Albert builds social capital

Social Capital – an overlooked lever on the path to FIRE

Many of us pursuing financial independence and desiring to retire early are constantly checking spreadsheets, prowling the internet for more life hacks and optimization strategies, and sidehustling our way to greater savings. One thing I don’t hear discussed much in the FI world is the concept of social capital and what a tremendous lever it can be on our path to financial independence. It became clear to me this weekend when I made a presentation to my local ChooseFI group on the topic of building social capital how few people in the room were familiar with this terminology and line of thinking.

Social Capital – What Is It?

When maneuvering in the realm of financial capital money is the currency. In the realm of social capital one’s interpersonal connections become the currency. The richer and stronger your social network the wealthier you are. There is no one commonly accepted definition of social capital. I happen to like this excerpt from the Encycloepedia Britannica website, which describes it as a “concept in social science that involves the potential of individuals to secure benefits and invent solutions to problems through membership in social networks.”

Social Capital in the FI world

The FI blogger to most directly address this topic is J.D. Roth. He first  wrote about it on back in 2007.  He expanded on and added to these ideas in his What Is Social Capital (and Why Should You Care)?  post on in 2015. In both posts he underscores what a valuable asset he believes his social connections  are. He points to the outcome in the Christmas Classic It’s A Wonderful Life as a good example of what social capital in action can look like as George Bailey’s friends and neighbors rally around to help his family. Lastly, earlier this year J.D. hosted a guest post on by Christine Hughey in which she outlined how committing random acts of kindness had unintentionally led to the accumulation of social capital with a monetary value in the thousands of dollars.

Mr. Money Mustache appreciates this form of wealth and wrote a fantastic blog post about it entitled Get Rich With Your Urban Tribe back in 2015. There are 2 paragraphs in particular from this post that I think very effectively encapsulate what social currency looks like in action….

Our house backs onto a park, which is at the center of a human-friendly community where people actually walk places. Because of this, people tend to just show up throughout the day. Little MM might run out to join some friends after seeing them out throwing toy airplanes in the park, who later join him to make mud rivers in the back yard or come inside for a round of Starcraft II. Kids wander in pairs or groups from one household to another without an armored SUV escort, or even shirts or shoes. We all climb trees and play in the creek. Adult friends might stop in as part of an afternoon walk, which ends up leading to beers and the joint cooking of a feast, which in turn attracts other adults and children, possibly even leading to unexpected tent sleepovers in the back yard.

In such a community, leisure and work tend to blur together. I might recruit a friend to help build a fence, who ends up needing my help to replace a furnace. A third friend might stop by to learn about the installation process, but mention a house he saw for sale down the street which leads to a short-term real estate investment partnership. Everybody could use some help at times, and everyone has some help to offer at other times. As a result, kids and salads, tools and books and loaned vehicles, money and heirloom tomatoes and homebrews tend to circulate freely through the crowd, enriching us all with each transaction.

Vicki Robin refers to what she calls financial inTERdependence in the updated version of Your Money or Your Life. In episode 123 of Paula Pant’s Afford Anything podcast Vicki states that in the financial independence community “there is a habit of separation.” The emphasis is on I, I, I – I am going to reach FI, I am going to travel, I am going to spend more time exercising, etc. She points out our lack of appreciation for community as a source of wealth. Over the years, Vicki has made the effort to get to know many people in her community.When she had a hip replacement a friend of hers arranged for people to check in on and feed her several times a day for several weeks, which they were glad to do. This proved to be an opportunity for many of them to sit and chat with her for an extended period of time so they got to know each other even better. In a number of other recent interviews Vicki has made the case that because a community of people can share resources and support each other, building your community is just as important as growing your income. She believes it boosts your financial independence in a way that relying solely on the income generated by your investment portfolio does not.

Even though we don’t usually think of it in these terms, the life many of us envision when we take the time to ponder what we’d like our lives to look like once we pull the FI trigger, is a life rich in financial inTERdependence with a strong local or urban tribe in which we thrive and feel supported. The bonus here is that increasing your social capital along the FI path is fun, fulfilling, and financially beneficial. In my mind it is one of the best ways to enjoy the pursuit of FI and make the journey something enjoyable vs. something to get through as quickly as possible. And the icing on the cake is this network of friends and neighbors, which can you bring so much joy to your life can also save you money by reducing the number of contractors and handymen you’ll need to hire, sharing garden bounty with you, giving you a ride to the airport, and sooo much more.

