost. “Wasting” money on high cell phone bills or time on long commuting car rides will impede progress.

Stewardship is a benevolent Christian trait. To use what God has given you carefully, rather than foolishly or haphazardly, is pleasing to the Lord. The FI movement pushes people to evaluate their lives and reexamine the efficiency of how they use their resources. The more skillfully we can steward our resources, the more able we are to attain FI and have more opportunities to please the Lord.

The Parable of the Talents in Matthew 25:14–30 teaches this stewardship narrative. The master is traveling away and entrusts differing amounts of resources to three servants. Each servant performed differently with what they received. The first and second servants double the amount they had through trading and investing. The third servant was lazy and unproductive; he ended with the same amount he was given. He didn’t use any of his gift to further or advance his or his master’s profitability.

The Parable of the Talents is not strictly about finances. It is primarily about how disciples will steward God’s kingdom when Jesus departs this earth. However, to further advance God’s kingdom and the work of the gospel, it is imperative to use time, money, and other resources wisely. One who invests his money, time, and energy well will reap great reward. Financial independence pushes people to think and live well regarding biblical stewardship.  

Vice No. 1: Unhealthy Obsession

Pursuing FI can lead to an obsession with money.

The fascinating thing about FI is that it aims to free you from the burden and worry of money. Ideally speaking, once you reach a certain level, you will rarely need to think about money again. Yet, the journey to FI depends upon very strategic and intentional money management in your expenses, taxes, and investments.

How many times a week (or a day) do you monitor your net worth or portfolio’s return in the stock market? I am tempted to become obsessive about my finances when I realize how crucial each little step can be.

The line between healthy stewardship and unhealthy obsession is cloudy. This point is not to say you must be obsessive in order to reach FI, but rather that the process can be intensive and absorb too much of your efforts. Reaching FI allows you to be free from needing to earn an income and pour yourself into so many other areas of life (more on that later). However, obsessively tracking your net worth on your way to FI leads to enslavement when the goal was freedom. The closer you watch your finances the more you will notice every blip in the market affect your “worth.”

Virtue No. 2: Discipline

Pursuing FI requires disciplined financial behaviors.  

The Christian life is often one of disciplined action. Denying selfish indulgences and fleeing from temptation is the call of every believer. The ability to say “no” to opportunities, excesses, or wastefulness is a discipline developed over time. Christ appeals to his disciples, “If anyone would come after me, let him deny himself and take up his cross and follow me.”   

Pursuing FI requires disciplined behavior that harmonizes with the life of a disciple. Rejecting opportunities for instant gratification and consistently repeating healthy habits mark someone who has learned the value of discipline in life—financially and spiritually. Disciplines of the spiritual life (prayer, meditation, etc.) are developed and maintained in the same way as financial disciplines. I will not buy that item that looks so shiny on the rack because I have trained myself to withstand that impulse.

To say that pursuing FI builds discipline is akin to saying that FI builds the right kind of habits. The approach to life that will align your finances properly is laced with habits that are only learned through time and self-control. The journey to FI will show you, teach you, and require of you discipline in your finances as well as your life.

Vice No. 2: Unhealthy Independence

Achieving FI may lead to an unhealthy “independence.”

As American as freedom is, there is a detriment it can bring to those who possess it. Experiencing the substantial freedom that FI can yield can create an “unattached” life.

For those who reach FI, there is no necessity for them to ever work for pay again. The lifestyle that they live can be sustained in perpetuity through their life savings and investments. This independence in finances brings with it an independence in life as well. Nothing ties you to a job or specific location. Many people speak of FI as the freedom to travel as much as they want. The internet abounds with stories of people who spend six to twelve months a year living abroad. There’s no reason to stay because you don’t “need” anyone. 

But what about people’s dependence on you? Financial freedom is most often praised as being about making me happy so that I can be personally fulfilled. In the literature the focus is on your personal relationship with work and your desire to escape the rat race. Very rarely does the conversation move beyond my family and me. How do my friends fit into my pursuit of FI? Irrelevant. What if I am bringing tremendous value to my employer, should I still quit? Your happiness is more important.

God has created us to desperately need other people, and healthy communities are built upon interdependent relationships.

To never “need” anyone again because you can travel anywhere and always with no financial need has the very real potential to remove you from a real, physical community. One that you need as much as they need you. The FI goal can uproot you from God’s gift of community in the name of total freedom and independence.

Virtue No. 3: Flexibility

Achieving FI can allow someone to spend a substantial amount more time at home or with their family and friends.

