Everything good gets to stay

Your journey to financial independence (FI) is a personal thing.  You get to choose how much you spend, how much you save, and therefore how long it will take to reach FI.

You decide what you spend your money on.  This means everything good gets to stay.

Live better while spending less

During the last 5 years I have increased my savings rate to over 75% of income.

Over that time life has felt more full of abundance, more satisfying, and more fulfilling with each passing year.

The strange thing is that the changes made to reduce spending aren’t very noticeable from the outside looking in.  Our lifestyle looks the same as it did before we started making improvements.

We still live in a beautiful house, we still travel and appreciate the beauty of the world, we have nice things, we can listen to all the music in the world, we eat delicious healthy food, we can enjoy an evening by the fire with family and friends, we read the latest books, watch the latest movies, and the children have more than enough toys and books and games.

Keep your money by cutting out the waste

You do not have to give up anything of value while you massively increase your savings rate.

I find it hard to remember what I was wasting all my money on before I started to pay attention.

However, if you’re looking for places you can make improvements to your spending, the following are good candidates (cut anything that doesn’t give you fulfillment in proportion to the hours of life energy spent):

  • Anything bought using debt (including leasing)
  • Anything you buy as a habit
  • Any daily spending (work lunches, coffees, travel expenses)
  • Any regular spending or direct debits
  • Insurance you don’t need
  • Subscriptions (cable, magazines, papers, gym, software)
  • Entertainment (cinema, bars, restaurants, attractions)
  • Expensive things (package holidays, furniture, clothes, watches)
  • Outsourcing (cleaner, gardener, decorator, window cleaner, dog walker, nanny, cook, driver)
  • Always buying the latest: phone / car / fashion / gadgets / etc.
  • Buying too many: cars / houses / clothes / shoes / bags / watches / etc.
  • Letting big purchases just get bigger and more expensive (houses, house improvements, cars, TVs, home cinema, yachts, helicopters, islands, etc.)

The biggest improvements

Make sure on the big purchases that you pay for only those features that actually enhance your life.

For example, pretty much any car can carry you and your family in air-conditioned comfort at an incredible 70 mph while you listen to your favorite music, podcast, or even learn a new language.  But how much extra lasting happiness do you get by adding mood lighting or reversing cameras.

Look to buy second-hand to maximize what you’re getting for your money.

The biggest improvements come from cutting out the daily waste on things like travelling to work and how much you spend on lunch there, and from finding better options for the big purchases (maximum value, minimum spend).

Another improvement is to never go into a store (apart from for food).  I still feel the urge to buy something when surrounded by shiny new things in a store.  If you don’t go in, there is no temptation to buy.

When surrounded by the abundance at home I rarely feel the need to add anything else.

Another thing happened that I wasn’t expecting.  The focus on my spending lead me to appreciate, enjoy, and use the things I had more.

Rather than constantly thinking about the next thing.  I found myself feeling deep gratitude for all the things we already have.

Increase your financial strength

It’s an incredible feeling to bring your spending in line with what truly gives you fulfillment.

You’ll have a strong sense of integrity in the way you’re spending your money and living your life.

Since you’re only cutting out the waste, the things that don’t make you happy, your life will feel full of abundance.

Almost as a side effect of this focus on an efficient and abundant life you’ll find you have more and more money to save and invest towards your financial freedom.

Everything good gets to stay 🙂

The world is your gym

The average cost of gym membership is $50 a month.  This works out as $600 per year.  $6000 per decade.

Another way of looking at any regular expense, is to work out how much you would have to save to cover that expense forever from your FI fund (at the 4% safe withdrawal rate).

This helps put spending in perspective.  In this case gym membership for life needs invested savings of $15,000.

Based on average take home pay in the US of ~$50k someone would need to work for an additional 3.6 months, saving everything they earned, to cover gym membership.

This might sound like a good deal or they might prefer to take the time instead and retire ~1/3 of a year earlier.

How much do you need to cover this for life

Working out the extra savings you’d need, to cover anything you regularly spend money on, is a great way to discover the things that are genuinely fulfilling (the things you’re happy to work for):

FI Fund Required = Annual Spending x 25

Increase your financial strength

Basically it comes down to a different way of answering the question:

“When can I afford this?”

