The conversation of “you can’t spend it when your dead” or “I’m here for a good time not for a long time” to me, when it comes to finances, is a silly way to approach life. Not because money shouldn’t be used for fun or shouldn’t ever be spent. But because money is very much enjoyable even when it is sitting in your bank account or in an investment that is growing your savings. Don’t let money burn a whole in your pocket.
First let’s discuss what money even is. Money is monetary energy. You work now for dollars, so you can use those dollars to purchase things in the future. Money allows us to have purchasing power for the future, meaning we don’t go to a farmer and ask him how much we need to work for him to get a pig. We instead ask him how much money the pig will cost. Because we have the ability in our society to save for the future, ideally, we will be able to use this to our advantage and be able to use these savings to purchase our future with the savings we have, meaning we no longer will need to work (retirement). Many people think retirement just magically happens and you will someday just wake up with hundreds of thousands of dollars in your bank account the day they plan to retire. This of course is not the case. This monetary energy can be used to purchase someone else’s time, it can be used to purchase faster transportation, it can be used for the highest quality food and goods, or it can be used to save yourself years of labor.
Money has previously been shells on remote islands, you could use gold and silver to buy things directly from other people, in Europe it is Euros, and in the U.S it is the US Dollar. None of these have much value on their own but in the minds of humans they have a lot of power.
Why is money useful even when it is sitting idle in a bank account? What exactly will this money give you without the benefit of spending it on chocolate chip cookies, gold watches, or vodka tonics? Let’s break it down into three categories.
- Freedom from worry
- Ability to take risk
- Your future time
First, why would you want money. When many people talk about poverty, they talk about not knowing where your next meal is coming from, or not knowing how you are going to pay rent. The most important thing about money in my opinion is that having excess money in the bank allows your fear of not having food and shelter, the basic human needs, to leave you. It’s a worry that many people have in the back of their mind, even if they are making a decent amount of money each month. When you live paycheck to paycheck, it is stressful and having a savings cushion is a lovely thing. It may start as $10 per week but as it builds the stress starts to leave.
Even if you are making $60,000 per year but save none of it. If something wild happens, an outlier year, like 2008 with the housing crisis or like 2020 with Covid-19, you could end up having no job, lots of bills, and wind up wondering how suddenly you don’t know how the rent will be paid.
No matter who you are or how much money you make, trying to find out how to save $5 a week, or $500 a week is something I believe everyone should attempt to do. Depending on the person the dollar amount is different but having about 3 months’ worth of food and rent money saved in a secured, high-interest savings account is VITAL to starting the steps of freedom from a weekly paycheck. If this is not possible in your current life. If NO money can be saved in your life based on your current habits or current bills there are only two options. One is to make more money, the other is to reduce your expenses. Maybe eating out at restaurants is too expensive for your budget and that must stop, maybe you’re spending too much on a vehicle or on rent. The possibilities are endless, but the reality is that everyone has two options when it comes to not having enough money, spend less or make more.
Having this saved money will help bring peace of mind, if you lost your job you have at least 3-6 months to figure something out.
Next, ability to take risks. This widely varies by person, risk could mean 6 months of traveling trying to start a YouTube channel, or blog. But it could also mean starting your own business that you want to do it full time. It could also just mean that you want to quit the job that you hate and try to find something a little better that would benefit your life as well as your family’s happiness.
This to me is the step after no longer worrying about bills every day. First off try to save 3-6 months of income, then start to build more investments other than cash and build up closer to a years’ worth of income. The amount you save depends on the risks you want to take.
Just to be clear, deciding today that you have a good idea with zero dollars saved, quitting your job, or dropping out of school is not advisable. That route is honestly just silly. If you have a great business idea or want to peruse something, it’s best to try to do it part time before full time. See if there is any ground to stand on. Zuckerberg didn’t drop out of Harvard until Facebook started growing rapidly. Most small business owners start working on their business prior to quitting their jobs and doing it full time. That’s just my opinion on how to proceed. If you can’t stand your job and decide that you want to quit and start your own grind, that is possible to do so don’t let me discourage you, it will just be more stressful than having a financial cushion.
So, if you want to start a new business and give it a full year of your time dedicated to it. That will require a ton of money, at minimum one year of expenses plus whatever the business will cost you. If you want to quit your job and find a new one, that may only require 3 months of savings. If you want to learn a whole new skill, go to college or a trade school. You may be able to do that while still working full time. It varies greatly.
For me the ability to take risks means that I can quit work for over a year and figure out how to proceed. I currently do not have a plan to do that, but I just like to have the option in case something arises, and it allows me the knowledge to know that I am NOT STUCK in my job or anything I am doing. If I am working a job that I hate, that is my fault and I cannot blame anybody else because I can quit if I want.
The last thing and the most enjoyable thing are being able to purchase your future. This is really the apex of what money can do. Saving properly and consistently throughout life allows most people to retire comfortably. It’s the sad reality that many elderly people physically cannot retire because they have no money saved. If they don’t work, they go homeless, it’s very sad but that is the facts. Social security does not pay very much money.
When you retire is your choice, if you have $100 million dollars maybe you would retire today, maybe you would work until you die, but at least you would have the choice. I save for retirement in my 20s because I want the option to retire in my 40s if I please. That would buy me over 25 years of my life, with no need to work to the ‘normal’ age of 67. To me that option is invaluable. That means if I have children, I can spend all my time with them. If I have a passion project, I can spend my time doing that. If I decide to volunteer years of my life building shelters in a foreign country that is an option.
The best part is I will still be quite young, meaning I can do anything I wish while hopefully still being in good health. Buying your future, now, is a powerful ability. You can decide how your future life will be just by saving some money today. There is 100% chance if you save money today you will have more money saved tomorrow than if you didn’t. Thinking long term can bring more happiness today because of lower stress and anxiety, and more happiness in the future because you will have so much cheddar in your bank account that you can live the life you’ve always dreamed of.
“Don’t let your dreams be dreams” -Shia Labeouf
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