There’s a saying that you can get things “Fast, cheap, or good. Pick two.”
This saying is meant to imply that you cannot have all three of those things. At least, you can’t have all of them at a high level. If you want something fast and cheap, it’s probably not going to be very good (hello, McDonald’s). If you want it fast and good, it ain’t gonna be cheap (the military knows a lot about that). And if you need it to be good and cheap, it’s probably going to take some time. Commercial space travel, anyone? The commercial space ventures going on right now are cheap in comparison to earlier attempts, anyway. And they are good. But boy did it take us a long time to get there.
Ease, Speed, or Wealth. Pick Two….Max.
You may know this concept as the Triple Constraint. In simple terms, the Triple Constraint is the three constraints that have to be balanced against one another in a project – scope, time, and cost.
The way I see it, there’s a similar Personal Finance Triple Constraint. You can have high levels of ease, financial independence (reaching it very fast), or wealth. You (probably) can’t have all three. In fact, many people won’t even get two. But I’d argue that everybody is trying for a high level of at least one of those things.
Let me explain.
Ease
I define high levels of ease as a financial environment that requires minimal thought and worry. It may be characterized by having a financial advisor take care of your finances. Maybe it means you just shove money into a target date fund and let it do the work. Or maybe it just means being able to pay your bills without worrying about having enough money to buy groceries afterward.
People seeking ease in their finances probably:
- don’t want to closely track their spending or investment performance
- want to be able to eat out without worrying about the effect on their wallet
- follow (or want to) the standard retirement advice of saving 10%. That retirement account might be 100% invested in a target date fund. They probably don’t like a lot of risk in their investment choices
People seeking ease probably also work for someone else. It’s a lot easier to be an employee than to be an employer, at least from a money aspect. Employees know with a fairly high level of reliability how much they will be paid and how much work they have to do to get that money. Employers have to make it up as they go, at least in the early years. And they may have to sacrifice several years of income if they are starting their business from scratch. That’s not easy at all!
The ease seekers are the core of America. This is what the average American is really going for. They know they won’t be rich, and they’ve never heard of financial independence the way we talk about it in the personal finance sphere. Those concepts aren’t even on the radar for them, or if they are it’s probably in a “yeah that’d be nice but it isn’t likely” kind of way. But most Americans can achieve some level of ease in their finances. Even if they carry consumer debt throughout their life, even if they are barely scraping by (or not), ease is something most people want more of from their money.
Speed
Then there is the goal of a high level of speed. By this, I’m referring to reaching financial independence (not necessarily early retirement) as quickly as possible. Many people don’t have this goal, for various reasons. I haven’t met anybody opposed to the theory of financial independence, but I have met plenty who choose ease instead. Striving to reach financial independence quickly just doesn’t sound fun to them. They are perfectly fine waiting for age 65 just like everyone else.
That’s how we do it here, right? That’s what Americans do.
Except for those of us that don’t want to wait. Shout it with me.
What do we want?
Financial Independence!
When do we want it?
Now!
For some of us, achieving financial independence as quickly as possible is the key objective in our financial planning. For some people that’s because they don’t like working, but there are other reasons too. Being able to pursue a passion is one. Or you could have a family situation that’s driving your desire – for instance, wanting to stay at home with your kids. The reason isn’t what connects us – it’s the drive.
Wealth
Then there is wealth. And by wealth, I mean dolla dolla bills, y’all. Being wealthy in other ways (health, friendship, love, etc) is extremely important. It’s just not the point of this post.
Everybody’s vision of what “wealthy” means is different, so I don’t want to put a dollar amount on it. For the purposes of this post, wealth is just having so much money that you don’t even have to think about it. Most of us striving for financial independence will still have to think about money, because we aren’t going to be saving so much that we exceed our FI number by many times over.
