June 3, 2024

The Disrupter’s Guide to Financial Freedom

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The Tale of Two Boats: A Lesson in Financial Disruption

Recently, while cruising the waters of Naples, I found myself amused by the creative names people bestow upon their boats. As we navigated a channel dotted with docked vessels, two names caught my eye and sparked a thought. On one side, a boat named “It’s Enough” bobbed peacefully. Directly across, its twin in size but not in spirit bore the name “Never Enough.” This sight struck me, and I wrote about it last year. I argued that we should be striving for a balance between pursuit and contentment, and it’s the perfect metaphor for the duality of financial mindsets I’ve been pondering lately.

Most of us aren’t handed wealth; we’re constantly balancing our present needs with future security. We must provide shelter and food for ourselves or our families at the basic level of necessity and figure out how to set aside funds for leisure and fun while contemplating the mystery of our future and what we will need to live and thrive on post-career. This dance of numbers becomes even more poignant as retirement approaches.

Friends from out of state, teetering on the brink of their post-career lives, recently asked me, “How do you know if you have enough for the future?” I’m no financial expert—I can’t crunch those numbers. But I do know a thing or two about spending money in ways that echo my values.

Defining Financial Success: A Disrupter’s View

What does financial success look like? For a disrupter, it’s less about ticking off conventional achievements—like snapping up the flashiest car or the grandest villa—and more about aligning financial choices with personal values and long-term aspirations.

In our conversations about finances, it’s crucial to understand the profound difference between being rich and being wealthy. Being rich might mean flaunting the latest luxury car or flashing a high-end watch, but it’s often just a snapshot of current spending power. On the other hand, wealth isn’t about what you can buy today—it’s about sustaining your quality of life long into the future without worrying about every next paycheck. Wealth means building assets that maintain their value and provide the freedom to make choices that enrich your life. It’s about creating a buffer that allows you to weather financial storms and make decisions based on what’s best for you and your loved ones, not just what’s necessary. That’s why I advocate focusing on becoming wealthy, not just rich—it’s about depth, not just the surface sparkle.

True financial success is less about the balance in your bank account and more about how those numbers help you live out your values and achieve your long-term dreams. It’s about aligning your financial decisions with what’s genuinely essential to you—whether securing a future for your children, having the freedom to explore the world, or creating a sanctuary at home open to friends and family. When your money starts to serve immediate needs and furthers your deeper aspirations, you’re not just managing finances; you’re crafting a lifestyle.

This approach transforms every financial choice from a mundane transaction into a step towards a more fulfilling life. For me, that’s the essence of financial success—it’s personal, purposeful, and profoundly liberating.

The Role of Optimism in Financial Planning

We have discussed how being an optimist drives personal and professional performance and success. Optimistic planning goes beyond mere daydreaming; it involves actively shaping your financial future through decisions steeped in individual values. It’s about believing in the power to craft your desired future with strategic financial steps. Optimism, when applied to money, means the deep understanding that you have the power to build and control your wealth and your future.

Even if you’re not raking in the big bucks, saving and investing is still within your grasp, a truth well-highlighted in “The Psychology of Money.” It’s about making smarter choices with the money you do have, focusing on consistency over flash. Start small—really small if you have to. It’s not about the amount; it’s about establishing the habit. Whether setting aside a portion of a paycheck, cutting unnecessary expenses, or investing, the goal is to make your money work for you over time. Remember, compounding doesn’t discriminate by income level; it rewards persistence and time.

Personal Values and Expenditure

How much money do you need now and for the future? Before you answer that question, you must first determine what you want in life. What do you value most? I have some close friends who are passionate about travel. Their retirement budget meticulously includes costs for international escapades, aligning their finances with their joy of exploration. While I love a good vacation, I don’t yearn for extended travel. I cherish short bursts of adventure and deeply value my home as a hub for warmth and hospitality. My financial decisions reflect this—choosing home improvements over long vacations.

Each of us has unique pleasures that drive our spending. Whether it’s a dream kitchen, a sleek car, or sitting on the dock fishing, proper financial planning for a disrupter ensures our expenditures bring us closer to the life we envision. When you daydream about the future, use that vision to keep you in alignment and save and invest accordingly. I wrote about discipline in this post, and it also applies to your finances.

Discipline (saving and investing money) reveals your commitment to your dreams—especially on days you don’t want to. The future you depends on the current you to plan ahead so you can enjoy every phase of your life.

Wealth and Time

Morgan Housel eloquently said, “Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness… Money’s greatest intrinsic value—and this can’t be overstated—is its ability to give you control over your time.” This insight resonates deeply with disrupters who see time and freedom as the ultimate wealth.

