Latest posts by FIRECracker (see all)
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- Book Review: Financial Freedom by Grant Sabatier - February 8, 2019
Now, you’re probably thinking “What the hell are you talking about, FC?” I’m clearly full of crap considering how often I wax poetic about my budgeting spreadsheets and those sexy sexy South East Asian prices. But hear me out. The reason why I say budgets suck is because they just. Don’t. WORK.
Sure, weirdos like me will get off on tracking every dollar spent and fawn over frequent flyer miles. But for most people, budgets are as fun as getting a fire-ant enema.
This is because, for regular, non-crazy people, budgets can feel like straitjackets. And even though I think too much freedom can be bad for you, too little freedom is even worse.
Let me explain.
Budgets tend to look at all your spending and try to force you to ruthlessly cut back on everything. And it does this by comparing every category of your spending to an “acceptable” spending range. But what they don’t do is EMPOWER you. This is because they take away your control and force you to conform to restrictions that don’t work for everyone.
As much fun as it is to be judgemental (and believe me, I know!), the reality of the world is that we are all different. What works for one person won’t necessarily work for another.
Travellers don’t want to cut back on trips. Homebodies don’t want to cut back on furnishings . Foodies don’t want to cut back on food. Fashionistas don’t want to cut back on shopping.
Now, don’t get me wrong. I’m not saying you should just throw caution to the wind and blow your cash on whatever you want. Becoming Financial Independent requires a certain amount of discipline, which means you can’t turn your expenses into a money inferno. BUT that also doesn’t mean you have to cut expenses down to the bone. So put away that hatchet and pick up a pen.
Why a pen?
Because we are about to figure out the meaning of life.
The Meaning Of Life
OK, I may have oversold that last bullet point just a tad, but it’s not too far off. While I can’t tell you about the Meaning of Life, I CAN tell you about the meaning of money.
And the big secret is, the Meaning of Money is different for each person.
So to start, I want you to write down the 3 things that are MOST important to you.
Go head, I’ll wait.
Got it? Okay good.
What you’ve just written down are your top three VALUES.
These are what you SHOULD be spending money on. Everything else can be cut to the bone, but if you cut in these areas, guess what? You are cutting into your happiness.
Take me for example. My top 3 values are:
So that’s why I always leave ample room in the budget for those things (remember how we spent $1800 in one month on food in Boston ‘cause we needed our lobster fix? Or $650 on getting Scuba Certified? Or $150 on the Robot show?). And even though I don’t drink, because I want Wanderer to be happy, I always make room for booze (even though I consider it a waste of money and it’s taxed like crazy). He tends to help me out by choosing to buy booze from groceries stores rather than going out to pricey bars, but nevertheless we make room in the budget for what’s important to the both of us.
As long as we make up it for it by cutting ruthlessly in other areas we don’t care about (like cars, houses, and clothing), there’s more than enough money to go around.
Think of it this way. Picture a glass jar.
Next to it sits a pile of big rocks, pebbles, and sand.
If you try to dump the sand in first, add the pebbles, and then jam in the pile of rocks, it won’t fit. That’s because sand and pebbles would take up most of the empty space, leaving little room for the rocks.
However, if you put in the rocks first, dump in the pebbles to fill in the empty space between the rocks, and then finally top it off with sand, you’ll find that everything fits.
In the example, the big rocks are what you value the most. The left over room in the jar will be filled by the other stuff, the things you’re indifferent about.
This is why we were perfectly happy to spend a whopping $1889/month in Boston on food and booze (because Lobstahs!), $988 on accommodation, an anorexic $211 on transportation and even tinier $86 on clothing. Clearly, you know were our priorities lie.
I was willing to take the subway instead of buying a car or taking cabs because I’d rather use that money for extra lobsters and oysters. I hate driving anyways, so buying a car held zero appeal for me.
Maybe a car-lover would rather spend $1000/month leasing a car, but only $800/month on food. Maybe they’re not a fan of lobsters anyways, so they end up cooking more.
And maybe a homebody would rather spend $2000/month on some fancy digs, but don’t bother eating out at all, and spend almost nothing on transportation because they hate going out.
All are different and all are acceptable.
And here’s the other thing, just because our jar was $3200/month, doesn’t mean everyone’s jar has to be that size. For those willing to trade off some years of their life to continue working so they can get a bigger portfolio, that’s fine too.
If you’re willing to grind away at the 9 to 5 for another 5-10 years to expand that jar, do it. Or for those willing to work after retirement so you can have a second jar to catch the spill over, you can do that too.
This is why forcing everyone to have the same jar and the exact same contents makes no sense. My rocks are not car-lover’s rocks, and homebody’s rocks aren’t my rocks.
When it comes to budgeting, we shouldn’t all be budgeting the same way. Everyone’s path to Financial Independence is unique, and uniquely their own. So figure out your values, and fill that jar your way, with your own rocks, and screw what anyone else thinks.
What do you think? What are your top 3 money priorities?
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