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
I’ve been invited by a London Financial Independence meet up group to do a live “Ask Me Anything” Q&A session online via Zoom on 5 May.
I’m told that numbers are limited and these events “sell out” (they’re free). You can find details of the event here.