Sometimes I have the privilege of talking to a reporter or a radio host or a television personality regarding some particular personal finance story they’re working on. Most of the time, the story they’re doing is a good one, focusing on how people are choosing to be more careful with their money or how people are making different career choices in order to bring to the forefront other values in their life.
I’m thrilled that the word is getting out there about such things. You don’t have to be a slave to your work. You can center your life around other things – and, believe it or not, it often frees you to perform even better professionally when you do.
Yet, whenever I spend time talking to a journalist, I usually hear one question that really gets me frustrated. It’s some variation on this question:
What is it like to give up all of the stuff that’s fun about life?
Of course, most of the reporters don’t ask that question so bluntly. They’ll word the question differently. Sometimes they’ll ask me about the things I chose to give up that might “shock” their readers or listeners. Sometimes they’ll ask me about depriving my children.
In the end, though, the point of such questions is to demonstrate that making financial choices that build toward an independent future means making miserable choices in the present. It undercuts the whole idea by presenting it as though you have to be “super cheap” in order to be able to do such a thing.
Here’s the thing. It’s not about being super cheap. It’s about choice.
It’s All About the Choice
Let’s say I’m at the grocery store and I’m picking up food for the week for my family. I see something really tempting on the shelf that’s not on the grocery list. Maybe it’s a bottle of wine of a variety that my wife and I like from a vineyard that we’ve heard about. Maybe it’s a snack food that my children might gobble up (or I might gobble up).
Or, let’s say I’m at a bookstore. I usually wind up in one if I’m ever in a shopping mall because I get quickly bored with clothes stores. I see a really interesting book on the front display that I really want to read, or maybe I’m wandering through the science fiction section and I see a new novel by a writer that I like that I didn’t even know was out yet and I’m really tempted to read it.
You can probably see a bunch of decisions like this from your own life if you think about it a little bit. Almost all of us are faced with financially tempting choices almost every day of our life.
(Of course, there are some people out there who are in such financially precarious positions that they don’t have the freedom to even consider such choices. My heart goes out to those people. It is never a good thing to be caught in such a position. This article is focusing on people with the financial freedom to at least make such a decision.)
Each time, when we’re faced with that kind of choice, we’re essentially choosing between having something that we enjoy right now or having something that we enjoy in the future.
So, let’s look at that grocery store situation. I could spend $10 or $20 on that bottle of wine, take it home, and enjoy it with my wife. We’d probably split it over two different meals that the wine paired well with and then the wine bottle would be forgotten.
On the other hand, I could choose not to spend that $10 or $20. Instead, that money sticks in our checking account (along with money we didn’t spend at other times). Eventually, it gets deposited into our investing account, where it grows happily at 7% a year for a while. It plays a part in making it possible for Sarah and I to choose to walk away from our jobs a little earlier than before, leaping into volunteerism or another career path that we dream of.
Does that immediate pleasure of that bottle of wine trump the impact of $40 or $50 saved up for an early retirement in several years?
The vast majority of Americans would say “no” to that question and buy that bottle of wine. Often, they wouldn’t even think of the choice in that way.
For me? I’ll usually say “yes,” or I’ll go looking for a cheaper bottle of wine instead. We get a lot of enjoyment from Charles Shaw wines and they’re usually $3-4 per bottle, for example.
The power here isn’t that I made the choice to go without the bottle of wine. The power here is that I was aware of this choice and considered it at all.
Now, what about that situation where I’m standing in the store holding the latest book by James S. A. Corey (my favorite sci-fi author at the moment)? I could spend $15 on that book and have it now, or I could exhibit some patience, request it at the library, and have it in a few weeks for free. The only thing that paying $15 gets me is the ability to have that book now and to have the physical copy after I’m finished reading it (which I likely won’t read again).
Again, it’s a choice. I can spend that $15 now to have that book immediately, or I can keep it in my pocket and read the book in a few weeks and put that $15 toward my bigger goals.
The truth is that the bottle of wine or the snack or the new book are each only going to give me a little bit of pleasure right now, a pleasure that will fade quickly into the woodwork. On the other hand, I can skip that immediate little burst of pleasure (and probably find something else that I’ll enjoy nearly as much without the expense) and put that money away for a big goal of mine.