In order to become truly wealthy in America, you generally have to do one of three things:
- Win the lottery (extremely unlikely)
- Receive a very large inheritance (possible, but still not too likely)
- Be very successful in business. This is usually but not always through owning your own business
The Personal Finance Triple Constraint
The theory behind the Triple Constraint is that each of these things is a trade off. Increasing the importance, and therefore effort, you place on any of them will necessarily cause one or both of the others to suffer. Maybe not a lot, but some.
If you want your finances to be as easy as possible, you are most likely going to give up some money. FIREes and wealth seekers will take the extra effort to earn and keep their money by doing things ease seekers may find excessive. For instance, working 80 hour weeks or learning the tax code to maximize loopholes. While you can achieve quick financial independence or wealth while also keeping your financial life easy, it’s probably not going to be quite as fast or quite as much money.
Note: index funds are one of the exceptions here. They are super easy and popular in the FIRE community and recommended by some of the wealthiest people in America (ahem, Warren Buffett). Index funds are for everyone!
If you want to achieve financial independence quickly, there are going to be some trade offs there too. It’s probably going to be difficult at times. You’ll have to make sacrifices and go against the grain of society. Even if you can do it without stretching your finances, there is also the problem of having friends and family constantly challenge your goals.
People will tell you that your goal is unrealistic. That it’s not worth it. That you deserve nice things. Because financial freedom isn’t nice, apparently. Or my favorite, from the wealth seekers – “It’s impossible to live on that amount of money!”
If you want to be wealthy, you can probably achieve financial independence too (it also depends on your spending) but it’s likely not going to be very easy – it’s going to entail hard, hard work. And depending on how you define wealth, it may take a long time.
There are major sacrifices in pursuing wealth…unless you win that lottery I mentioned earlier. In that case, put the money into some index funds, kick back, and enjoy your ease/speed/wealth trifecta.
I’m going for speed, even though it seems like I’m moving at a snail’s pace at the moment! I don’t want to end up amassing multiple millions of dollars since I cannot think of a single scenario in which I’d live a life that required me to ever need that much money, so I’m not focusing on wealth directly. However many hundreds of thousands of dollars I’d need for FIRE would be plenty comfortable enough, thank you!
Although you know, having a net worth high enough to be FI means I’d be pretty damn wealthy in comparison to most Americans, let alone most anyone in the world. So I’m indirectly going for two of them. Let me get back to tracking every expense now though since I can’t have all three… 😉
Yeah…wealth doesn’t really interest me. I don’t need it to live the life I want, so I’d just end up working longer so that I could give it away. I’d much rather retire early, then help people through volunteer work and philanthropy!
But if you do want to go for all three, you can geoarbitrage to a location where your US FI number is huge money! 😃
All good things in moderation, so a blend of the three in our case. We won’t be as fast as we could be, as wealthy, or as easy. But we’ll be happy.
And that’s what’s important! That’s a very balanced approach. Good luck!
Speed is actually not a huge focus of mine (though I guess compared to *typical* America, reaching FI at 45 versus 65 (or really never) is still pretty speedy. It took until having a child to realize that I didn’t want to be married to my job and work endless hours for years and years on end. Now I’m working 80% time, and although I’m giving up a considerable amount of money because of it, I don’t plan to go back to FT once my son is in school. I’ve found that my life can be pretty darn good with an extra 2-3 hours compared to full time employment. And I’m willing to coast to FI more slowly to keep it that way.
Hahaha, I’d definitely say 45 is still pretty speedy. But you are also an ease seeker! A look behind the curtain: I originally labeled it comfort, because it was about being comfortable with your finances and where you stand in life. That sounds like you!
Angela, I am in the same camp as you!
We could be there a lot faster if I was working full time, but we love the ease of having more time while our daughter is young. We didn’t discover the FI concept until our mid 30’s either. So we’ll probably just coast into things over the next 10 years or so and we’re Ok with that. Although every time I read Financial Panther’s side hustle report I think to myself “What are you doing? Get yourself together!” lol.
