Financial Freedom Isn’t All About Accumulation



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This site and most other personal finance sites spend a disproportionate amount of time talking about accumulation (i.e., saving, investing, and net worth). Accumulation is obviously the linchpin to growing one’s net worth, but at the end of the day you may need to remind yourself that all that accumulation actually has a higher purpose.

The goal of reaching financial freedom is not to accumulate digits on a screen, because the reality is that you can’t take it with you. Life here and now, lived well according to your definition of “well,” is what any of us should focus on. The goal of financial freedom is to build enough wealth to fund the lifestyle you want to live, a life built of intentional choices and values that have meaning to you. Yes, financial freedom starts with saving but is ultimately about spending.

Think about the 4% rule to really allow that last sentence to sink in. That rule of thumb states the necessity of accumulating 25X your desired spending level to fund a 30+ year retirement with a high probability of success: “to fund” meaning what you’ll spend during said retirement. It’s all about spending…eventually!

Wealth is just stored up purchasing power. The more you have the more you can spend on the things-people-experiences that are important to you. Wealth is the means to an end, not the end itself.

I personally believe that the pursuit of financial freedom should be a balance of both saving and spending. That is why I created the law of 50/50the law of 50/50 back in 2015. If you adopt this law like the GYFG household has, you will aim to save 50% of your after-tax income and spend the remaining 50% guilt free. It also ensures relative frugality vs. the extreme kind that I’m not a big fan of (but good for you if it works for your family).

I’m also pretty evangelical about focusing on the income side of the equation since the sky’s the limit in terms of how much you can earn. Expenses can only be cut so lowExpenses can only be cut so low: you’ll still need food and shelter, after all. If you pair an increasing income with the law of 50/50, you get a free pass to embrace any sort of lifestyle inflation you may desire – that you can finance with 50% of your take home. And let’s just acknowledge that we are all chemically programmed to want more because of dopamine. This approach recognizes the pull of dopamine and builds its satisfaction into the equation: want more? Earn more!

I know lifestyle inflation tends to be a big no-no across most personal finance circles, but seriously, does anyone really want to live like a college student forever? Some of us (guilty as charged) want to enjoy the finer things in life.

A high income paired with a high savings rate (50% is a very high savings rate) is the surest path to a high net worth. And if you are a complete nut like me (not recommended) you may eventually reach a level of earning that outpaces your desire to spend, which increases your savings rate to 60% – 70% – 80%+.

Agree or not, financial freedom is ultimately about spending. It is of course a delicate balancing act, so don’t get too carried away by the allure of MORE caused by the dopamine that is driving that desire in all of us. Just understand that a physical or digital store room somewhere filled with tall stacks of cold hard cash is not the end in and of itself: the lifestyle those stacks can buy IS.

– Gen Y Finance Guy

Gen Y Finance Guy

Hey, I’m Dom - the man behind the cartoon. You’ll notice that I sign off as "Gen Y Finance Guy" on all my posts, due to the fact that I write this blog anonymously (at least for now). I like to think of myself as the Chief Freedom Officer here of my little corner of the internet. In the real world, I’m a former 30-something C-Suite executive turned entrepreneur turned capital allocator. I am trying to humanize finance by sharing my own journey to Financial Freedom. I believe in total honesty and transparency. That is why before I ever started blogging, I decided that I would share all of my own financial stats. I do this not to brag, but instead to inspire motivate, and also to hold myself accountable. My goal is to be a beacon of hope, motivation, and inspiration, for you, the reader, by living life by example and sharing it all here on the blog. My sincere hope is that you will be able to learn from me - both from my successes and my failures! Read More



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5 Responses

  1. Good post. My thinking has been trending a lot more in this direction recently (particularly after the world shut down during the pandemic).

    I’ve recently been listening to Ramit Sethi’s podcast (which is great on this topic). I’ve also heard of a book ‘Die With Zero’ that is also meant to touch on this.

    Some people may say – ‘you’re rich so of course you’d say money is to spend’. I think to that response I’d say that you meet that point with your 50/50 rule and being very intentional about growing your income. However, even if all your income / wealth growth plans had gone nowhere (and your income had flatlined way back) I think you were still mindful about what was important to you – e.g. family, wanting to be your own boss and start your own business.

    The only misinterpretation of the post might be someone becoming obsessed with earning more to fund a lavish lifestyle that they can’t afford on their current earnings. That could happen if they haven’t been mindful of their priorities and life goals.

    Happy spending ????


    1. Yes, the GYFG household as always made spending decisions in the context of our earnings, to ensure we spent less than we earn. That said, there are things we spend money on now that we would not at lower levels of income. I think you hit the nail on the head when you talk about being very intentional with both growing income and mindful of spending in the context of earning.

  2. So well said! We did not live on a monastic budget. We kept the big expenses low, housing, food and cars, but spent more on the things we valued. Since my income went up on average by 9% every year of my career we were able to live on more and save more every year. I think we followed your plan pretty close even if we were a few decades ahead of you on the time line. I definitely think it’s the optimum plan for most people if they are able to increase their income consistently.

  3. Spending is definitely my weakest area… I’m a pretty frugal guy (grew up poor) and being in the FIRE community I got a lot of positive feedback for an 80% savings rate on my journey to FI. Since retiring (well, semi retiring) last year, I am trying to be more free with my spending but its a works in progress. I think aiming for a lower savings rate around the 50% mark like you suggest is probably a better way to do things than rushing to FI as soon as possible

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