Why save, plot and plan for my financial future?
Jul 30, 2017
If you would prefer to listen to me read this blog post, please click on the play button.
Recently I was having a mind blank about a blog article for the week. After over a year of blogging this is the first time this had happened. You know how much I like to talk/write but I just drew a blank! Crikey. I was out Curling with a friend and asked him for some suggestions, while he was trying to concentrate on the perfect shot (which generally results in him knocking my stone out of the way)! And amongst many ideas was the question of “Why? Why save, plot and plan for my financial future? The Big C could nail me tomorrow so why not just go for it today? Live in the present, spend up big, don’t worry about the money and do things that bring happiness now because I could be gone tomorrow?”
Curling on a cold Central Otago night.
He really (really) got me thinking and at the time I couldn’t answer his question while we hurled large stones down the ice. For someone who talks so much I find it hard to concisely sum up my thoughts about WHY I am so interested in pursuing Financial Independence (FI).
It’s from the heart this week, more touchy feely than I would usually write, so bear with me! Here is my shot at explaining myself.
I’m actually not in search of money, I’m instead searching for HAPPINESS. And despite the well worn phrase “money can’t buy you happiness”, I disagree. The two are interlinked and have a symbiotic relationship.
I grew up in a household without much money and although the topic was not front and centre at the dinner table, I knew my parents struggled financially. We were at times a very low income household and although she did a good job of hiding it I could see that my Mum in particular worried about it. At different times, “poverty” was a word that would have come close to describing our situation. To this day Mum hates the word “frugal” because she spent 30 years having to be just that. And I only worked it out recently but she also hates soup. We ate so much soup growing up because it was CHEAP to cook and could feed a whanau of seven. Now that I think about it I don’t like soup much either!
I never had a mentor but from time to time I was exposed to people who didn’t seem to struggle like we did and each time I met a person like that I filed away the memory. I’ve been on a long journey of learning how to be good with money ever since. Regrets? I should have started way earlier but I couldn’t because I didn’t know what I didn’t know. Over time I noticed that SO many Kiwis were struggling financially and are just a few pay cheques away from a financial meltdown. This has just made me focussed and driven to make plans for when we inevitably run into trouble in life, so we need not have to worry about where the money is coming from, like my family often did.
My history is why I have a very low tolerance for financial risk and unlike many others I see debt as HUGELY risky. Debt makes everything just that bit more stressful. I don’t believe in good and bad debt. Debt is debt. I think it all sucks whatever way you run the numbers. Always having someone to answer to (the bank) really restricts the freedom I have to do what I want, when I want. I know I look at debt differently to most. I think having it is a crisis. I really do. Whether it is a mortgage on a home, a mortgage on a rental property, a bicycle on layby, an overdraft to get to the next payday. It is all an illustration of buying something I actually can’t afford. Owing money scares the pants off me so I avoid it at all costs.
It was not the Big C but instead the Christchurch earthquakes that provided a real pivot point and prompted the question of “what is the feckin point to life”? Seeing an entire city transformed, and not in a good way, over the course of a couple of years couldn’t help but leave an impact. I’ve mentioned before that by the time the earthquakes started we had created a good emergency fund to get us through and I’m so thankful that we did. It made us much more resilient to cope with all the drama and out of everything we had to worry about, money was not one of them and that lifted a huge weight off our shoulders. HOWEVER, when the government compulsory acquired our land we entered a two and a half year limbo where we battled with our insurer to get paid out for our mortgage free and fully insured home. We became stuck and had no control over our future. We vowed to not let that happen again.
We tightened our belts instead and started to question our status quo. Were we really put on this earth to drift through life working, spending, having a two week holiday each year, retiring with limited cash and then dying at a prepaid funeral? Really?
This jolt (literally) slowly woke us up to taking more responsibility for the direction of our lives.
I wanted to start living a more intentional life. There are too many other things I enjoy and want to do that don’t involve “working 9-5 for The Man” to bring in an income to buy the stuff I want and don’t actually need.
