When I first wanted to start talking about the idea of financial independence with my wife I was hesitant because I thought she would think the idea was a little bit crazy or unattainable. I worried that if I took the wrong approach she would be turned off to the idea if she perceived it as simply involving not spending money on anything and living as cheaply as possible. So I decided to give her a book, Your Money or Your Life, and asked her to read it and then see what she thought of the idea from that perspective. It turns out that the approach the book takes resonated with her especially when it comes to thinking about the value of what you choose to spend money on versus how much of your life you spend to acquire or do something that costs money. In fact I think the book was one of the reasons she started to thinking about all the costs associated with working at her former job and this helped her to pull the plug on that and start working for herself. One of the key points in the book is not to deprive yourself of everything by spending as little as possible, but only spending money on what you truly value. We like that approach because everyone has different things they value and that means that everyone’s plan is a little bit different; you simply cut out spending that does not really give you value. When we started to consider what we value we found it was not items, but rather experiences.
One example of this which others might think is wasteful from their perspective, is that we love going to Disney World, especially since we live so close. We average going to one of the parks at least twice a month, and sometimes more often when we use hotel points to stay there for a long weekend. We have annual passes for our family that currently cost approximately $1,000 a year, and these passes give us access to every park whenever we want. There is no doubt that this is a significant amount of money, but we value and enjoy the experience, especially seeing our daughter light up when she meets a favorite character or watches the firework shows. It also gets us out of the house and outside doing something together as a family. The challenge of course is that Disney is built as a marketing machine so while we value the ability to go to the parks, it takes a lot of effort to resist the constant marketing to buy and consume as much as possible while you are there. Most of the time it is fairly easy for us since we go so often and know what to expect and exactly what we want to get out of the visit. When you are only about an hour drive away it makes it easy to go for just a few things and then leave once you are done. I could write several posts about how to maximize a visit to Disney World, but really unless you live as close as we do, and benefit from the Florida discount rate, it is hard to imagine keeping the costs too low for an activity and place that is designed to get you to spend. I guess the key for us is to be aware of the costs and know that we are getting value from what we decided to spend.
Disney is just one example of experiences we value and are willing to spend a certain amount of money on each year. We typically do a lot of traveling, although we do take advantage of travel hacking with points and miles to keep costs low. We also are willing to spend money on activities for our daughter that we are unable to provide or teach her ourselves that she enjoys and we feel is important to her development and enjoyment.
Too often I read other sites and blogs about financial independence, personal finance, or being frugal that come across as condemning spending on anything other that was is absolutely essential to live. While I agree that the vast majority of people overspend it is typically because they don’t think about the value that get both now and in the future from their spending choices. We are acutely aware when we spend money that it impacts the amount of time until we can reach financial independence, but the important thing is that we make conscientious choices on what we spend money on based on the value that it gives us rather than simply spending without thinking about it. Every choice and decision you make is going to have tradeoffs, but the important thing is that you understand and are aware of what those tradeoffs are right now and how they impact your happiness in the present and in the future. If everyone took the time to understand how spending and saving impacts their future it would lead to a lot more emphasis being placed on spending on things you truly value and need as opposed to wasteful unconscious spending.