Chances are, you read this blog and others like it, because you're interested in the subject of personal finance. It could be because reading about personal finance is your definition of entertainment (guilty as charged). Or perhaps you're looking for knowledge to achieve a specific financial objective.
Seeking out personal finance knowledge in a deliberate and purposeful way, and eventually acting on it, will generally indicate that you've achieved Financial Awakening.
The majority of people will never reach this level of financial enlightenment. This is evident by reading mainstream headlines on the state of most household finances.
I didn't achieve my Financial Awakening until around the age of 30, which I believe makes me somewhat of a late bloomer, especially in today's digital age.
How to tell if you're Financially Awake
Think of the world as two alternate financial realities, something like the matrix. One world is made up of financial zombies lumbering through their lives, unaware of their true surroundings. The other world is made up of a few motivated souls, in control of their financial destiny.
Here's how to tell if you're of the Financially Awake variety:
1) Allergic Reaction to Debt
You view debt as a form of financial evil, designed to enslave you for as long as possible. Some of that debt is possibly unavoidable, and necessary to achieve long term financial objectives, like student loan debt. Other debt is designed to satisfy the need for instant gratification, like credit card and auto loan debt, and even mortgage debt.
Regardless of the type of debt, you recognize that eliminating it from your life will lead to a more secure financial foundation. Once that realization is clear, you work tirelessly to destroy it. You also avoid taking on any new debt, unless you're eventually in a financial position to use it to your advantage (like my buddy Fritz did).
2) Consumerism Grosses you Out
You're hyper aware of our consumerist culture and the incredible marketing efforts enabling it. You have become immune to all forms of advertising and the barely veiled attempts to lure you into a frivolous purchase.
You basically recognize that any financial resource squandered on stuff that adds no value to your happiness is a waste. You're repulsed by spending, unless it genuinely benefits you in some substantive way.
3) You Consider Investing a Super Power
You finally figured out that making money isn't limited to a day job. Compound interest is indeed a miracle, and a super power that can be tapped in all sorts of ways. Whether you diligently squirrel away your money in a retirement account, or get creative with crowdfunding.
The basic idea is that investing puts your money to work, and increases your financial muscle. You just have to control that super power, and know your limitations.
4) You're a Chronic Personal Finance Nerd
Once the veil is lifted, you find yourself obsessively seeking out personal finance knowledge. You binge read personal finance blogs, glance through mainstream media related to the subject, and constantly analyze your finances.
Like any obsession, this can sometimes be unhealthy, so make sure to balance it out with your happy thing of choice.
5) Financial Independence is your Primary Goal
You eventually realize that this alternate world is basically about financial independence. It's the ability to control your own destiny and shape your life into what you desire it to be. That financial independence can mean early retirement for some, for others it's accomplishing personal goals that would otherwise be unattainable.
Regardless of the destination, your journey becomes that of financial freedom. All your financial efforts are focused on that primary goal. You start to optimize your finances, and begin to operate your household like a business.
When did you become Financially Awake?
Although I had better financial sense than most, I didn't really become financially awake until around the age of 30.
That's when I feel I became fully aware of my financial situation, and the veil slowly lifted. Of course this doesn't mean I had it all figured out back then, in fact I still don't.
It just means that all five of the indicators I shared earlier eventually raised my consciousness. I had numbers 1-3 mostly figured out, but it was the last 2 points that really shocked me awake.
I started reading some articles about people who were retiring in their 30s, and eventually made it to such legends as Mr. Money Mustache and Financial Samurai. This opened up a whole new world for me, and helped me focus my financial energy in a more productive way.
I sincerely believe that the earlier someone becomes Financially Awake, the higher their chance is to become financially independent. With all the free knowledge out there these days, all you need is an internet connection (or a public library) to help you swallow the right pill.
Once you take the pill, there's no turning back. You will see your financial world in a whole new way. And hopefully that wisdom will set you on a course for financial freedom.
Readers, when did you become financially awake? What was your defining moment? Are you happy not being a financial zombie, or is ignorance truly bliss? Share your thoughts and comments below!