Your financial strength increases as you move through the following list of answers:

  • I have just enough spare credit on my card to buy this thing
  • I could buy it on finance and can afford the monthly payment
  • I have a deposit and I can fund the rest with finance
  • I can buy it cash from savings
  • I have cleared all non-mortgage debt and can buy it cash
  • I have cleared all my debt (including mortgages) and can buy it cash
  • I am FI and this spending is covered by my passive income

The world is your gym

Getting back to gym membership. If you get fulfillment from your gym membership, it feels worth the cost, then it gets to stay.

I personally would rather spend my time hiking on mountain trails, out on my road bike or running, swimming in lakes, kayaking in the ocean, lifting weights at home, or climbing (which are all pretty much free).

If you want to use the world as your gym there are plenty of ways to burn calories whilst spending no money at all.

Doing push-ups, sit-ups, pull-ups, yoga, weights at home, and just walking, running, or cycling in the fresh air are all you need to stay fit.

Calories burned by exercise

As you can see from the list below one of the best ways is simply running up some stairs:

Calories burned for 45 minutes of exercise (average weight): 

Running 5mph (12 min/mile):  554
Running 6mph (10 min/mile):  693
Running 6.7mph (9 min/mile): 762
Running 7mph (8.5 min/mile): 797
Running 8.6mph (7 min/mile): 970
Running 10mph (6 min/mile): 1109

Running up stairs:          1040

Walking 2mph (30 min/mi):    173
Walking 3mph (20 min/mi):    229
Walking 4mph (15 min/mi):    347
Walking 5mph (12 min/mi):    554

Cycling 12mph:               554
Cycling 16mph:               832
Cycling >20mph:             1109

Rock Climbing:               762
Martial Arts:                693
Swimming:             416 to 693
Skiing:               416 to 554
Kayaking:                    347
Dancing:                     312
Vacuuming:                   243
Surfing:                     208

Improve your spending

Take a look at each of the things you regularly spend your money on:

Work out how much you need to save to cover that spending in your life forever.

Work out how long you need to work to save that amount. Then decide if that feels like a good deal to you.

This is a simple way to immediately improve your spending.

Looking for ways to achieve the same goals without spending money increases your financial strength.

As an example you could save yourself $15,000 and use the world as your gym.

Money can buy you happiness

Maslow’s hierarchy of needs

Money can buy you happiness but it depends on how you use it.

It begins down there at the base of the pyramid of Maslow’s hierarchy of needs.

Physiological needs

If you have enough money to cover a lifetime’s worth of clean water, healthy food, warm dry shelter, enough clothing (and you appreciate these things) then you’ve got the base of your happiness sorted.

Time in nature and sunlight should also be included in the list of physiological needs.

The idea of the hierarchy is that a person must feel each need is met before being motivated to seek needs on the level above. 

Once you have these critical physiological needs covered you can start to move up the hierarchy and increase your happiness.

Each of the other needs requires the spending of time more than the spending of money:

Safety and Security

The feelings of safety and security are massively improved by not spending your money and instead putting it to work to make sure you’ve got those basic physiological needs covered.

You need time (but you don’t need money) to maintain your health when the world is your gym.

Staying healthy and exercising will help you sleep better (another of the key physiological needs).

As will removing some of the self-imposed worries that come from buying things using debt or trying to maintain a high-spending lifestyle on a single stream of income.

Taking on debt to buy things you don’t need can have a big negative effect on your feelings of safety and security.

As you start to increase your savings rate the money can be used to get a deposit together or overpay your mortgage.

Eventually you become mortgage free, removing forever one of the biggest expenses most people have.

Reducing your mortgage and eventually becoming mortgage free satisfies the human need for security.

Love and Belonging

Love and belonging are where you really need time.  Time to be together.  Time for your family and friends.  To have fun, to talk, to play, to read, to travel, to add to the emotional bank account you have with each other.

These days the constant chase for more can have a massive detrimental effect on the amount of time you have spare to spend with those you love.

Buy yourself more time by keeping your money and putting it to work for you.

Self-esteem

Self-esteem is boosted by taking control of your life.  By having the strength of character to no longer follow the crowd.  You will earn the respect of others by living a life that is true to your values.

I promise you the moment you realise you don’t need to buy things to attempt to signal worth you will feel stronger and more confident than ever before.

I feel a far bigger sense of achievement from taking a good photo, sketching a good likeness, or climbing a challenging mountain than I ever have from something I’ve bought.

Self-actualization

Finally we get to the pinnacle of the pyramid.  Self-actualization comes when you maximize your potential.  When you do the best you’re capable of doing.

The FI path is the path up this pyramid.  As you stop trying to consume your way to happiness you find creativity starts to flourish instead.

