Here at Five Years to Financial Freedom, we talk a lot about saving money, how to be more frugal, and what you should be doing with the money you save. Now, that’s all well and good but I came to the realisation that knowing what’s worth spending money on is as important as knowing what not to spend money on.
In order to reach financial freedom faster, we tend to focus on frugality and lowering our cost of living. This is an essential part of becoming (and staying) wealthy. However, I found that I would get so wrapped up in bean counting I would stress and worry about every purchase. In order to get over this I had a think about what money actually is, and my reasons for wanting financial freedom.
Today we’ll be looking at all the things you should be spending more money on, the benefits of increasing your spending in those areas, and how to get those benefits for free.
Your loved ones
Giving gifts is one of my favourite past-times, finding something that another person will enjoy and then presenting them with it is such a joyous occasion. Instead of buying (or making) gifts for the people you love in your life, give them surprise treats.
People you love, and who love you in return are the building blocks of our lives. By setting aside some of your wealth for them you’ll; become happier, forge stronger relationships, learn more about yourself, and improve the quality of someone else’s life.
I don’t like to buy people things, I like to buy them experiences. This is scientifically the best way to maximise the happiness return on your investment and is a great excuse to do things that you want to do.
You don’t even need to spend that much, research has found that “happiness is more strongly associated with the frequency than the intensity of people’s positive affecting experiences.” Here are some of my favourite ways to splash out on a loved one:
- Treat them to a really good cup of coffee
- Buy fresh ingredients and cook for them
- Take them to an exhibition/film/attraction they want to see
If there’s absolutely no room in your budget for a coffee or film, simply budgeting time for them is an excellent way to get the same benefits.
Becoming financially free is not worth it if it means you have to trade your health to get it. Investing more in being healthy is essential in becoming financially free as fast as possible.
Exercise makes your brain function better, and regular exercise decreases the chances of getting several diseases. Through spending more on exercising, you’re investing in your future and helping yourself make better decisions today.
Now investing in your health doesn’t mean buying a gym membership (although that is a great investment as long as you go), it may be something like:
- Getting a FitBit or other health tracking wearable
- Buying a pair of decent hiking boots to encourage you to walk more
- Purchasing a waterproof mp3 player so you swim more
It doesn’t really matter what you get as long as you start exercising regularly. I found that if I buy something to help me with something it encourages me to start doing that thing, otherwise I feel guilty about wasting the money.
If you’re really trying to focus on saving/investing your money, there are plenty of ways to get regular exercise for free. Before I could afford a gym membership I would:
- Go for an hour-long walk and listen to my favourite podcasts
- Borrow my friend’s bike and go for a ride
- Do body-weight exercises around my apartment
Anyone you know who’s into fitness will tell you that most of the work to looking good is done in the kitchen. Diet is such an important part of our lives, using a high-quality fuel will give you a higher quality output.
Instead of trying to cut down your weekly food budget, increase it and slash your “eating-out” budget. As you cook more meals at home you’ll develop a life skill, have more control over your diet, and actually find you save money.
As you increase your grocery budget, buy higher quality foods that aren’t overly processed, things like:
- Whole wheat carbohydrates
- Lean cuts of meat
There are free ways of eating better food (dumpster diving, volunteering, growing your own), but these require a larger time investment than many people are willing to give up. Here’s what you can do to buy high-quality food at minimal cost:
- Get a Costco membership and bulk buy your staples
- Go to supermarkets early in the morning or late at night to get heavily discounted food, then freeze the food
- Buy canned vegetables (they are as healthy as fresh vegetables)
Something that the majority of people don’t do is spend money on their professional development, which is understandable when you look at the cost of many professional development courses.
With that said you’ve got to think about it like an investment, if you spend £2,000 on a course that enables you to earn £5,000 more then it’s clearly worth it. But, thinking about it like this doesn’t demonstrate how valuable professional development is.
When you go on a professional development course you’re not only improving your skills, through the people you meet you’re also:
- Doing market research
- Seeing the flaws/strengths of how other businesses operate
On top of all this, professional skills rarely exist in a vacuum. If you take a project management course, you can use those skills in other areas of how a business operates. For example, I took a general management course on “emotional intelligence” and I’ve used what I learned in:
- Sales negotiation
- Improving workflow processes
- Customer service
As I previously said, professional development courses can be expensive, but they don’t need to be. You can find a lot of free professional development courses online (Coursera is my favourite), or set up a skills exchange with someone who knows what you want to know. Or if you’re already working for a company, start showing an interest in going on courses and sometimes (or if you make a good enough case) you can get them to pay for it.
Whenever you mention travelling people often scoff, roll their eyes, and say, “I don’t need to find myself.” This isn’t going to be a motivational bit about how we should all drop everything and move to Senegal (although that would be fun).
Going somewhere new exposes your brain to all sorts of new stimuli that it needs to process, and categorise. You exercise your brain and teach it to think in new ways, and make new abstract connections, improving your creativity.
You’re forced to rely on other people for help and the majority of the time the language barrier will be much easy to break than you might think.
Finally, it puts things in perspective. By taking some time away from the huge amount of hustle required to reach financial freedom, you can evaluate the things you’re doing that are actually productive and the things that aren’t.
“Travelling for free” is hard to quantify as the opportunity cost of spending some time in a different country can be expensive. However, you can heavily mitigate the cost of travel. I’ve found the following to be effective:
- Teaching in South East Asia: Schools in Korea, Japan, and China will pay for your flight and find you a place to live whilst paying you a decent salary. However, your contract is held for one year.
- Dave’s ESL cafe is a great resource to find work
- Work Exchanges: Places all over the world will offer you room and board for around four hours of work. This gives you enough time to work on other projects you have going on, whilst allowing you to live a different lifestyle.
- Location independent income: If you have a skill that can be done from a laptop and an Internet connection you can travel the world indefinitely and build your career at the same time. If you’re working in a country where the cost of living is low you can actually come home having made
- Corbett Bar has a list of 64 location independent skills/jobs that should jump start your imagination
Spending is not a sin
Being frugal is an important trait to have/learn on the journey to financial freedom. However, as counter-intuitive as it may seem, there is a cost to being too frugal. What I hope I’ve done today is shown you that it’s alright to spend money on some things.
Instead of feeling trapped by frugality, I hope that I’ve shown you things you are allowed to spend money on. And if you’re willing to put in the effort, you can get most of the things on the list for free. The five things you should be spending more money are:
- Your family and friends: There’s no point in being wealthy if you can’t improve the lives of the people that love you
- Your body and health: There’s also no point in sacrificing health for a temporary financial gain. Investing in your fitness and health will increase your productivity allowing you to reach you financial goals faster
- Quality food: By moving away from highly processed foodstuffs and consuming better food you’ll give yourself more energy and brain power
- Increasing your skill level: Once you’ve cut down on spending you should focus on increasing your income. Investing in education is a time-tested method of increasing your income
- Travel: Getting out of your comfort zone, and doing something exciting has so many psychological benefits. Similarly, travelling has helped me realise exactly why I want to be financially free and enables me to visualise my goal more vividly
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Here are some more articles that you’ll enjoy:
- 9 Reasons I was lucky to lose my job
- The three essentials to financial freedom
- 7 cures to self-sabotage