What is “Savoring” and How Can it Help You Build Wealth?
I can’t remember the exact age that I noticed how much money influenced how people lived. I do, however, remember my best friend from third grade. Hannah and I were quite different. She came from a wealthy family that took multiple exotic vacations a year. I’m talking African safaris and Machu Picchu for weeks at a time. My family rarely traveled for fun. Hannah’s mother prepared her fancy school lunches with snacks that other students envied. I ate school lunch. Hannah had Lisa Frank school supplies, the best quality crayons and pencils and the perfect wardrobe. I had practical supplies. We were both smart, loved and well cared for. The main difference between the two of us was how much money our families had.
That’s where I started thinking about how I would build my empire when I became an adult. I vowed to have “the finer things” in life. In hindsight, I’m not sure what I pictured. Probably a mansion with maids. These days, I would absolutely abhor a mansion with maids. After law school didn’t work out , I began my career in finance. I knew that finance was the perfect way to get wealthy. It was around that time that I stumbled across the F.I.R.E movement. F.I.R.E stands for financial independence, retire early. Even though all the bloggers talking about it were mainly white or male, I was hooked. The premise was simple: invest the bulk of your income now, build a large portfolio and retire early by living off the interest of the investments. It sounded like the perfect way to avoid a life of living paycheck to paycheck.
It worked out well. It turns out, I have a passion for finance; specifically, helping people use their income to build the life of their dreams. However, in 2020 with the pandemic changing life as we all knew it- I decided to stop pursing the traditional version of F.I.R.E and instead decided on Coast F.I.RE. Coast F.I.R.E differs from traditional F.I.R.E in the sense that F.I.R.E is saving enough money so that you can live on the interest of your investments alone. Coast F.I.RE is saving enough so that you never have to invest again, and you can still retire at the traditional retirement age. It is still financial independence, but in a different way. In my case, it was a much quicker version of financial freedom. When you no longer have to save and can allow your investments to continue to grow, you gain more flexibility in your day-to-day financial life. I transitioned to Coast F.I.R.E to allow myself more time to enjoy my earnings now. Besides, one of the most valuable lessons I learned along my journey was that “the finer things” aren’t always material. Here are the top 5 choices I made to achieve Coast FIRE:
This is part of the discussion that gets difficult. I do think it is possible to achieve financial independence without making large sums of money. However, it will take much longer. The truth is most people who build up large portfolios didn’t do it through budgeting alone. You need a strong income to be able to put away 50-80% of it and still live decently. I will add, though, that I never made over $100,000.
For some, purchasing a home is out the question due to the high costs. But I bought my home in 2015 in a low cost of living area (at the time). This was a significant portion of being able to aggressively invest because I didn’t have to worry about rents increasing. I also had the flexibility to rent out rooms in my house for extra income if I needed it. Luckily, I never had to. With the growth of the real estate market over that time frame, I was able to gain enough equity to refinance my house and pay off all debt other than my mortgage. This gave me even more room to aggressively save. Without student loan or car payments, I was able to save even more.
Although I don’t believe that you can budget yourself to wealth- I know that budgeting and keeping expenses low is a key ingredient. The fact of the matter is- the more money you need monthly, the less you can save. Having high car payments, expensive rent and uncontrolled spending habits all prohibit aggressive saving. Some people see that as too restrictive, but it worked out very well for me. It forced me to go deeper and figure out who I was without money. I found ways to entertain myself and travel without breaking the bank. As I reflect, one of the best parts about pursuing F.I.R.E was realizing that it’s not about money, but freedom and flexibility. Trust me, if you want freedom and flexibility- keep your expenses low.
This is a critical ingredient as well. If you simply save your money, you will not be able to achieve financial independence. Each year, inflation rises and the money we have saved is worth less. This doesn’t mean you need to become a financial planner or licensed stockbroker like I did. It simply means you should get a baseline understanding of investing, keep your fees low and be consistent.
The truth is those fancy school lunches and upgraded school supplies weren’t that big of a deal. As a child, I noticed the differences that money created in the way people lived, and I thought that people having more than me meant they were worth more. I spent a decent amount of time trying to make up for that. What I learned is that I was never less than anyone based on what I didn’t have. If I am being perfectly honest, F.I.R.E taught me to truly enjoy the “finer things in life”. To me, they don’t include fancy lunches or name brand school supplies. At the core, F.I.R.E is about freedom. Freedom to spend time with my amazing friends and family. Freedom to pursue work that completes me rather than work that is needed to pay the bills. Freedom to travel (pre-Covid) without restriction. Freedom to walk away from anything that doesn’t serve me. Freedom to change course without worry that I can’t afford to make that move. Freedom to be me. That’s FIRE!
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*Anna Paul, CFP® is an Investment Adviser and Certified Financial Planner. She currently serves as money coach for Snowball Wealth providing personalized financial guidance in areas such as budgeting, building and maintaining credit, estate planning, debt management, and money mindset. Most importantly, she believes in coaching clients to adapt their mindset to their goals. She specializes in helping individuals identify financial goals and take actionable steps towards achieving them. Anna volunteers with Carolina Youth Coalition as a mentor and serves on the Volunteer Income Tax Association. When she isn’t giving financial education presentations, she can be found hiking, couponing, or trying new recipes. *