Creativity is right at the top of the pyramid and as such has a massive positive impact on your happiness.  

But it’s sometimes hard to be truly creative when you’re working for someone else.

Buy yourself the time and the freedom to give to the world and find purpose in the work that you do.  

Give yourself the time to continue learning and growing.

Some of the traits of self-actualized people (as described by Maslow) begin to shine through as soon as you step onto the path towards FI.

Maslow states that self-actualized people:

  • Are no longer motivated by the satisfaction of basic needs but instead by growth and learning
  • Enjoy the journey and not just the destination
  • Share deep relationships with a few and feel affection towards all
  • Have a purpose – a desire to improve the world
  • Are not troubled by the small things
  • Are humble – aware of how little they know compared to what could be known or is known by others
  • Interested in understanding the world and happy to seek out the unknown
  • Make up their own minds and make their own decisions
  • Take pleasure and are grateful for the simplest things
  • Take continual pleasure in the wonder of the world (the beauty of a sunrise or the feel of a cool breeze)

Buy yourself the freedom to live a fulfilled life

So there you have it.  Make sure you have enough money to cover healthy food, water, and shelter.  Do that as efficiently as possible.  Then keep as much of your money as you can and put it to work for you.

Money can buy you happiness if you keep it, put it to work, and buy yourself more time.

Buy yourself the freedom and the time to reach the pinnacle of the hierarchy of needs with a joyful and fulfilled life. 

You can save the world today

You can save the world today

How we spend our money shapes the world. 

But I’m getting ahead of myself.  Allow me to rewind a little…

400 million years ago a plant stored some light energy from the Sun as glucose.

With this beautiful equation:

6CO2 (carbon dioxide) + 6H2O (water) + light energy 
= C6H12O6 (glucose) + 6O2 (oxygen)

A short time later the plant was eaten by a sea creature and the energy was stored in its body.

1 month ago that energy was pumped from deep underground, where immense time and pressure had converted it into oil.

This incredibly useful (and finite) base material could then be used to make chemicals and plastics (found in nearly every product we use).

This particular batch was refined into gasoline.

I think you know where this is going…

A tank full of fossils

Last week you filled up the fuel tank of your car.

This morning you converted that 400 million-year-old energy into enough kinetic energy (with some waste heat, sound, and light) to push you and an average of 2 tons of car on your commute.

Throughout the year this habit will cost you over a month of work (based on average running costs and earnings).  Plus potentially over a year of work to buy the car (if new and bought with finance). 

It is likely some extra energy (and money) was wasted due to all the other people, in the way, in their 2 ton vehicles.

Some of these journeys were necessary and some were not.  Some of the people in that queue could have chosen to cycle instead.

Instant improvements

Imagine if everyone who could, woke up tomorrow and decided to cycle to work.

Roads would be instantly clear for those journeys that had to be made: by ambulance, car, van, or truck (most of which are electric and self-driving … in this Utopian future of course).

Benefits for you and for the world

For those who had chosen to cycle: their fitness levels and overall health would begin to improve immediately.

As would their mental health as they reconnected with nature and the changing seasons.

A feeling of well-being would flood through them, as the exercise triggered endorphin production.

Their sleep would improve immediately as well.

The honking horns, impatience, and road rage that come from constantly being stuck in traffic are replaced by smiles exchanged with oncoming cyclists on the bike tracks.

This catalytic change of habit, leads to a cascade of benefits:

  • You appreciate nature more when you spend time in it
  • Air pollution is reduced massively
  • Cities could be designed around people rather than cars
  • This encourages a virtuous circle where more people choose to move closer to where they work and walk or cycle
  • Our impact on the climate is reduced
  • Unnecessary waste of this useful material is reduced overnight

Any day you choose to cycle you boost your health, fitness, and wealth.

The money you spend changes the world

Imagine if those same people decided to switch their electricity supply to a renewable energy supplier.

Maybe they add photo-voltaic cells to their roofs.

If they made the simple changes to buy fewer things.

And pay attention to the amounts and types of packaging the things they buy have.

The money we spend has an almost instant impact on what gets created and how it gets created.

You don’t have to wait for someone else to change the world for the better.

You really can be the change you want to see.

Choose how you spend your money.  Be the inspiration for those around you.  Change the world.

A beautiful future

There is a beautiful future ahead of us.  This future includes all that is good from humanity’s progress.  Just without the unnecessary waste.

A future where we look after the only planet we have (for now).  Where we live in balance with nature.  Where we realise where the true value lies and we appreciate the abundance.

