Can you spare some change, mister? Just a dollar?
I have been asked that by beggars in my city probably more times than I could count. I don't normally explain to them that there is no such thing as spare change, at least not if you take your personal finances seriously.
Similarly, the notion of extra money is a problematic one -- it was one of the most important bad beliefs about money that I had to conquer before merging onto the fast lane of growing my emergency fund and my overall wealth.
Consider:
- At least in my case, and probably in yours as well, more than 90% of my income comes from my day job. I am trading valuable hours of my life, hours I will never get back, in addition to my mental and physical peak energy -- when I go home at night I am often exhausted. So when I get a paycheck, I feel as if I deserve every dollar of it.
- Even if I have some money left over after handling rent and monthly expenses, I no longer consider this "free money" or "extra money" that can be used to go shopping, get a massage, or take a weekend vacation. I work too hard for my money. "Extra" money instead now goes directly to my online savings account at ING, or to one of my brokerage accounts. Since I work hard for my money, I want it to work hard for me.
- Of course, balance is still key. I find the Buddhist principle of the "middle way" to be useful in personal finance. Although I firmly cast aside the idea of spare change or extra money, it doesn't mean I never indulge in shopping or vacations. But I don't consider this burning free money. Instead, it is wisely purchasing something I want with my money. There's a difference. If you win the lottery, then maybe you can consider that free money and burn it up however you want. But aside from that, don't kid yourself, you've worked hard for your cash.
- I also like what my father told me recently... he's aware of my 24/7 quest for greater financial freedom and my goal of hitting $1,000,000 in net worth by age 29. "You don't have to earn every nickel out there," he told me. In other words, it's fine to seek new income streams and invest wisely, but I don't need to grab every penny or nickel on Earth. Again, the key is balance. If you respect the value of a buck, and you respect the value of your time, this will naturally lead to a more frugal lifestyle. But you don't have to be compulsively frugal, and you don't have to completely renounce the finer things in life.
What do you think? Tell me in the comments box below.
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