Social Capital – Where Can I Get Some?

The ChooseFI local meetups present a fantastic opportunity for those wanting to build social capital and connect with others seeking financial freedom. Administered through Facebook these groups give people the chance to connect online; informally in person at bars and restaurants, or people’s homes; or even to gather more formally with some kind of educational programming. My local group just organized a mini FinCon at which one of our members, who will be speaking at FinCon in Orlando next month, practiced giving her presentation on us. We in turn gave her feedback as well as a better sense of the flow and timing of her presentation. And as I mentioned at the beginning, of this post I spoke to the group about social capital.

Similarly, the Minimalists, Joshua Fields Milburn and Ryan Nikodemus, established a network of local meetup groups managed via Facebook. Like many people on the path to FI, most people are drawn to minimalism because it encourages us to focus on the essentials (which will vary from person to person) and let go of everything else. Minimalism also stresses the value of living intentionally and not consuming mindlessly. To connect with minimalists in your area check out

Another set of locally administered Facebook groups some people in FI circles are already familiar with are those stemming from the Buy Nothing Project. Search on their website to find your local group and begin requesting items and services you need and offering up those things you have and no longer need or a service you’d like to provide, all while building community and participating in random acts of kindness. I’ve shared dumpster treasures I recovered in large quantities or just didn’t need and received a child’s gate when I was pet-sitting in my home and needed to contain dogs in a certain area. My local Buy Nothing group has terrific administrators and one of them hosts a party for us at her home every year.

I am fortunate to have a very vibrant and active local time bank in my city. Time banks were conceived in 1980 by Edgar Cahn and now exist in cities around the world.Time banking is a kind of money. Give one hour of service to another, and receive one time credit. My local time bank also allows the exchange of goods in addition to services. I have found my local time bank to be the best way to build my social capital. It’s fun, offers unique opportunities for social interaction with a wide variety of people, and of course provides me with a good or service I needed in exchange for my time (not money), and an opportunity to assist others.

We have had some very creative exchanges conducted through the St. Pete Time Bank. A member who has a large mango tree let people come over and pick up fallen mangoes. Those members gave her a time bank hour for the mangoes and she gave each of them an hour for helping clean her yard. Afterwards, the group gathered at another members house and made mango chutney that everyone could take home with them. Another member who teaches financial literacy programs for kids wanted to get more copies of some instructional materials published by one of the Federal Reserve bank branches, but they only send out 30 copies to each address. That member gave one hour to each person who wrote in and had the booklets sent to their address for her. I earned an hour showing people how to dumpster dive. And this blog still might not exist if it weren’t for the time bank as I was able to receive WordPress assistance from a member to set up this blog. And best of all are the monthly pot-lucks; always a gathering of like-minded souls interested in strengthening community and full of innovative ways to do so.

A local swap meet

I also enjoy going to different regularly held swap meets in my area. One in particular, that just started a couple of months ago builds in 30 minutes on the front end for people to gather and chat before the swapping action begins. This swap meet is organized by a member of the time bank so I also get time bank credit for attending the swap.

Of course there are always moms’ groups, church groups, business groups, etc. can help you identify other local gatherings of people coming together around a common interest. I find attending official city functions a productive way to meet people concerned about their community.

In the Mr. Money Mustache article I quoted above, MMM describes how he makes a list with all of the addresses in the immediate vicinity of his house and the effort he puts into meeting those neighbors and filling in the their names. I have been extremely fortunate to meet wonderful neighbors in both of the neighborhoods in which I have owned homes, but that didn’t happen without some effort. I spend a lot of time outside on my front porch, gardening, working in my yard. This effort paid off with lifetime friendships and all kinds of mutual aid. Other good ways to build social capital close to home include attending neighborhood association meetings and connecting with neighbors through the Nextdoor app.

What about you? Are you accumulating social capital? If so, how?


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