The moment you step onto the path that leads you to grow rich enough, you make the immediate changes that improve the world.

It’s the ultimate win-win 🙂

Minimalism

Let’s talk about minimalism.

The path to financial independence (FI) often leads gently to a degree of minimalism.

I have noticed that as my desire for more disappeared, I started to re-evaluate all of the things that I had bought in the past.

Things cost more than money

One of the benefits of paying more attention to spending, was the realisation that, quite often, buying things actually made me less happy.

A build up of anticipation, a short thrill on purchase, followed fairly quickly by the inevitable buyers remorse.

People spend a significant proportion of their lives thinking about the next thing they are going to buy:

Researching, browsing, planning, shopping.

Some things demand regular attention:

  • Cleaning
  • Repairing
  • Storing
  • Keeping warm
  • Keeping dry
  • Finding
  • Charging up
  • Filling up
  • Emptying
  • Protecting
  • Insuring
  • Upgrading
  • Replacing

You could lose years of your precious life, just to looking after objects.

Free your mind

More than anything each thing takes up some space in your mind.

You can end up caring too much about keeping the thing and keeping it in good condition.

Things clutter up your mind as much as your house.

Things lead to more things

Lots of things lead to the purchase of yet more things (especially houses and cars).

Before long you could find yourself looking for a bigger house (or external storage) to store all of your extra things!

Freeing up space in your life

For at least a couple of years we have been doing sweeps of the house and things are either sold, given away, given to charity, recycled, or thrown away.

This process makes you realise how hard you have to work to get rid of things.

Which makes you all the more careful about letting anything new into your life.

Things really have to justify their place in our home by adding a lot of value and fulfillment to our life.

I’m always amazed that there is still anything left to come out of the house but it keeps piling up in our clearing warehouses (under the stairs or in the attic) before finally going to a new home.

Pausing before letting any new thing into your life

It feels good to pare back the things you own to those that truly enhance your life.

The exercise also strengthens the habit of pausing before letting any new item into your life.

Some things get to stay

Minimalism could be taken to an extreme but what we’re really after here is the perfect balance:

We’re looking for enough.

Some things get to stay:

All of our outdoor gear gets to stay.  As we’ve had incredible adventures thanks to this stuff.  These things easily justify their place in our life.

Likewise, the family bikes, the camera, the Sonos speakers, our iPhones … and of course the books, all get to stay 🙂

Buying high quality when you do buy

When you decide that a thing is truly worthwhile.  That you’ll get a lot of use from it and it will add a lot of value to your life.  It is often worth buying the highest quality you can.

Cooking equipment, coats, walking boots, tools, are all examples where it is worth buying high quality items and keeping them for a long time.

Store things in the second-hand market

We now always look to buy things second-hand to start with.

These days: people buy, barely use, and then discard things for the latest model.

There are always incredible, good-as-new things, on offer for a fraction of the original price.

I have used this technique to buy a barely used Digital SLR camera for a sixth of it’s original price.

Looking back at the changes I’ve made since stepping onto the FI path.  Buying second-hand is one change that has made a big positive difference.

You end up with a high quality lifestyle for a fraction of the price.

Rather than storing things you’re not using in your garage or attic.  Simply sell it and you can always buy something similar later if you find you need it.

Anything that hasn’t been used for 6 months is a good candidate to sell.

When you store your things in the second-hand market you don’t have to worry about them at all.

Someone else takes care of keeping them in good condition, keeping them warm and dry, and storing them.

We bought a campervan once, had an incredible year of family adventures, then sold it for a small profit that meant it paid for its running costs.  But that’s a story for another day.

Having what you use and nothing more

There is something incredible about having just what you use and nothing more.

There is freedom in having enough.

Give yourself the gift of time by clearing out your clutter.

Less time being owned by your things.  More time and space for living.

A simple step to take today …

Look around your house for anything that hasn’t been used in 6 months.

Satori

Whenever you slip into presence (satori) the beauty of the world is immediately apparent.

“In Zen a glimpse of presence is called satori.  Satori is a moment of presence, a brief stepping out of the voice in your head, the thought processes, and their reflection in the body as emotion.  It is the arising of inner spaciousness.” – A New Earth by Eckhart Tolle

Whenever you slip into presence, the beauty of the world is immediately apparent.

There is a sense that everything you could possibly need is already yours.

A sense that everything is going to be alright.

A strong feeling of gratitude and of joy!

Just as much beauty

There is just as much beauty on your doorstep as there is anywhere in the world

There is just as much beauty on your doorstep as there is anywhere in the world.

