Basics
If you've been following this series you know I talked about appreciating and depreciating assets in episode 3. I made the statement that, if ALL YOU CARE ABOUT, is to accumulate more money you should only spend money on appreciating assets. I also immediately clarified that this is impossible because we will have to spend some money on depreciating assets like clothes or food. Today I want to talk about depreciating assets that are still smart buys.
Investment
When talking about investment most people see real estate or stocks, maybe even buying a restaurant or skateboard shop. There are other investments to consider though, and most of these investments are depreciating assets or simply expenses. According to the above rule (don't spend money on depreciating assets) you might think that you should NEVER spend money on them, yet here is the exception:
Don't spend money on depreciating assets, except if they are considered investments.
Pain
The whole point of an investment is to have some pain now, for relief in the future. It sounds negative I know, think about the gym: You have to sweat in order for that fat to disappear, or the muscles to grow. No pain no gain. Same goes for your financial freedom. You will eventually have to invest your money in order to make it grow. Now I want you to start thinking about depreciating assets like a phone, computer, gym membership, more expensive yet healthy food, representable clothe or hair-do etc, etc. Some of these are just because you find them fun, some of these can actually be seen as an investment in yourself or your company and, though the asset will lose value, it will first of all increase the value of something else, most likely: you! Before it actually runs out of value completely.
Perspective
What may be an unnecessary cost to someone could be a fantastic investment for you. If you're a photographer the next best camera may be exactly what you need, if you work as a postman, you probably don't need that fancy new phone. So think about where you're going to spend your precious money, and what will allow you to have the biggest Return on Investment.
Fun
Oops, I said it: Fun! The biggest issue with wanting to become financially free is that we also want to live our lives 'the fun way'. Whether it's travelling, going out for dinner in fancy places or driving a Lamborghini. We always have to choose between doing the 'smart' thing and the 'fun' thing. And this is the crux of this article:
Everybody knows that doing more fun stuff will make you poorer, doing the smart thing will make you life boring. Yet what if we could do the smart thing whilst enriching our lives?
Challenge
There are certain expenses that you can make that will enrich your life immensely, and on their own they may appear to just be a 'fun' expense. However if we look a little deeper it is possible to find investment value. I therefore want to challenge you to start looking for ways to spend your money on things or activities that you really enjoy, and yet, that also contribute to your financial freedom. Maybe in the long run, yet they have to bring a positive ROI.
This way you can start doing more enjoyable stuff in life whilst actually building towards financial freedom, and not having to miss out on the great things life has to offer!
Give me some examples of what you can spend money on that seems to just be a 'fun expense' whereas in reality it is contributing to your financial freedom.
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I think it is just all about balance. Have fun now in a way that you can have even more fun later! Of course this is subjective so we just need to work out what works for us.
Yes@ngm2219 I agree! it's important to have fun throughout your whole life in my opinion. Yet keep in mind life ain't over after you're30, or40 or 50 for that matter ;)
And life is short at the same time, this is a beautiful piece @markdeheide, need to take my time to digest and work something out for me.
@micscrypt yes absolutely we cannot just focus on the future, we also have to live in the now! :)
@markdeheide Very true. I think this is a fatal flaw for many young people, especially those around my age but it holds true for most ages.
What is your current age @ngm2219?
It's on my profile, 18.
Your insight is likely being useful in my future investment. Thanks for sharing @markdeheide :)
Thanks @aiyeecanoy glad to hear I've been able to help you out a bit!