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How Colleges Spend Money
Soon after starting our marriage, my wife and I stumbled upon the FIRE movement. For the uninitiated, FIRE stands for Financially Independent, Retired Early.
Their philosophy is an evolution of minimalist thinking. They extend the idea of owning less and spending less into a mathematical formula for freedom called the 4% Rule. Below is a picture of a FIRE calculator which can help you determine how early you could retire based upon your savings rate and financial needs.
I bring up this movement because one of their foundational beliefs might be the shift higher education needs to survive. This belief is best summed up by the following quote.
It’s not how much you make. It’s how much you spend.
– Gary Vaynerchuk
For individuals, financial freedom comes when they are able to cover 100% of their expenses from passive sources of income (i.e., investment returns, royalties, etc.).
The problem, especially in capitalistic societies, is that the expense number never seems to stop growing. As our income rises, so does our ability to fulfill consumer desires which we once were unable to satisfy. And yet, getting a taste for more and better only serves to open our eyes to what’s beyond that, so with the next raise we reach for those instead. And on and on it goes.