From a rough sampling of the FI crowd online, this is the number one reason people pursue getting their finances in order. Family life and children are great motivators. What if you could invest even just half of those forty hours you spend a week into time at home with family? Many people would pay a substantial sum of money to reach such dreams.

Imagine making each school function, each late afternoon sports game, or were open to meet friends or your spouse for lunch any day of the week. FI can free you of the 40–50-hour work week and allow you to redistribute that time toward the things that matter most to you.

I am sure this might unsettle some readers who still work full-time. Do I really want to spend forty hours a week at home? Or if one spouse already stays home with the kids, do we really want a second person home? That sounds counterproductive.

Those are exactly the right kind of questions to be asking. “What could FI look like in my life?” The reality is, most adult professionals spend so much time working that they consequently miss out on many aspects of their children, spouses’, and friends’ lives. FI can provide opportunity to reverse some of that pattern.

Vice No. 3: Less Generosity

Pursuing FI may lead to less generous behavior.  

What if I gave away $1,000 tomorrow to a friend in need? How might that affect my progress toward FI? Well, with an assumed 10% investment return over the next fifteen years, that would turn into $3,800. That could easily represent one or two months of expenses in FI that you just gave away. These are the cost-benefit analyses that the FI mindset wanders into.

Do I really want to give away that money if it could lead to me quitting my job one or two months sooner? Multiply that situation over dozens of generous opportunities you might have in a year or decade. We could be talking about months or even years of time that you gave away.

I don’t intend to say that FI people are less generous. I am simply reflecting how I know my own heart works, and I assume some others are with me. If disciplined spending and savings are the most important part in my financial journey then all of a sudden generosity becomes counterproductive. This can make me hesitate before giving away to my church, school, neighbor, charity, or missionary.

Generosity is a vital Christian virtue that’s already a difficult skill to nurture, and striving for FI can increase the strain.

Virtue No. 4: More Opportunity

Achieving FI can create abundant opportunities for giving time and energy for free or minimal pay.

Most people dream of financial independence for exactly this reason. What would you do if you didn’t have to work? Nearly every person’s list would include more time with family or traveling. Yet, also very high on the list would be volunteering at your church, city homeless shelter, or mentoring students at the local elementary school. The list of benevolent volunteer opportunities is endless, and when you are freed from the need to work for a paycheck, then you can pursue your passion wherever it lies.

What if you were an accountant and reached FI, could you volunteer to manage the finances of your church or a parachurch ministry you are involved with? Are you a web designer? Is there an organization that you care deeply about that could benefit from your work? Perhaps they could pay you only a third of what a “regular” web designer would charge. You reaching FI has the potential to save that organization thousands of dollars a year because you no longer need to charge the same rate for your time.

Let your imagination run wild on this virtue. There is no doubt in my mind that each of you feel strongly about a ministry and would love the opportunity to give more of yourself to it. Pursuing and achieving FI opens incredible doors.

Vice No. 4: Laziness

Achieving FI could lead to laziness or complacency.

The aim of FI is to no longer need to be employed again. Your finances are stable based upon the investment returns from your portfolio. So without a job, and without a compelling need for employment, like putting food on the table, it’s possible for vices to crop up.

Complacency and laziness are natural temptations that the human condition falls into. When “employment” is no longer a necessity of survival, then choosing to engage in work or productivity is sourced in personal fulfillment or seeking societal improvement. The temptation of the human heart is often to take the easy way out.

How often, when given the chance between continued hard work or enjoying well earned rest, do we choose the latter? Multiply that over years of hard work culminating in the opportunity to rest indefinitely from employment.

None of these vices are necessities for pursuing or achieving FI. However, they outline dangerous traps surrounding this path. This is the tone of many an FI blog or book. Self-fulfillment is often established as the source of all good. As believers we have to take a broader perspective on life and fulfillment.

God calls us to pursue the good of our city. As we are stewards of such a great treasure in the gospel, we bear the responsibility to care for our workplaces, our neighborhoods, and our friends. One, two, or all three of those social arenas might call for us to delay FI in order to serve those around us. Are we willing to lay aside our pursuit of FI (temporarily) if it means serving those around who are in need? If not, then we have bought into the FI lie, believing my life revolves around my own self-fulfillment.

Where do we go from here?

It might be time to dust off your credit card statements and look seriously at the financial house you’ve built. Or perhaps you have developed financial discipline and your monetary thriving allows you to give generously. Wherever you find yourself on the spectrum, welcome to the dialogue between theology and finances. We have a lot of ground yet to cover.