I’ve said before that there are two ways to improve your happiness.
You can either get more or you can want less. Either way works.
I’m not sure it matters which way is “best”. What I’m sure about is that wanting less is a whole lot cheaper than getting more.
Consider the boundary case of Bear Grylls who can live for free anywhere and so is already financially independent…even without a stash of money.
Now personally I prefer to eat food from a grocery store rather than bugs and roadkill. But at some point after you have a decent job, a roof over your head and enough food, you have to ask yourself: where do you draw the line?
What if you could be a Zen Warrior and be happy with minimal possessions? I’m talking about unlearning what we have learned from the advertisers and marketeers. I’m talking about no longer putting consumer knick-knacks on a pedestal that they doesn’t deserve to be on.
The maths is unavoidable. In The Lord of The Rings, there was One Ring To Rule Them All. On the path to financial independence, there is One Metric To Rule Them All. And that metric is your % savings rate.
You can get your % savings rate up by earning more or by spending less. Or, better still, work both sides of the equation. The balance is up to you and your circumstances.
Just know that every time you buy something, you are buying it out of post-tax income. So if you are a 40% taxpayer and the thing costs £60…well the real price is actually £100. That’s what you had to earn to afford it.
Desire is a contract that you make with yourself to be unhappy until you get what you want. So at some point we have to ask ourselves: how much is enough?
There are different answers to this question. There’s the 25x rule of thumb that says you probably have enough to never work again when you have invested net worth of 25x your annual spending.
But I like the definition that says you’re rich when someone gives you an extra £1 million and you don’t change the house you live in, the car you drive or who you sleep with.
I recently did a podcast interview and one of the questions I got asked was: if you were given £10 million what would you spend it on? It was fun to think about. My answer was to split it 3 ways between 1) The Woodland Trust 2) a global equities tracker fund and 3) venture capital with the potential to change the world.
I’m still waiting for the £10 million cheque to arrive in the post though.
Frugality is relative and its contextual. When I was young and broke I operated in Monk Mode where necessary. You do what you have to do to get your stake money together. Once you have money working for you in your compounding machine, well then maybe you can ease up on the extreme frugality and enjoy a few luxuries?
Someone smart once said that there are two phases of a man’s life: the hunt and the feast. The hunt is when you chase the prize. The feast is when you enjoy and celebrate abundance. [I also believe that it’s important to enjoy life when you’re young and to keep challenging yourself when you’re older. But I still like this metaphor].
Just remember that your health thrives on a less-is-more basis. In the West, we live in the most abundant societies ever. Luxuries become traps when they start to impact your health. As a society, we long since passed that point. Obesity is now a far bigger problem than starvation.
Funnily enough I’m now back in Monk Mode during lockdown with intermittent fasting and a break from alcohol. This is to optimise health rather than to save money. But it’s funny how often the low cost way is the healthiest way.
One of the great things about being older is that you’ve already bought the things you need. We already seem to have more than one bottle opener and potato peeler and I don’t feel the need for any more.
Do we always want to be shooting for the stars? Or do we at some point achieve inner peace with what we have? I ask these as questions for you to consider rather than as prescriptions handed out by internet gurus.
There is no one-size-fits-all answer. But as someone smart once said:
A man is rich in proportion to the number of things he can afford to let alone.
Image credit : Nick de Marco
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On reflection. Looking back at my life(55 now) my mentality towards money has served me well and I’m now reaping the benefits. I would say I’m in the feast phase now and it’s great.Always saving my money, not silly over spending. I’ve had eveything I wanted but it was never to excess. I’m enjoying an easier life now with no money worries. I live in the smallest house money can buy. But it gorgeous, homely, modern. With a lovely garden. Opposite to me is my friend who has spent well above her income all her life, lived years with huge debt. House in rack and ruins. She never listen to my advice and just said we are wired differently! Is she happy, no , shes stressed as hell.. Fortunately she did listen to me, I got her to sell her house, downsize to a smaller house she half owns half rents cheaply. . With the excess she cleared her debts and I said your on easy street stay there now. She will get a good nhs pension so she dosnt need to save and invest lke us. But it’s all about your money mentality. We are same age but soooo different in our spending and money managing skills. Can people change, I dont know? I’m just glad I am the way I am. I try and help advise others but get shouted down. But for those that seek a new ways, they will google and come across these FI sites and read our stories , be inspired and take the less travelled road.. I hope so cos its happiness and Peace .
Thank you for your response.
I was never good with money, I had to retire early due to a injury..
I am a retired RN, but missed being fully vested by a year!!
The good thing is I had wonderful short term insurance, that turned into long term.
I bought my parent’s home 10 years ago, but still have a mortgage.
I am looking at renting a room to a travel nurse in the future.
I am not good at investing, and currently looking for a fiduciary advisor!#
Thank you for your advice.
All i have ever wanted is to be secure. Finally at 51 I now live mortgage free in a rural area with a small income and a little money in the bank/stockmarket. I still enter competitions to win lots of money but only so I can help other people.
Love this one Barney.
A friend of mine worked for a large corporate firm. The staff car park was full of shiny SUV’s with personalised number plates. He was asked why he didn’t have one when he could clearly afford it with his salary and investments.
His reply was that it was enough to know he could buy one if he wanted !
Love this. It’s so true.
100% spot on here. I don’t want a Tesla, even though I can afford one. And that is a powerful feeling.
I’m reading a lot on Alan Watts at the moment. He is one of the “inventors” of the backwards law.
Exciting stuff, you should have a look into it.
Loved the Thoreau quote in the bottom!
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This is cool!!!
Now I can forgo a lot of cars I still want a Taycan
But will wait three years!