There is one huge, yet unexpected downside of early retirement. It only becomes obvious once you have retired.
It comes as a surprise because it is not something that crosses your mind while you work to become financially independent.
Here is the one major unexpected downside of early retirement:
You become an easy target for friends and family who frequently ask you for money.
It is hard for people to fathom the number of sacrifices and discipline it has taken you to get to financial independence and retire early.
They simply see you as someone who is loaded with cash and should always be there to dole out financial favors on demand.
Unexpected Early Retirement Challenge – People See You as a Cash Dispenser
There is a difference between helping others financially when you want to versus when you are forced to.
Once you are financially independent, it gives you the means to make an impact on those around you who are less well off.
As I have mentioned in the guide to early retirement getting to FIRE is a combination of skills, perseverance, and luck.
You may know scores of people who would have put in the required work, yet things somehow never worked out for them.
In those cases, it is indeed worthwhile to assist others the best you can. Being able to do something for others is one of the cornerstones of happiness in retirement.
Being able to assist others is indeed a privilege and one of the core tenets of humanity as well.
The issue I have though is with the freeloaders.
The people who continue to have bad financial habits and look to you for a bailout each time.
Helping someone once will only make them come back asking for more. They refuse to put their own house in order and take responsibility for their own lives.
So, what do you do in this situation and how to handle it?
This is an unexpected downside of early retirement that you are highly likely to encounter.
How to Handle Friends & Family Asking for Money
There are no perfect answers on how to handle this challenge.
Each situation is unique and requires adapting to the circumstances as they stand.
Here I am assuming the person is close enough to you that you cannot bluntly say no.
It could also be an old college friend who has never asked you for any financial favors till date.
They just showed up one fine day unexpectedly.
You naturally want to give them the benefit of doubt in this case.
Here are some things you can do to handle this situation.
Ask for Documentary Evidence
There is difference between asking for financial help generally and asking 2 grand for a specific purpose.
Ask the person to share documentary evidence for their request.
If he can be blunt enough to ask for financial assistance you are well without your rights to ask for evidence to back up his request.
Furthermore, look at the manner of communication. If they start by asking for 10,000 and then quickly drop to 5000 or 3000 that is big red flag.
A person in a genuine financial distress would be open to discuss his specific financial challenge.
More so if you have been approached as a close friend and confidant.
Pay the Creditor Directly
If they claim a medical payment is due, ask for the bank details of the hospital that needs to get the money.
Similarly, if a school fees, food and other payment is due ask them directly for invoices and bank details of the vendor.
This way you directly pay the vendor and help them with the immediate financial issue at hand.
It will also have an added benefit – If your friend is just making the excuse of a medical bill, he will be forced to show his hand.
It will help you cut through the fluff.
You will be able to identify if the person really needs assistance to pay his medical bills or if he is just simply targeting you for free money.
Sound Out Your Friends
There is a high probability that you are not the only one being targeted by this person.
Your other friends who are financially stable may also be targeted.
Check with your friends if they too have received similar requests of this nature. Sometimes it can be revealing what you find out.
The freeloaders have a habit of approaching people individually, saying how they want to keep their requirements confidential.
“I only shared this request with you, because I knew I could trust you.” This is a typical line of a fraud artist.
Warn your other friends about this behavior so all of you do not get taken advantage of at the same time.
It is Never Coming Back
Any money you give this way is never going to come back. The person asking for money will always ask for it as a loan.
He will have a story that it is a matter of just 2-3 weeks before he returns it all back. All of that is just a ploy.
You can be rest assured of one thing – this money is never coming back.
So, if you do decide to help someone financially keep this at the back of your mind. You are giving a donation and not a loan.
Preempt the Next Request
If you have helped a freeloader once, there is a good chance you will be approached again.
It is just a matter of time.
Therefore, use the opportunity to preempt any such future requests.
Tell them you are doing this as a one-off favor and will not be able to entertain any such future requests.
Make it clear that you are not a person of unlimited resources. You have your own financial obligations towards your family that you need to cater for.
Getting Over it Emotionally
Saying no to someone in genuine financial need is never easy.
The point of this article is to help you identify someone with genuine financial needs versus the free loaders who see you as a cash machine.
Even if you have helped someone without undertaking the steps outlined above, it can leave you emotionally depleted.
It is not the money that you gave away that leaves you disappointed. It is the feeling of being lied to and being taken advantage of.
In this case there are some things you can do to let go financial regrets.
Good financial habits take a lifetime of learning and practice.
Most people only look at the result that comes from years of hard work and patience.
They are not willing to put in the demanding work and just want to latch on to you once you have put in the hours to get to where you are today.
It is important to identify these freeloaders so that they do not distract you from helping the people who genuinely could benefit from your contributions.
This is the one major yet unexpected downside of early retirement. You will attract unwanted attention.
Therefore, just like your journey to early retirement, keep your financial life private.
There is no joy in shouting from the rooftops about the life milestone you have reached. That is a recipe for trouble.
Dushyant Choudhary is the founder of dushyantnomics, an early retirement blog for professionals. Dushyant retired early from his 9-5 corporate life after a successful international career. He brings his knowledge and experience to his current role where he’s dedicated to helping professionals achieve a fulfilling retirement.