In a world where time feels increasingly scarce, having the ability to decide how, where, and with whom you spend your time is a true mark of wealth. In this sense, money is not just a medium for purchasing things but a critical tool for buying freedom. The less you worry about trading your hours for income, the more you can focus on the activities and relationships that genuinely bring joy and fulfillment. A profoundly powerful thing is the freedom to choose how to make meaningful contributions, explore passions, and nurture relationships. It’s a reminder that while we can always make more money, we can’t make more time.

Managing our finances wisely isn’t just about security or comfort—it’s about optimizing our life’s most finite resource: our time.

Cultural Perceptions of Wealth

Our culture often mistakenly equates visible wealth with success. While some may think an expensive car or designer watch commands respect, true admiration comes from how authentically and integrally we live our lives.

Too often, we fall into the trap of building our lives around the image we think will impress others. Whether it’s driving the latest car, wearing brand-name clothing, or living in a prestigious neighborhood, we’re tempted to invest in appearances. But here’s the stark truth: most people are too preoccupied with their own lives to care about the superficial aspects of ours. No one cares. This obsession with image drains our wallets and diverts our energy from the things that genuinely matter. It holds us back from pursuing more meaningful goals that align with our personal values and aspirations.

When we let go of this need for external validation and focus instead on what brings us personal satisfaction and growth, we free ourselves to invest in the things that are meaningful to us. In doing so, we find that our most fulfilling achievements rarely demand a showcase.

Practical Tips

Here are some tips to help you align your financial choices with your personal values and aspirations using the disrupter’s approach to financial freedom:

1. Define Your Values and Goals: Begin by clearly defining what matters most to you—whether it’s family, freedom, security, or creativity. Write these down and use them as a compass for your financial decisions. Ask yourself how each financial choice brings you closer to living these values.

2. Create a Values-Based Budget: Craft a budget that prioritizes spending on what genuinely brings you joy and fulfillment. Allocate funds not just based on necessities but on what enriches your life, such as education, travel, or charity. This makes it easier to cut expenses that don’t align with your core values.

3. Automate Savings and Investments: Set up automatic transfers to savings accounts or investment portfolios to ensure you consistently contribute to your future, no matter your current income. This helps build wealth gradually and ensures your spending aligns with your long-term aspirations.

4. Invest in Assets, Not Liabilities: Focus on acquiring assets that appreciate or generate income over time, such as stocks, bonds, real estate, or a personal business. Avoid excessive spending on depreciating assets like cars and gadgets unless they serve a significant purpose in fulfilling your life goals.

5. Embrace Minimalism in Spending: Adopt a minimalist approach to personal possessions. This doesn’t mean living without luxury, but rather choosing to spend on items that serve long-term purposes or enhance your life quality. This helps reduce wasteful spending and aligns your financial habits with sustainability and intentionality.

6. Educate Yourself Financially: Invest time in learning about personal finance, investment strategies, and economic principles. Knowledge is power, and understanding the financial landscape can help you make more informed decisions that align with your goals.

7. Seek Alternative Income Streams: Look for ways to diversify your income, such as starting a side business, freelancing, or investing in income-generating assets. This can help reduce dependence on a single source of income and provide financial flexibility to pursue your values.

8. Review and Adjust Regularly: Schedule regular reviews of your financial plan to ensure it remains aligned with your evolving values and goals. Life changes, and so might your definitions of success and fulfillment, necessitating adjustments in your financial strategy.

9. Practice Mindful Spending: Before making a purchase, ask yourself if it aligns with your values and contributes to your long-term goals. This practice helps cultivate discipline and prevents impulsive buying that can derail financial plans.

Conclusion: Redefining Wealth

Financial success for a disrupter isn’t measured by the accumulation of assets but by how well our finances enable the life we truly want to lead. It’s about thinking critically about our financial goals and adjusting our strategies to meet them and create our desired future.

Embrace being a financial disrupter. Challenge the norms, align your resources with your deepest values, and use your financial decisions as powerful tools to sculpt the life you dream of. Remember, every dollar you save and every investment you make isn’t just about securing your future; it’s a declaration of your dreams and an investment in your most authentic self.

Don’t just aim for financial independence but strive for financial liberation, where our wealth is measured not by the numbers in our accounts but by the breadth and depth of our lived experiences.

Stand firm in the conviction that the true value of your wealth is the joy and freedom it brings into your life and the lives of those you cherish.

Onward and upward, my fellow disrupters.

 

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