Personal Finance Planning Is Not About Self-Denial Anymore

Personal finance planning is a boring business. That’s what most people think anyway. But it needn’t be so. Make your money management project an adventure in pursuit of The Good Life, and you will never view saving as a boring money allocation option again.

A New Approach to Personal Finance Planning

The problem is that most people associate personal finance planning with sacrifice. My experience is that there is little connection between the two. In my case, each increase in saving led to greater enjoyment of life, not only in the long-term, but in the short-term as well. So I’ve tried to understand better the widespread perception that to manage your money well means to enjoy life less.

I’ve come up with a theory. Just as generals have a tendency to develop battle plans based on what worked in previous wars, consumers have a tendency to form viewpoints about personal finance planning based on the experiences of earlier generations.

It’s not that long ago that the pleasures derived from material goods were hard to come by. Television is a recent invention, as are the airplanes that make exotic vacations feasible for the middle-class. It’s only the large productivity gains enjoyed in recent decades that have allowed many of us to even consider the possibility of eating out several times a week.

So we define luxury as the possession of goods and services–electronics equipment, restaurant dining, vacations. But are these things really luxuries in today’s world? A luxury to me is something rare and precious that brings an unusual feeling of comfort or pleasure. I question whether the things that can be bought with a credit card still fit the bill.

Is Television Still a Luxury?

Television was a luxury when television first became available. But today a small-screen color television with the ability to play videos in your home can be purchased for $200. It’s not hard enough to come by to be considered a luxury.

Manufacturers have tried to restore television to luxury status by increasing the size of the screen. I don’t think this works, however. A big-screen experience is better than a small-screen experience. But the difference is not great enough to justify calling the large-screen television a luxury. The jump from no television to a small-screen was far more significant than the jump from small-screen to big-screen.

I don’t think you can buy luxury with spending anymore. Consumer goods have become too plentiful and too cheap to make ownership of them all that special. There have been efforts to add expensive attributes that increase the feeling of specialness for those who own them. But does a hamburger cooked on a $5,000 grill taste that much better? If not, I question whether the increased price delivers genuine luxury.

Money Solutions

What are the true luxuries today, then? It’s those things that are possessed only by a few, those things that offer an unusual degree of happiness and contentment. I can think of several things that fit the bill, but they aren’t things you can attain by spending more. They are things you can only possess by saving more.

Freedom from Anxiety over Job Loss

Freedom from anxiety over job loss is a luxury in today’s world. Job security wasn’t such a big deal in earlier times, when there were millions of middle-class workers who believed that it was unlikely that they would ever lose their jobs. Today, the smartest and hardest-working employee has no such confidence. Job security is rare.

That makes it a luxury–one that can be purchased only by saving enough to become financially independent of a paycheck. Attaining a higher level of job security is the sort of goal at which your personal finance planning efforts should be aimed.

The ability to retrain for new types of employment is another of the new luxuries. The New Economy offers awesome opportunities for workers positioned to take advantage of the next growth surge. But it has become difficult to anticipate where the next growth surge will be taking place. Many of us need to leave the fields we have gained experience in to continue to move forward in our careers. But only those who have put aside substantial amounts of savings early in life feel free to take the risks needed to take full advantage of the new opportunities.

Possession of a savings cushion allowing one to take risks not viable for most others has become a luxury. It’s the savings cushion–not the things that could have been bought with the money instead–that provides a rare comfort in modern times. Aim your personal finance planning efforts at freeing yourself to retrain for more fulfilling and more financially rewarding jobs, and you’ll become one of the world’s most effective savers in no time.

We All Crave More Free Time

Yet another luxury in today’s world is free time. All workers, from those earning minimum wage to those earning six figures, complain of the busy pace of modern life. Earning a high income and buying lots of goods and services offers no special status in this regard. High-earning lawyers and doctors are suffering from the same tensions as all the rest.

Money Answers

Spending money on massages or on housecleaning services can ease the pressure a bit, but cannot eliminate it. But achieving financial independence does eliminate this bane of modern life. The day I retired from my corporate job is the day I entered a world of luxury. I don’t spend any more than before. But I enjoy the rare comfort of having time to think amid all the hustle and bustle. Is the pursuit of the luxury of more free time likely to make your personal finance planning more successful? It is. This sort of approach has worked for hundreds of Passion Savers, and it can work for you too.

When I was in the process of altering my savings goals, I never took any action that I viewed as a sacrifice. It wasn’t necessary. I was able to meet all my goals by taking steps that added to my sense of well-being by making me feel more secure about my future and by bringing the dream of independence closer to reality.

If you think of luxury in this new way, there is no such thing as a savings goal that is too “extreme.” It does not make sense to view steps in the pursuit of more fun, more freedom, and more fulfillment in negative terms. So long as those are the goals of your personal finance plan, you deny yourself nothing in going after them ever more intently.

There’s only one downside to this new way of thinking about personal finance plans. Once you experience the benefits, you can’t imagine going back to the old approach to spending. Luxury is hard to give up once you become accustomed to it.