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A Redditor's post in the Chubby FIRE subreddit has gained a lot of attention since it has a deep message about building wealth. The Redditor explains that they have $900,000 in the bank and earn $100,000/yr from their career.
Even though they are in a solid financial situation, the 44-year-old has always been hesitant to spend on themselves or their family. Recently, though, they've decided to change their approach and are actively trying to be less stingy with their money.
Is it wise for the Redditor to embrace a more lavish spending approach, or is it better to stick to a budget-conscious way of living? I'll express my views on the matter, but consulting a financial advisor is always a smart choice if possible.
Main Highlights
Building a nest egg requires prudent money decisions and staying focused on long-term goals.
However, it’s perfectly fine to spend some money on yourself and others to create unforgettable memories.
Retiring early is possible, and may be easier than you think. . (Sponsor)
You Can't Bring Your Wealth Along
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A $10 million portfolio may lose its significance when you reach the age of 100. At that stage in life, individuals often find they have limited time to utilize their wealth, experience life, and engage in activities that are more commonly enjoyed by those in their twenties and thirties.
It's good to spend money on yourself and others from time to time, but it's good to not ditch frugality. There's a difference between frugality and being cheap. Being frugal means you stay sharp with minimizing expenses but aren't afraid to spend extra money when it makes sense. A trip to Europe costs extra money, but financially secure people who have always dreamed of going to Europe shouldn't put it off forever.
Being frugal involves finding methods to minimize costs, often sacrificing essential needs and personal joy in the process. Embracing cheapness is akin to fantasizing about visiting London while having the means to do so, yet opting for a trip to London, Ohio, instead.
Excessive Spending Can Lead to Financial Strain Down the Line
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It's perfectly fine to treat yourself occasionally, but it's important not to overdo it. The Reddit user appears to understand this balance well, as they don't indulge in extravagant purchases such as a boat or a swimming pool.
Keeping your finances in check allows you to have some extra funds available when needed. For example, a Reddit user is looking to assist their mother with a down payment for a new vehicle while also planning to take their daughter and her friends out for a movie and a fun time at Dave and Busters. Despite these generous intentions, the Redditor continues to drive a 2013 model car, demonstrating their commitment to financial responsibility.
The Reddit user is also leaving their investments untouched, allowing compound returns to work in their favor. This approach strikes a balance between enjoying some discretionary spending and maintaining their wealth.
You Don't Require $10 Million to Find Happiness
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Although having $10 million would be beneficial, a substantial net worth isn't a prerequisite for happiness. In reality, tying your happiness to a certain financial milestone can lead to disappointment once you achieve it. Focusing excessively on what others possess can diminish your own joy and might discourage you from enjoying your current resources.
Keeping all your money to yourself isn't the wisest strategy. Investing some of your funds can lead to unforgettable experiences. As you age, the memories you create will likely hold more value than your financial assets.
Investing $5,000 in a vacation, Super Bowl tickets, or another costly indulgence can hinder your financial objectives. Yet, this is precisely why you put in so much effort. Many individuals strive to achieve financial freedom and expand their options. A lucrative career coupled with consistent investments can leave you with extra funds for personal enjoyment. It’s not necessary to allocate every cent you earn towards investments or essential expenses.