Retirement Psychology

When I first met Husband, when he was a whopping 22 years old, he was already saving for his retirement. I thought this was HILLARIOUS! What a dork! What a conservative old man! Retirement is AGES away.

As I got older I stopped thinking of him as a dork. I could see the wisdom. But I wasn’t too concerned about saving for retirement myself. I mean, I had it vaguely in the back of my mind but I figured that we should buy and payoff a house first and THEN start saving for retirement.

But that changed just over a week ago. And what changed my mind? Not the fact that everyone knows that they need to save for retirement, that it’s the ‘right thing’ to do. Not that the earlier you start the more you will have. Not even the Frugalwood’s brilliant explanation of compound interest being a magical unicorn (see Frugalwood Unicorn). But rather, two simultaneous realisations:

  • Retirement is something good/a reward (i.e. the financial freedom to travel, play and study as much as I want)
  • It could happen soon. Like really soon. Like 7 – 10 years soon if we are really good.

And boom, just like that I was ALL for it.

Let’s look at my two realisations: The fact that retirement can actually be whatever the hell I want it to be immediately makes it a reward. This is in stark contrast to traditional concepts of retirement. This shift in perspective however is magical because suddenly behavioural psychology 101 can kick in:

IMG_2275 cropped


What this means is that retirement suddenly becomes something that I am prepared to work really hard for i.e. save for:

IMG_2276 cropped

The magic with early retirement is doubly powerful because:

  • My reward is MUCH closer than retirement is traditionally presented as.

The key here is the immediacy. If consequences are delayed then our brains take a lot longer to learn to increase the behaviour (if ever!). For example, I have struggled to cut out chocolate (which I love!) my whole life. I know it would be healthier for me in the long-run but I just can’t seem to manage it. However, when I went through a stage of immediately getting a bladder infection every time I had any beer or wine (which I equally love!) you can bet I cut it out pronto. I didn’t even mind not tasting the stunning wine of the day when out with friends (which is significant given how much I hate missing out!)

  • My behaviour has a direct impact on how quickly my reward comes about. This points to a fundamental problem with the traditional concept of retirement as something that just happens at 65 years old. In this sense it is presented as an objective “fact” (/life stage) quite divorced from any action or lack of action the individual may or may not take. In other words, time has the power rather than the individual. This is clearly not a recipe to encourage saving:



What this all basically means is that traditional concepts of retirement suck ass. And early retirement is the winner of the world for always 🙂 Also, irrespective of how this Brat Experiment goes, I already feel grateful to Early Retirement for teaching my brain that retirement is something that I want ❤


My (beginners!) understanding of Early Retirement

  1. Retirement is NOT what happens when you are no longer capable of working and are preparing to wind down your life. Rather, retirement is simply the ability to financially support yourself without having to work. This means that you can work if you want to but can pretty much do whatever you want with your time (i.e. in our case travel, study, work flexible hours, watch our children’s every sport game etc).
  2. How much you need to retire depends on how much you need to live (nothing to do with your salary).
  3. This means that reducing your living costs/spending has two effects:
    • You need less to retire on
    • You can retire sooner because you are saving faster
  4. 4% is very important. I’m still digesting exactly how it all works but my rudimentary understanding is: I need to have enough capital so that my living expenses per year take only 4% of that capital. This will ensure that my capital generates enough interest to keep up with inflation and provide for me for the rest of my life. This means that I can retire when I have saved 25 times my yearly living expenses. The brilliant Mr. Money Mustache explains it beautifully here. For my fellow number panic-ers (spelling?) here it is explained in picture format: IMG_2269
  5. I just love the graph in this post by Mr. Money Mustache because it makes complicated maths very practical for my Humanities-loving brain. For example, if we save 60% of our income (i.e. live off 40% of our income) then we will be able to retire in just TWELVE-AND-A-HALF YEARS! Say whaaaaat? 🙂 🙂 🙂 🙂

Money and relationships are cooooomplicated…

6:08pm last night Husband phones me:

 Husband: I hate you.

Me: Why?

