Financial guru Dave Ramsey likes to make the statement that you should live like no one else so that later you can live like no one else. This means that you should cut down debt and save so that you can build wealth and then do what you want. People who are even more radical like the blogger known as Mr. Money Mustache tend to argue that you should be even more radical in cutting expenses and economizing your life.
This cutting down on expenses allows you to gain financial independence even more quickly. Once you’ve reached a level where your passive income can pay for your expenses, you’ve reached the point where you can retire early. Combined, this concept is known as FIRE (financially independent, retired early).
Once you reach FIRE status, you totally own your time. There’s no need to work solely for the purpose of bringing in money for expenses. You can still work if you find what you’re doing particularly rewarding, but it’s not necessary. However, few people reach this status, and sometimes the reason is a spouse who’s not on board with the idea of saving money.
Many Americans like to keep up with the Joneses. They want what they see other people have, be it a nice new car or a 3,000 square foot McMansion. Unfortunately these things cost money, and they usually require debt to purchase. Debt takes money that could otherwise go toward building the wealth that can lead to achieving FIRE status. What can you do to get a spouse who is a spendthrift on board with saving money?
This is where you can bring in the idea of the future self to your spouse. Unless you die at an early age, you are going to get old. Every dollar you spend today is a dollar that’s not going to be available for the older you. Every dollar that you save today is a dollar that you can invest. Those invested dollars can grow over time to be worth more than a dollar as compounding interest starts to take effect, and your future self will be thankful to the you of today for making this choice.
Getting your spouse to read some of the leading blogs and books that deal with financial independence can show him or her how the math for FIRE works and how you can own your own time. If they are open to cutting down on materialistic desires and see the freedom that they can obtain, they will be more likely to make the move toward gaining financial independence. When both spouses are on board, it makes FIRE much more likely.
David Milberg is an experienced credit analyst in NYC. He is a long-time owner of Milberg Factors, a factoring and finance company with locations in New York, California, and North Carolina.