One of the things that was unexpected on the journey towards FI was a very strong feeling of being on vacation that would sweep over me on weekend days or even week days.

When each day contains:

  • Time in nature
  • Time to do things together as a family (just playing games, or going for a walk, or reading a book to the children)
  • Exercise
  • Learning
  • Healthy food
  • Good music

Then you realise these are the valuable things that make a vacation a vacation.

All of a sudden every day has the potential to feel that way.

You can appreciate the beauty of the world right where you are.

Memories are free

Martin Stewart, director of the financial advice firm London Money, told the Daily Telegraph in September. “Sure, save half your salary, eat the roadkill, bin-dip, raid the charity shops, recycle everything, just stay in and actually read the T&Cs of things rather than waste money going out. From this you will create lots of savings, but sadly very few memories.”

I disagree 🙂

Memories need time more than they need money.  Memories are free.

Memories need time more than they need money.  Memories are free.

I took all of the photos above over the last five years.  During the same period, I reduced spending from ~50% of my income in the first year to spending ~25% of income this year.

Vacations and travel can, as with most categories, cost wildly different amounts of money and be wildly different in terms of the fulfillment, happiness, and memories they provide.

Our approach is to spend as little as possible on the necessary costs of getting to the new places, but once there, we live much as we do at home.

We don’t:

  • Book package holidays
  • Eat out much
  • Go into many shops
  • Tend to visit expensive attractions

Instead we enjoy the beauty of the places we have come to see.

In this way we have visited some incredible places in the world whilst spending a fraction of what could be spent on a single week’s holiday.

We like outdoor sports so spend our time exploring the world and hiking, cycling, kayaking, swimming, climbing, or skiing.  Once you have the equipment these activities cost very little but have a massive positive return in terms of fulfillment.

We have incredible memories from the last five years including:

  • Touring as a family through six countries in Europe in a camper-van
  • Exploring India with friends
  • Twice yearly trips to the mountains
  • Kayaking in the ocean
  • Ice-climbing in Norway
  • Climbing in the Swiss, Italian, and French Alps

We’ve also been on city breaks, skiing trips, hiking trips, and beach vacations – at the same time as massively reducing our yearly spending.

Good memories come from having adventures together and exploring the beautiful world whether it is on your doorstep or on another continent.  They come from spending quality time together as a family, and with friends, wherever you are.

Breaking the link between spending money and having a good time will be one of the most strengthening things you do.

I would argue that you create better moments, better memories, and have better experiences when you take spending out of each day.  You’ll find yourself in fewer queues and fewer traffic jams.

Instead you’ll find you have the empty mountain trails all to yourself.

You’ll feel like the whole world is yours to experience and enjoy.

The 4% safe withdrawal rate

The 4% safe withdrawal rate

We need a target to aim for:

The 4 percent rule gives us that.

The Trinity Study has worked out that the safe withdrawal rate from a US share and bond based pot is 4% per year (inflation-adjusted).

This works out as a pot that is 25 times your yearly expenses.  Save that up (plus a bit for added confidence) and you’re free.

What is the Safe Withdrawal Rate?

The Safe Withdrawal Rate (SWR) is the rate that you can withdraw from your portfolio every year that ensures you have a high probability of never running out of money.

The 4% refers to the portion of the portfolio withdrawn during the first year.

It is assumed that the amount withdrawn in subsequent years will increase with the consumer price index (CPI) to keep up with the cost of living.

The 4% rule is based on historical worst case scenarios.

What about my 70+ year retirement?

The study assumed that the portfolio needed to last 30 years.

What if you’re planning on retiring at age 30 with the potential for a 70+ year retirement.

The good news is that a 3.5% safe withdrawal rate would, historically, see you through.

“Notably, it appears that the safe withdrawal rate does not decline further as the time horizon extends beyond 40-45 years … the 3.5% effectively forms a safe withdrawal rate floor” – Michael Kitces

The key thing is the sequence of real returns.  If you have a good first decade then you would be able to increase the SWR after that.

You can use the Shiller PE ratio to give you an indication of the likely market performance over the next 10 years.

See these awesome analyses by Michael Kitces:

I am still using the 4% SWR for the reasons I outline below.  When you look into it you may choose 3.5% or lower.

A case can be made for a 3% SWR (and is here) especially for those invested in markets outside the US.

There is even an argument for a ~1.8% SWR made here based on prevailing annuity rates.