Husband: I have been looking for cheap running shorts for half an hour and have spent the entire time feeling like shit for wanting to spend money.

Me: I’m sorry Love…

Husband: You and this bloody money stuff hey…


This brings up two concerns:

  • I don’t want to do this if long term we constantly feel guilty every time that we spend money (I can see the benefits of guilt in the short term though as a way to initially reduce spending)
  • Money and relationships are cooooooooooooooomplicated…


I’ll be honest, dear Reader, my initial response to this phone call was triumphant glee. You see traditionally it has usually been the other way around: Husband the saver and me the spender (although I prefer to use the term “liver of life!”) and so it felt really good to have things swopped around a little bit 🙂


When we first started dating it took us a while to figure out why grocery shopping usually involved arguments: basically, we both approach money in very different ways. See the beautiful illustration below:



Years later and I think that we have both moved a little towards the other’s money culture and so shopping has become much more pleasant. But since starting this process I’ve started to wonder if that’s not just because we have both been, unwittingly, assuming the elephant position (if this reference confuses you please check Stop assuming the elephant position out)….


Back to that phone call last night: Husband is definitely as on board with this Brat Experiment as I am. Similarly to me, he’s desperate to have our own house, travel and (this you don’t know yet about me, dear Reader) would LOVE to be able to study for the rest of his days – and the Brat Experiment suddenly makes these things tantalizingly close to reality. Also trying to spend as little money as possible is right in line with Husband’s money culture. However, at the moment, I am definitely the driving force (read: constant reminder) that we are trying to spend less money… and this subtle power dynamic makes me nervous. Or maybe it shouldn’t? Maybe with something as lifestyle challenging as this it’s more about team work. We have both decided that we want to give this Brat Experiment a try and we both REALLY want the things that this lifestyle can potentially afford us i.e. we want the same end result and are on the same team. So maybe it’s more about us taking turns being the “driving force” and I just happen to be first?



Plan 1


Hubby and I get paid on the 25th of each month and so we have decided that today is the first day of really putting this Brat Experiment into practice. And we think that we have come up with a flawless plan for it:

Whenever we travel we give ourselves a budget per day. We know that we can’t spend over that on any given day but that if we under spend then we have extra for something we could not have otherwise afforded – wonderful. And it works really well J So why not apply it to our normal, everyday lives? So here is the plan:

  1. Our budget is 100 000 won a week each. This is 10 000 won a day Monday to Thursday and 20 000 won a day for Friday, Saturday and Sunday.
  2. Plus we have allocated an extra 100 000 won each a month for any unexpected or bigger expenses that might happen from time to time.
  3. This means that we will live off 500 000 won each a month.
  4. PLUS we have allocated 500 000 won a month each for traveling expenses. This can be saved up for a big trip or used to explore the country we are currently in.
  5. All this means that we will be saving almost 60% of our combined salaries.
  6. Track our expenses in real time over the next month using our new money management app and then reassess this plan at the end of the month.

Sounds pretty good hey? I mean, what could go wrong?! 😉





Stop assuming the elephant position


Addo Elephant Park, South Africa (April, 2014)

When I was a kid we went on a family holiday to Zimbabwe. My parents are strange creatures though – they only like to go on holiday to really wild places. To translate this into something normal people like you and I, dear Reader, can understand, this means that they like to go on holiday to places where you can easily die: wild animals who are not used to seeing humans, game reserves who aren’t too concerned about keeping track of guest safety and free camping (i.e. no fences separating your [flimsy!] tent from the [wild-wild] animals).

Anyway, while on this particular holiday we had been driving around all day when we rounded the corner and came across a GINORMOUS lone young bull elephant tantruming, I mean trumpeting, for all he was worth. He was clearly pissed about something and he was letting the world know.

