We’ve talked about it many times here on our blogs, that saving money is extremely important for many things, including giving you financial freedom. What most people who take our advice find is that, once they actually start putting aside a large chunk of change, and building up their wealth, many new opportunities come into their life, and their outlook changes quite drastically
Interestingly, spending money on everything in sight loses its appeal. It’s not that you won’t want to buy anything, but just that accumulating wealth will actually give you the same satisfaction that purchasing things used to give. The fact is, if you measure your wealth by how large your portfolio is, and how much income your assets are generating, it means that you’re much closer to being able to not work anymore, or at least work only when you want to. For many, that reality is much more attractive than, say, the latest piece of tech or a new set of golf clubs.
Having a large amount of money in savings, an IRA, 401(k) or invested in a well diversified portfolio will also give you a taste of financial freedom before you actually become completely free financially. For example, if you have enough savings and investments, you can weather many different kinds of storms, including being able to start a new career if the one you currently have makes you want to jump in front of a bus. Relatively small expenses like having to replace your car or get a new roof on your home won’t be nearly as stressful either.
Being able to invest more money with a financial firm will also make it less costly to grow your assets. For example, if you invest at least the minimum in a specific share class, Vanguard will offer you funds with smaller expense ratios. As your assets continue to expand you’ll find that many financial firms will offer tax preparation software and financial plans at no cost, as well as cheaper trades. Even better, if you work with a financial advisor who gets paid a percentage of assets under their management, there’s a good chance that they’ll offer you lower fees.
Lastly, when you get to the point where retirement is looming and you’re wondering whether or not you should continue working for an extra year or two, you’ll have the financial ability to make that decision with a lot less stress because you’ll know that, even if you walk away from that steady paycheck, you’ll still be able to support yourself and your lifestyle. If you do decide to work longer, the chances are much better that you‘ll be happy at work because you will have made the decision to keep working, not your bank account.