You are reading the title of this blog post correctly. The road to financial freedom is not just about planning, saving and investing, it is also about enjoying your life and taking some time to “smell the roses”. The road to financial freedom is also lined with spending, which to many folks is a dirty word. However, strategic spending to support the lifestyle and dreams that you want is the entire point of seeking financial freedom in the first place.
Spending money is not a mortal sin
It is a simple fact of life that each us needs to must spend money to purchase the basic necessities of life: food, water, clothing, shelter, etc… In addition, each of us has personal needs and lifestyle desires, several of which we realistically expect to fulfill and others we consider dreams or wishful-thinking that we understand we can do without.
To me, there are three key elements to obtaining financial freedom and they are:
- Planning – i.e. Figuring out how much money and income you need to support your lifestyle assuming you do not work another day of your life (financial freedom means you have saved an amount of money that will generate enough income to support your lifestyle)
- Saving – The actual act of saving to build enough money to meet your financial freedom money goal
- Spending – The use of your money and income to purchase goods and services to meet your needs and fulfill your wants and desires
The road to financial freedom is really that simple: Plan for Financial Freedom and then Save and Spend according to the plan, that’s it.
This means that if your plan calls for you to save 25% of income to achieve financial freedom; you have a whopping 75% of your income available to meet your basic necessities of life and spend as you please. So, spend away because you have earned it and because you are saving according to plan you are spending strategically.
Take a vacation and re-charge your brain
So, you if have created a financial freedom plan and therefore have budgeted a portion of your income for spending then my advice to you is to allocate money to take a vacation, and if possible multiple vacations per year.
Why, vacations are expensive aren’t they?
Yes, vacationing can be expensive: hotels, plane tickets, food, car rentals, etc… But the mental and lifestyle benefits greatly outweigh the financial costs as long as you stick to your financial freedom plan and are spending money that will not cut into your saving plan.
Benefits of Vacations:
- Taking a break from your daily routine is a great way to rest your mind and experience something new
- Perspective: Seeing the world is a great reminder of just how lucky you really are
- Just saving money is not fulfilling on standalone basis; using a small portion of your personal fortune on new experiences is valuable for personal growth
- Re-connect with your spouse and/or children; Most of us are not able to spend consecutive full-days with our family and vacationing can give you an opportunity to catch up.
- Adventure
- Travel can be very educational; an opportunity to learn about new cultures
- A fresh start is great by-product of long vacation. Your mind has relaxed and you are ready to face new challenges.
- Spark your creativity! Some of your best business and financial ideas will come to you while drinking a cocktail with your feet in the sand.
Does your financial plan allow you to spend strategically? Are you over-saving? Are you willing to invest in great vacations to refresh your mind?
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Amazing post and very interesting stuff you got here! I definitely learned a lot from reading through some of your earlier posts as well and decided to drop a comment on this one!
Having a plan and sticking to it gives you the control to be able to make choices (ie. vacations) within your budget. I thoroughly agree that vacations can be re-energizing and are important to your family and your mental health. They don’t have to be extravagant and luxurious every year. Simply getting out of town and away from the computers/phones can be just what the doctor ordered!
You make two good points here! First, you’ve got to ‘smell the roses’, as you say. What’s the point if you have millions of dollars saved yet no friends to enjoy retirement with and no interests?
Second, budgeting by saving a fixed amount and spending the rest is a good plan! Just note, if you work for yourself, don’t forget taxes, haha.