The things I want to do are not extravagant by any stretch of the imagination:
I want to go for a walk with Jonny whenever we feel like it
Drop my daughter to school and pick her up at 3pm
Write my blog
Go for a run up a hill on a sunny day
Go to work and be useful and enjoy every minute of being there
Drive to visit my parents whenever I want
Volunteer my time
Cook whatever I feel like for dinner and not worry about the price of ingredients
Money buys time and enables us to do the things we want to do - but they needn’t be big ticket items.
I have stepped away from what I think of as the “endless pursuit of MORE”.
When we had our daughter, it took until she was about two and a half before people stopped asking “when are you having another?”
When we bought a house and set about gardening every square centimetre and growing as much of our own produce as we could and the inevitable question was “when are you buying a lifestyle property”?
No thanks. We are “done at one” and this is MORE than enough property for me thanks. I deviate from the Kiwi path of always stepping it up to bigger and I don’t want more and more and more.
It has been a slow journey out of increasing our consumerism. I’m not surprised that people kept asking me what was next because for a long while we were the worst offenders. Weekends spent strolling the mall, brand new cars, a boot load of random stuff dragged home each week because the bargain was so good. We suffered from lifestyle creep - as our salary increased so did our spending. But it slowly dawned on me that the endless pursuit of more stuff, meant that I needed to work more to purchase more and that is BONKERS.
It has taken all of my 43 years to work out that there is very little ‘stuff’ that excites me now. I honestly can’t think of one single consumer item that I’m just craving to buy.
So:
NOT spending is not a chore.
It is not about going without today so that I can spend that money in the future in a frivolous way.
I’m not stockpiling cash to blow it in 10 or 20 years on a new TV and a boat.
I’m not deferring gratification today.
TODAY, I am extremely gratified and I wake each day grateful for what I have.
I’ve stopped frittering and have focussed on spending intentionally which frees up money to invest. I have become frugal and good at saving and to me learning about investing is more interesting than many other hobbies I have had. Once I discovered the concept of net worth, I wanted to work out how to increase it. It is an interesting challenge.
Making a lot of money in a job I don’t like, and spending that money to buy stuff that I hope will make up for the happiness that I don’t get at work, to me at least, is pointless. Endlessly buying things to improve my day won’t work. Investing in my happiness will.
Now, working for money becomes more optional and chasing down FI becomes our goal. We still have to work and part of us thinks we should, while we are young enough, be working the big career jobs like we used to but yeah/nah, it is just not for us anymore. Semi retirement is our short term goal and neither of us wants to work 40 hours per week anymore. I give up my precious time for money and I get far more balance and job satisfaction out of smaller hours. I don’t get my time back so I have to ‘spend’ it carefully and I can honestly say I love going to work. But, if I got laid off tomorrow, we would be OK and that gives my family a huge sense of security.
All of these factors combined means that my life/our life has balance and I live in the moment today while really planning for the future next year and the years after that. Yes, I could die tomorrow but statistically speaking the chances are low so I had better plan ahead. I don’t want to be too old to enjoy FI and I just know that working 9-5 till 65 is not for us. That’s why, to me, it was so important to kill debt, spend our money intentionally, then save and invest the remainder.
I am not an overly persuasive character so I don’t endlessly try to convert people to my way of thinking. If I can inspire people to think about their own finances and make some changes that will improve things for them both now and in the future, well, that’s awesome. What if I’m the only person they can talk about money with? If I can help I genuinely want to. Everyone has a different story, and everyone is on their own journey, making the choices they make due to their history and what they have since learned.
I have worked out that I can, to a large extent, direct and determine my own future. By handling money well now, when trouble hits I will have the resilience to deal with it financially which in turn makes it easier to cope emotionally. Money gives you the freedom of choice and it helps get me to my end goal, which is happiness.
I can honestly say that I do live for today and that I’m truly happy.
