When people are just starting out on their financial journey, they often ask, “Why should I save money?” Then they start filling in answers like retirement, new car fund, home purchase, college savings, etc. There’s nothing wrong with that, but it sort of answers the question in a backwards fashion and over-complicates things by creating extra mental overhead as you constantly ask yourself, “Where does the money need to go this week?” Here’s a secret, though. The only reason you need to save money is far simpler: Freedom. Saving money ultimately comes down to buying your freedom. When you realize that, it reduces a lot of the mental strain and angst associated with saving.
Any savings goal you can think of is, at its heart, about freedom. It’s about the freedom to live, do, buy, and work however you want. When I started out, I got all twisted up worrying about many different savings goals. Where was I putting money this week? Was it the house fund? The car fund? Retirement? Emergencies? I had a boatload of accounts and sub-accounts dedicated to all these discrete goals. It was exhausting.
But one day I sat down and looked at it all and realized that every bit of this mess was tied to simple freedom. I wanted the freedom to live where I wanted. If I needed a car, I wanted the freedom to buy the (reasonable) car of my choice. I wanted to be able to quit work when I wanted (or needed) to, or to go part-time. If I decided to change careers, I wanted the freedom to do that, even it it required retraining in something else. It wasn’t about discrete goals as much as it was about one single goal: Freedom.
So I closed a bunch of accounts and consolidated what I could into just a few accounts. (Things like IRA’s and 401k’s have to stay separate for tax reasons, but I just lumped everything else into a single taxable investment account, cash, and a few CD’s.) Now I view my money as freedom money. Even the retirement money is ultimately about freedom. I no longer fret if the car fund has a certain amount in it, or if there’s enough in the emergency fund. It’s all for the purpose of living the life that I want.
Does it mean that the money is endless? Of course not. I still have to make choices about what is most important to me at any point in time. If I need a new car at the same time I want to go on vacation, I have to decide which purchase is most important. Or, I have to decide what I can compromise on with each so that I can have both. But my savings means that I have the freedom to do that. That’s why I put the money away, so I could make those choices.
Does saving for freedom as opposed to individual goals mean that you need to save less? Nope, sorry, it’s not that easy. If anything, once you realize that saving equals freedom you want to save more. The more you have, the more freedom you can buy in more areas of your life. That’s a far more motivating prospect than trudging toward discrete goals one at a time.
Saving for freedom also makes the process much more enjoyable. When you realize that you are buying years of freedom and easy choices, you come to enjoy saving instead of feeling like it’s a punishment. Frugality isn’t a chore, it’s a path to freedom. Dumping your raise into the 401k isn’t about deprivation. It’s about buying future you the freedom to age in a nice place instead of a crappy nursing home. Freedom is an energizing feeling and doesn’t engender the resentment that sometimes comes with “having to” save for a specific goal.
When I think about the freedom saving brings, it comes in many forms.
- Live where you want, in the dwelling that you want.
- Do work that you enjoy, or no work at all.
- Work until you’re ready to quit, not until you’re forced out or break down.
- Survive a layoff without panic.
- Freedom from fear that an unexpected expense will ruin you.
- Travel/play how and where you want.
- Free yourself from toxic co-workers or relatives.
- Give what you want to charities or family.
- Buy what you need when you need it without angst or fear.
- Decide how and where you want to age.
- Indulge your wants and desires without compromising everything else.
The more money you save, the more of these freedoms you can enjoy. Having switched to a freedom mindset rather than an “individual goals” mindset, I feel more comfortable with my financial life. I no longer worry if each “bucket” has enough in it. It’s all one big bucket to be spent as I need and want to. The bigger that bucket gets, the easier my choices become in all areas of my life. There are no more mental gymnastics as I try to siphon money from one bucket to another to accommodate an unexpected expense. It’s all just there to buy my freedom. For me, that’s been a bigger motivator over the years than any individual goal and, as a result, I’ve saved far more and found the process more rewarding.
Read More:
- 5 Ways to Increase Your Income and Achieve Financial Freedom
- Do What You Want With Your Money But Have a Reason
- Why You Want to Save Money and What You’re Willing to Do About It