Any sane driver would have seen the tantruming young elephant (i.e. the teenage personality in the bulldozer body) and driven smartly on. But no. Not my Dad. He’s a farmer you see, dear Reader, and so thinks he’s some kind of animal whisper/controller person. Well, the elephant took one look at our parked car and charged us. Thank goodness my Dad drove quickly off. But unfortunately only for a bit. He then stopped the car and THEN (you would think he could have done it while STILL driving) asked if the elephant was still charging (?!?!!). We turned to check out the back window… only to find that the elephant was so close that we couldn’t see anything out the window except the elephant! 😦 😦

Ever since that day I have been terrified of elephants. And each time a car that I am in goes anywhere near one I squeeze my eyes shut, stick my fingers in my ears, (ideally stick my head in a pillow) and sing to myself until the danger has passed. In other words I ignore the elephant danger and distract myself until I’ve survived the ordeal. Even I can see that this is not the most useful of approaches. If elephants really are as dangerous as I feel that they are, then surely the most rational response would be to constantly watch what the elephant is doing while frantically considering every escape route available to me?

You get where I am going with this, don’t you dear Reader? 🙂 Avoidance and distraction are brilliant defenses against things that make us anxious i.e. elephants and finances. The only problem is that they don’t let us do anything actually useful about the problem…

I didn’t think that I had assumed the elephant position with regards to our finances. Really, I didn’t. I mean, I keep receipts and every few months plug them into an excel spreadsheet and stuff. And you only do this if you are proactive and good about money, right? Wrong. In the spirit of early retirement I downloaded a money tracking app so that it would be easier to track our expenses. Imagine my unpleasant surprise when after just ONE DAY of using this app I realized that I’m not as good about money as I thought I was (see The Numbers)… And how have I tricked myself into thinking I’m “fine” with regards to money management? By distracting myself (only plugging finances in months after the fact) and avoiding staring our spending right in the face as it happens i.e. assuming the elephant position. Bugger.



The Beginning…

So, dear Reader, let’s be transparent from the very beginning. Some things to know about me:

  • I’m 29 years old.
  • I’m happily married to one of the grumpiest and loveliest humans on Earth.
  • I’m a trained professional in the Humanities (i.e. I get the Bell Curve but beyond that I tend to panic when it comes to numbers).
  • I LOVE my job.
  • I am obsessed with travelling.
  • And I recently realized that I want to retire early. Or to be more honest and specific: I recently realized “early retirement” is the name for how I want to live my life. Up until now I’ve tended to use my husband’s word for what I want: “Brat”.

To be fair, I think “Brat” sums it up quite nicely. My idea for my life is:

  1. To travel. Often. Regularly. Slowly. Leisurely. For weeks at a time.
  2. To have the privilege of being the Mom (the kids haven’t been born yet!) who can watch soccer practice, join in school trips and play hide and seek in the garden
  3. To work at my job which I love
    • BUT to do so with flexible hours and as much holiday time as I want (because of the kids and the travelling)
  4. To own my own house (debt free)
  5. To be financially secure and comfortable (for example: not be at risk of financial disaster if there is an unexpected expense; being able to celebrate special occasions with a fancy restaurant meal; being able to afford to go to people’s weddings or funerals etc)

According to traditional thinking the only way to have (4) and (5) is if I do (3) for a really long time without the flexibility, which means sacrificing (2). In order to do (1) I need (3) but as soon as I have (3) there is no time for (1). But I can easily have (2) if I am willing to give up (3), (5) and probably (4). In a nutshell? I’m a Brat.

But now I know that there are other Brats out there in the world JUST LIKE ME 😀 And instead of being idealistic morons with no grip on reality, it turns out they are normal humans who simply tend to approach money in an intelligent, disciplined manner. And they call it Early Retirement. A MUCH better name 🙂

You don’t know me well yet, dear Reader, but I am intelligent. And I am disciplined. Especially when it comes to Big Picture Stuff (like getting to live the kind of life I want to). So, that is what I am going to try and do. And I’m going to use this blog to document my journey for two reasons:

  • I think/figure out/understand things better when I have to write it down.
  • As some vague kind of accountability – even if you, dear Reader, only exist in my head 🙂 And so hopefully to keep the momentum and discipline going.



New Zealand Road Trip (May 2011)