The “Second” Choice
One important part in this that is almost always overlooked is what I call the “second choice.” It’s the alternative to the immediate expensive pleasure that doesn’t cost nearly as much and is maybe a little less convenient, but is still quite enjoyable.
For example, if you’re looking at a book in a bookstore, why not just get it from the library? You still get the full experience of reading it and you don’t even have to pay for it. (Better yet, you don’t wind up stuck with a copy of a book you won’t read again.) You just have to wait a little bit to get the book.
Another example is the wine. I could buy a $10 or $20 bottle at the store, but we honestly like the $3 Charles Shaw wines almost as much. They’re just fine for pairing with a good meal.
There are lots of these kinds of second choices.
Why not invite friends over for a dinner party instead of going out on the town? Even if you foot the whole bill for the meal, it’ll still be cheaper and you’ll probably get a (free) invite to another dinner party or two down the road.
Why not rent a new release from Redbox instead of going out to the theater? Pop your own popcorn and curl up under a blanket. It’ll cost you a total of $2 instead of the $20 or more that the same experience costs at a theater. Sure, you might not get to see the newest theatrical release, but you’ll get to watch a pretty recent release.
I could list lots of these types of “second” choices, but they all have the same thing in common. They still give you a burst of pleasure – maybe not quite as big as the other option, but an enjoyable experience nonetheless – but they don’t cost nearly as much, which allows you to save the difference.
The real catch here is that seeing such choices requires both creativity and impulse control. You have to be a little creative to come up with appealing alternatives, and you have to have impulse control to keep from just buying that first option without thinking about it.
The reward? You get most of the pleasure while keeping most of the money in your accounts. You get to have a great experience in the moment while also putting money away for whatever your long term goal may be.
What About Your Children? Won’t Someone Please Think of the Children?
One aspect of this puzzle that comes up all the time is the role of my children in it. Isn’t a childhood where the parents are making regular “second choices” or simply skipping out on pleasures going to be an empty childhood?
For one, I grew up in a household that never had a lot of money. I remember exactly two vacations from my entire childhood and neither one was more than a day’s drive from my home. I never flew in an airplane until I was an adult. There were several opportunities from my childhood that I had to turn down due to insufficient funds.
Yet I never felt as though my childhood was deprived. I had everything I needed and many of the things I wanted. I never lacked for love. There was always food on the table. There was always an interesting dinner conversation. I had clothes to wear and a warm bed to sleep in. I was a voracious reader and although my parents bought me some books, I could always go to the library for more or borrow them from a neighbor.
Those childhood experiences taught me a lot and greatly influenced my parenting style. My focus isn’t on making sure that my children always have the biggest and best of everything, but that they have steady love and support. My focus isn’t on eliminating all challenges in their life, but making sure that they know how to take on challenges and succeed. My focus is on their basic needs and security and on providing a foundtion that they feel that they can rely on as they grow and explore. Spending lots of money on extra things like extensive travel or expensive toys doesn’t achieve any of that.
For another, it doesn’t require me to open my wallet in order for my children to have a wide variety of experiences and growth opportunities. We try to balance a mix of organized activities that we mostly do as a family – things like going ot the park and exploring in the woods or going to the library – with a lot of unstructured free time where our children get to figure out for themselves what to do with their time.
In other words, the only things our children are deprived of are things like “big” birthday parties with a pony in the back yard and overly expensive treats on a regular basis. They never lack when it comes to things they particularly need, like love and attention and conversation and care, nor when it comes to basic needs like food and clothing and shelter.
My children will never lack for the things they truly need – love, attention, time, food, clothing, and shelter. They might not have everything they want, but giving them everything they want doesn’t teach them any valuable lessons, either.
The Big Goal
None of this really makes any sense, however, if you don’t have a big goal that you’re weighing in opposition to all of these little financial choices.
For Sarah and I, there are two big goals that we keep front and center. Our first goal is to eventually live in the country on a small plot of land. We’re actually able to reach this goal right now and the only thing holding us back from pulling the trigger on this move is the fact that we want to find the right piece of land and/or the right house before we do it. We’re not in a rush because we largely like where we currently live.