One of your missions on the road to financial independence will be to determine the safe withdrawal rate you feel happy with.  The 4% rule gives you an initial target to aim for.

What size pot will I need?

As you reduce your spending and increase your savings rate on the route to becoming Rich Enough, you will get to the point where you’ll know how much you spend in a given year.

It is likely to smooth out and be quite consistent.

Your target pot will become clear.

Feeling safe with the safe withdrawal rate

Since the path to FI involves being aware of your spending, you will benefit from:

  • Knowing where spending could be further reduced (without any reduction in happiness) if required during the critical first decade of retirement
  • Having the energy and time to earn more money or create assets that increase passive income
  • The fact that inflation has less of an effect on low spenders
  • Being debt and mortgage free so that interest rates do not effect your spending
  • The fact that lower spending is very tax efficient

How can I feel even safer than that?

You can simply save a bigger pot than you need.

My personal approach has been:

  • To have a cash fund covering the first few years of early retirement mitigating some sequence of return risk (the risk of market corrections during the first decade of retirement)
  • To have an FI early retirement fund and a separate normal retirement fund that I do not include when calculating my SWR (this will be left to grow until normal retirement age)
  • We have income that comes from investment properties alongside the passive income from the FI pot (diversifying across asset classes protects your FI cash flow)
  • Our yearly spending, while lower than average, has plenty of room for reduction if required
  • I do not include any Social Security / State Pension in my FI calculations
  • I do not include our ability to downsize to a smaller house in my FI calculations
  • I do not include any inheritance in my FI calculations

Discovering your target

As you focus your spending on only those things that truly give you fulfillment, you will discover your annual spending target.

This leads you to the pot size that needs to be saved and invested.

It can build up surprisingly quickly and surprisingly easily as you Grow Rich Enough 🙂

The tracking game

Tracking income, spending, and passive income on the path towards financial independence (FI)

Tracking everything you spend has some major benefits.  It turns reaching financial independence into a game.

Each month you compete with yourself to do better than last month.

Each year better than the year before.

You can map your progress on a simple chart (as above):

  • Earned income (yellow)
  • Spending (blue)
  • Passive income from investments (green)

The chart shows 4 years of spending efficiency improvements, an increasing savings ratio, and increasing passive income.

I love this chart, for it is the answer to the question:

How do you reach financial independence?

Earning more and spending less

It’s tempting to think you should focus on earning more money in order to reach FI.

There are three problems with this though:

  1. Lifestyles have a sneaky habit of inflating to use up any pay rise
  2. Pay rises, after tax, have only a relatively small impact on the amount you can save each month (as can be seen from the chart above)
  3. Pay rises are only partially within your control

The key to your freedom is how much you spend and that, it turns out, is completely within your control.

No such thing as a typical month

One thing that became clear, when I started tracking, was that there is no such thing as a typical month.

I used to budget: so much for the mortgage, transport, food, taxes, insurance, entertainment, etc.

These budgets are a fiction though.

In reality each month is different with spikes in spending due to, for instance, a vacation, a big purchase, a Birthday etc.

Discovering the truth about your life

Tracking brings honesty and integrity to your relationship with the money you earn, spend, and save.

You start to see each expense in terms of the hours or days you had to work to earn it:

  • 2 days of work per month to pay for the fuel used on the commute
  • 2 days to pay for the car
  • 1 day to pay for work lunches

You can find that you’re working a week per month just to pay for working!

Keeping your spending diary

It is easy to keep a simple spending diary on paper or in a note in your phone.

This simple act brings awareness to your spending.   As you note it down you have a moment in which to see how your spending makes you feel.

Everything that gives you fulfillment stays

When you spend your money on something that truly gives you fulfillment (in proportion to the number of hours of work required to earn that money) you feel totally at ease noting that spending down.

On the other hand you’ll quickly become aware of spending that is just a habit or that provides no increase (maybe even a decrease) in your happiness.  It won’t be long before this spending will stop.

It probably won’t be long before you start having days where you spend no money whatsoever!

Creating your chart

At the end of the month tally up your spending into categories that fit your life (e.g. home, transport, utilities, food, clothing, entertainment, vacations, social, hobbies, fitness, work, giving, etc.).

Then you can start to draw your chart of income and spending.  As you save and invest, you can also include the passive income that comes from your investments.

Towards freedom

The key thing, to start with, is growing the gap between income and spending.

Increasing your monthly savings ratio.

Accelerating your progress towards financial independence … towards freedom.

A simple step to take today …

Note down everything you spend during the day.