Fun premise. I’m going for speed first. I expect wealth to be an eventual after effect. I don’t think I’ll stop making money once I get to FI. I see it as an opportunity to turn a hobby into a business. I used to be focused on ease and may go that way again once I achieve FI. For now, it’s all about optimization though!
If I had to rank them for myself, I’m speed then ease then wealth. But I do think wealth might end up being a side effect for me, too, if I end up with a military pension.
Interesting post! I am actually taking the pedal off the “FIRE” element. In other words I’m consciously embracing lifestyle inflation (ease) and the knowledge that my husband and I will have to work a few years longer than we otherwise would in order to pay for it. I also am aiming for a Retirement Number that is firmly in the “Wealth” category, versus the low 7 figure or even 6 figure balance many FIRE bloggers seem to aim for before pulling the plug.
I like my job, my team is great, and I have a short commute. I also don’t have kids or anything else I”m dying to quit my job to tend to. I also really like nice hotels, expensive wine, name brand clothes, and our luxury townhome. And I like being able to hire people to do things like clean my toilets and re-stain my deck, versus doing things myself to save money. We spend about $150K per year (closer to $120K once the mortgage is paid off), and I’d like a nice cushion so we’re able to give generously and not worry about a health care costs or tax rates rising. So I’m not willing to quit as soon as we’re technically able (which is basically, like, now if we sold the pricey home that dominates our expenses). We’d rather work a few years longer and enjoy the finer things in life now and in retirement. Ease + Wealth is the formula for us. Even though it will take more time.
FIRE used to seem like a worthy goal – but then again everyone who reaches it seems to decide not to actually quit, or they “unexpectedly” keep earning lots of money in retirement from blogs and side hustles (every FIRE blogger), or they get antsy after a few years and start a new businesses (MMM and his wife). I’ve seen this in the “real world” too as a financial advisor. Extreme early retirees and even trust fund kids who never have to work almost always end up working in some capacity again.
It’s all about balance and it sounds like you found yours! I’m a total sucker for luxury hotels and houses too. While I’m definitely heavier on the FIRE side, I’m not pushing things as fast as I could because there are certain things I want to be able to do both now and in retirement that do cost some money. My FIRE number is on the high end of single FIREes, I’d say, although still a low amount in the eyes of my friends.
Thanks for commenting!
those are good points, like inverse proportionality in a way. though i didn’t realize it at the time i have enjoyed several periods of semi-retirement while in the perfect health of youth. the best was leaving a stable job and pick a place where you like to be on vacation (mine was new orleans) and move your stuff there and eke out a living. it helped to have no pets, spouse, house, or kids and very few possessions, but didn’t help was financial recklessness that came with my youth. every now and then a little hiccup comes and you end up living in a boarding house (not ideal) with crappy financial sense. the upside 15 years after the fact this that with a mini-retirement where you went off the rails crazy for a couple of years is that you’ve gotten a lot out of your system and the speed seems less important as you’ve experienced that freedom, even if it was reckless at the time. mrs. smidlap was on her own wild ride in a parallel place so this journey to FI for us was comparatively easy having lived through some knocks. we were able to get out of deep debt and close to FI in 10 years without feeling any crisis like we were missing anything having been there and done that. it’s good to move forward without fear knowing that a little hardship wasn’t that bad (except that boarding house in boston).
nice blog.
Oh man. Between this comment and your blog, I can tell you’ve got a story or two to tell! Welcome to the blogger fold!
hey thanks. i’ll be keeping up over here and learning what i can to navigate this new adventure.
I’m on the wealth and speed tip. I realize that a lot of people achieve speed by cutting their expenses to next to nothing. While I’m not willing to go that far, I’d like to reach FI by 45. That’s going to take a lot of work to build investments through ownership. Well worth it though. When my money makes enough money for me to live the lifestyle I want, I’ll then have the option to change my mind everyday and twice on Sunday.
I’m not willing to go bare bones either. I suspect to a lot of people in the FIRE community, my expenses would be considered enormously high for a single person. No worries here, though. I’ll still get there while relatively very young, and…personal finance is personal 😉