Our second goal is further down the road and it’s a line we hope to cross in the next decade or so. In fact, assuming there are no significant negative detours when it comes to our financial state, we should be there well within a decade. That goal is financial independence.
What do I mean by financial independence? I mean that all of our living expenses are funded off of the income from our investments. This enables us to live for the rest of our lives without actively seeking income for the activities we choose to fill our lives with. I have dreams of writing a novel and working for a volunteer organization in my area, for example, and Sarah has a similar set of personal dreams.
These are our big goals. These are big, life-changing things that Sarah and I have dreamed of for a long time. They’re like giant mountains in the distance of our lives.
Compared to those, things like a delicious bottle of wine from the store or a new book or a new board game or some new camping equipment seem far more real and present and urgent. It’s easy to see those smaller things. It’s easy to understand the very immediate pleasure we would get from sinking our money into those things.
It’s not always quite so easy to see those big “mountain” goals. Even to us, they feel like enormous things out in the distance, far away from our current daily lives.
Here’s the key, and it’s really the key behind all of this: if we do not make the choice to cut back on some of those smaller pleasures today, we will never have those big life-changing and life-affirming goals tomorrow. We cannot make it from here to there if we constantly spend our paychecks on the neat things we see in our daily lives.
I’d love to buy that James Corey book that I saw at the bookstore, but if I do it, I take a step away from this big dream of mine. Is it really a loss to put that book back on the shelf and walk away?
Sarah and I would probably really enjoy that $20 bottle of wine with dinner tonight, but if we enjoy that bottle, we’re taking a couple steps away from that goal. Is it really a big loss to skip that wine entirely, or to get a much less expensive bottle?
We might enjoy an extravagant family vacation… but, honestly, when I think back on our family vacations, my best memories are of the simple moments, and all of the vacations, expensive or otherwise, have those simple moments spread throughout. So, is it really a big loss to put off a big vacation for another year and go camping or something simple this summer instead?
We might be tempted to take the whole family to the theater to see the latest movie, but doing so will probably mean $50 in tickets and even more if we buy snacks and drinks. On the other hand, we could rent a $1 movie from Redbox or watch something that we’ve recorded for free, pop up a dollar’s worth of popcorn, and have just as many smiles and almost as much enjoyment for about $60 less.
Life is constantly filled with those kinds of choices. If there is one change that’s really happened in my day-to-day life since my financial turnaround, it’s that I’m aware of these choices. Before this, I didn’t really think of this type of thing as a choice at all. I kept my day-to-day activities isolated from my big dreams, and because of that, I never really made any progress at all toward those big dreams. It was (and still is) so much easier to see that immediate choice and that immediate pleasure right in front of me.
But, in the end, it’s always a choice. I have the power to make that choice every day. Do I want that future I dream of? Or do I want that cool thing sitting there on the shelf? Is there a compromise? Or is there just a good free alternative that lets me have fun now and still build toward my dreams tomorrow?
When I choose to spend less, I’m not choosing misery. I’m choosing my big dreams. And, if I do it right, I’m not giving up much pleasure today, either.
In the end, it’s not about being super cheap or some sort of paragon of frugal virtue. It’s about the power of choosing for yourself.
Like it or not, the little choices you make every single day decide for you whether or not you’re going to be able to achieve your big goals. Do you want to retire at fifty? You decide the answer to that question every time you’re tempted to pull out your wallet.
If you make one change based on this article, it’s this. Recognize that every time you spend, you have choices. Stop for a minute and think about those choices. Are you going to choose this short-term fleeting pleasure? Or are you going to choose the big dream you have in life? More important than either of those, is there some sort of middle road, a “second choice” that enables you to enjoy something right now without taking away from your big financial goals?
Trust me, it makes that Charles Shaw wine taste that much sweeter. It makes the library seem that much more welcoming. It makes the little compromises that keep you on track seem like they’re not a big deal at all – because they’re really not.
And, sure, sometimes you can choose the splurge, but when you choose it, you’re aware that it is a step away from your big goal, and that filling your life with steps away from your big goal means you’ll never get there.
The beauty in working toward financial independence is the beauty of choice. It’s always all about the choice.