There is no point making money if you don’t spend it all. If you die with too much money, that means you wasted a lot of energy, time, and nerves. You could have just relaxed more and enjoyed life!
Imagine you’re a financially successful 35 year old professional making $250,000 a year. You’re still $130,000 short from being in the top 1%. But by any other metric, you’re doing just dandy.
Yet, instead of living a comfortable life, you live like a pauper, renting the same dumpy one bedroom since you were 25. For wheels, you drive a 2002 Toyota Corolla and for vacation, you always stay domestic, never wanting to see the world. Everything you do, or don’t do rather, is because you want to save money.
Some of you may think this is a great way to live, as certainly you’ll be saving a boat load of cash for retirement. I say there’s absolutely no point making that kind of money if you are going to live so frugally.
Six figure jobs are a dime a dozen, but generally come with higher stress. As such, you might as well just make a fraction and lead a carefree life if you never plan to spend your earnings.
Watching the zeros grow in your bank account is a very empty feeling after a certain point. It might boost your self-esteem to tell your friends how much you have, but that’s just shallow.
Cash is only a medium of exchange, and a means to provide a better life. If you aren’t utilizing your cash, then you are wasting your time.
Hoarding Money Like A Disaster Is Always Around The Corner
There’s a fine line between being smart with your finances and being overly frugal. Let’s say you’ve always wanted to buy that second-hand $30,000 Porsche in your 30s and your gross income is 10X that amount.
Instead of buying what you want, you get a $8,000 Toyota Corolla to save money in your 30s. Well after 10 years, guess what? You’re in your 40s and the novelty has worn off. You’re just another 40-something year old knuckle-head going through a midlife crisis.
Comfortable shelter is the same thing. The rental stock is generally inferior to the ownership stock. Due to rent control, many landlords haven’t updated their apartments in years.
Sure, you may be saving money renting your same 1 bedroom in your 30s as in your 20s. But you’re also crimping your lifestyle if you can afford to buy or rent a two bedroom or three bedroom apartment or home.
You’re going to be middle-aged and feel proud of yourself for saving X amount of dollars. Meanwhile, someone who spent what they could afford has been living a much better lifestyle for the same time period.
Therefore, everyone must eventually choose a decumulation age and start spending more.
Spend More Money On Living Better
One of the reasons why the housing market is so hot is because we’re all spending a lot more time at home. Therefore, the more time we spend at home, the more we appreciate our homes and want a nicer home.
During the pandemic, people have clearly realized there’s no point making money if you don’t spend your money on nicer things. If there’s ever a time to spend more for a better life, it’s during a pandemic.
Great vacations are priceless because of the everlasting memories they provide. Instead of flying off to Greece, you decide to experience your 3rd staycation in a row to save money.
Meanwhile, you’re getting older and you’re no longer as nimble as you once were to hike those great mountains. It’s harder for you to sit comfortably on an airplane for longer than 3 hours because of deep vein thrombosis and numbness in your legs.
Now, what’s better? Living a better lifestyle that you can fully afford, or saving an extra buck or two?
Life Is Finite, Please Don’t Die With Too Much Money
Most of us who are educated and who work hard are going to die with TOO MUCH money in our bank accounts. I know retirees who have great pensions with no mortgage and very little expenses still try and save as much money as they can. Well guess what? That’s kind of counterproductive, because saving money while you are retired is like saving money to spend in death.
I’m likely saving too much money by putting away 70% of my after tax income. It’s been instilled in me ever since I got my first crappy job at McDonald’s to save the majority of money and not spend.
It’s very hard for me to spend more, largely because I feel I have everything I need. It would be nice to have an ocean view vacation home in the South of France. But that seems like just too much hassle.
The only thing I’m thinking of purchasing is new car in 2025 once my car turns 10 years old. As a father to two young children, a safe car is paramount.
After maxing out your 401K and IRA and then saving 20% of your disposable income after retirement contribution, I say we should spend guilt-free the remainder on whatever we darn please. If we try our best and fail at spending all our disposable income on living life, then saving the rest isn’t so bad.
Please repeat after me. There’s no point making money if you don’t spend your money. Revenge spend to your hearts delight. Buy things with your tremendous investment gains since the pandemic began.
If there’s ever a time to use money to improve the quality of your life, it’s now!
RESOURCES FOR A BETTER LIFE
1) Manage Your Finances In One Place
The best way to build wealth is to get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts in one place so you can see where you can optimize.
Before Personal Capital, I had to log into eight different systems to track 28 different accounts (brokerage, multiple banks, 401K, etc) to track my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing, how my net worth is progressing, and where I’m spending my money.
The best feature is their 401K Fee Analyzer which is saving me over $1,700+ a year in portfolio fees I didn’t know I was paying. The future is never going to be certain. But at the very least, we can stay on top of our money so we’re prepared for whatever comes at us.
Finally, run your finances through their free Retirement Planning Calculator. They use your real input to output realistic retirement numbers.
2) Negotiate A Severance Package
Never quit your job, get laid off instead if you want to move on. Negotiating a severance package provided me with six years worth of living expenses to help me focus on my online media business.
Check out my book, How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye. The book provides solid strategies for how you too, can escape a job you hate with money in your pocket.
Both my wife and I negotiated a severance package from our jobs at 34 years old. Since then, we’ve been able to travel the world and live more free. We also became parents to two children. It has been a blessing to negotiate a severance and walk away from our jobs with money in our bank accounts.
3) Invest In Real Estate For Passive Income
One of the ways to live a better life is to always have enough passive investment income. This way, you don’t have to spend time working because your investments are doing the legwork for you.
Real estate is my favorite way to achieving financial freedom because it is a tangible asset that is less volatile, provides utility, and generates income.
Fundrise is my favorite online real estate investing platform because it was founded in 2012 and focuses on heartland real estate. Heartland real estate, or Sunbelt real estate, has lower valuations and higher cap rates. Fundrise offers many diversified and managed funds for you to choose from.
Take a look at CrowdStreet, one of the leading real estate crowdfunding platforms today. CrowdStreet focuses on individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends.
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