Today I wanted to look at the inverse relationship between
Life Freedom and one’s finances. You see, a mismanagement of one of these key areas in life or an imbalance will in turn affect the other one. You can have “your cake”, but you may not be able to handle the whole cake yourself.
According to Ycharts.com, the current personal savings rate is just over 5% which is quite a long way off from the long term savings rate of over 8%! As I write this, unemployment is now rebounding, businesses are starting to capitalize on a growing economy, yet people are not saving like they should for their future.
So, just what gives? Why isn’t the world full of savers rather than spenders? It’s actually quite simple. Today’s world has become a high marketed, consumption marketplace. Ads fly at consumers at every turn, credit cards are given away like bad advice and the world is playing keep up with those who are obsessed with obtaining material ‘stuff’.
We are constantly bombarded by huge companies such as Apple reminding us that the new phone we purchased merely a few months ago will be replaced by a sleeker model. Just one example of persuasion to consumers to separate them from their hard earned cash. We need the latest smart phone, LED TVs in every bedroom, 3 new cars in the driveway to keep everyone happy and the list goes on.
Somewhere along the way, we as a society forgot our ancestors notion of saving for a rainy day (emergency fund) and for the future. I don’t need to mention the burden placed on one’s head when they are riddled with debt and it starts to rule their life. This in turn equals less life freedom. Money can be a tool to actually improve one’s life, but we’ve got to put in the work. It’s not easy, admittedly, it’s actually difficult to build the discipline to manage finances.
How do you go about saving if you haven’t been doing so? Simple, just start small. There’s no rule to say that if you aren’t saving at least 10% of income per month, you’re not on track. If you can’t quite save that much yet, start at say 5% or what you can set aside.
As you work on becoming a better at managing finances, make it a game to actually start saving more and more. Especially, investing in deferred accounts such ROTH IRAs, 401K pensions e.t.c. Start cutting back on unnecessary expenses. Maybe your paying for full cable when you could cut back to basic cable and Netflix. Dine out less, cut your entertainment and “want” spending. Do what you need to come out on top.
Think of how much your life will improve when you no longer have to worry about finances due to having your emergency fund fully stocked, you build on your net worth and investments and prepare properly for the future.
Got something to add or just want to give some feedback? Make sure to let us know by commenting. Also, please share this post if you feel it could help someone else. Karma can be fun.
