Independence Day

The best way to maximize your freedom, to give yourself the most choice in how you live your life, is to be financially independent. That’s not quite the same as being rich and it’s a long way from having a high income, though a high income can certainly help you achieve financial independence if you use it wisely.

Financial independence, to put it in the most simple terms, means that you can support yourself through your own resources. You don’t need a paycheck to live, in other words. Most rich people are financially independent, but not all financially independent people are rich. The key is to carefully manage your income and expenses. If you don’t think you can strike it rich (and if you were unwise enough to not select rich parents it’s going to take luck and hard work to strike it rich as an adult) but want to be financially independent, you must be willing to settle for a modest lifestyle. To look at it a different way, if you want to be able to buy anything you want, it helps if you only want things that are moderately priced.

I have been facing a stark example of that lately. Fourteen months after the birth of our son I’m still driving an old two-seater sports car. I will eventually have to buy something with a back seat, as my wife keeps reminding me, but I am holding off as long as possible; hopefully at least until her Honda is paid off. One car payment isn’t as good as none, but it’s better than two. The problem isn’t going to go away, though, so I’ve been considering what I’m going to replace my trusty old Miata with.

Once upon a time, not too many years ago, I would have liked to get a Porsche. Not a top-end one, but a humble Boxster. Now, spending a lot of money on a car seems wasteful to me. Oh, I wouldn’t mind having an expensive sports car, but it’s not worth the money to me. I don’t consider a car to be an asset, or even a status symbol. It’s a tool, transportation. I enjoy driving and would like a car that makes the time behind the wheel fun, but you don’t have to spend a raft of cash to get that. Right now I would no more spend $45,000 on a car than I would spend $250 on a pair of boots. In fact, I’d be more likely to spend the money on the boots; I’d get more use out of them and they’d last longer.

It takes less money to support a modest lifestyle than an extravagant one, and the less money you need to support your lifestyle, the easier it is to become financially independent. We all want nice things, and living a Spartan, miserly lifestyle is no one’s idea of fun, but you have to sell a piece of your life for every expensive toy you buy. Make sure you get a good deal.

Comments are closed.