[Editor's Note: The following article from WCI Network partner Passive Income, MD discusses loosening the purse strings a bit. I think it is important to become good at all aspects of your financial life–including earning, saving, investing, giving, AND spending. Enjoy the post.]
Financial freedom from medicine is a beautiful thing. Once you’re in a position where all of your expenses are covered by other sources of income, you get to decide whether you continue to work in a clinical setting or not.
If you’re like me though, that’s not quite good enough. That was the first milestone, certainly, but when it comes down to it, I don’t want to just not work. I want to live a more abundant life.
Of course, what it means to live a more abundant life is up to the individual. But to me, it means having the resources to live how I want and to be able to give how I want.
Freedom From Multiple Sources of Income
If you’ve been reading this blog, you probably know that I’ve been fortunate enough to have multiple sources of income. As those streams of income have increased, people have asked me how I’m spending that money.
I answer by saying that after my basic obligations are met (housing, education, food, etc.), I donate to causes important to our family, and I also put money toward more cash-flowing investments. My goal is to continue to grow the golden goose that lays ever-increasing passive income eggs every month. When you live completely off that passive income and never touch your initial principal, you’re living the dream.
Well, besides the things mentioned above, you’ve probably heard me and many others talk about the idea of spending money on experiences and not things. This is good advice because it puts the focus on living well rather than simply collecting stuff. But I’ve never really talked about how I do that and why.
So let’s start with the why.
Experiences Create Stronger Connections
As humans, a basic need is love/connection with other people. Experiences—whether through travel and meeting new people or by simply spending time with your family—help foster those connections and create lasting bonds.
Experiences Create More Sustained Happiness
Experiences create happiness–both during the experience, the anticipation before it, and for years to follow. Not only do those experiences help you look at life differently, but they create memories that will last forever.
Think of an awesome experience you shared with someone, years ago, that still brings a smile to your face. For me, certain vacations and certain cities conjure up such strong memories of joyful times spent with family and friends, they can’t help but bring up my mood in just about any situation.
Experiences Shape Our Lives
How many of you have gone on a trip or to an event and left feeling changed? Experiences can do this because those moments truly can shape us. I remember trips that gave me a new perspective on life. They helped me be more grateful for what I have, and they’ve helped me grow.
Experiences impact us in ways that objects and things never could.
So, here are some of the problems with “Things”:
We Adapt to Things Really Quickly
How long does the newness factor last for you these days? If you’re like me, it doesn’t last very long. Innovation and technology move so quickly that what we’re impressed with for a moment quickly becomes the norm. I remember being so blown away by my first iPod. Now whenever I see an old one sitting around, it looks like a piece of junk to me.
Keeping Up With the Joneses Is Real
Things are great until you see something better. I remember how excited I was to get my first new car as an attending: a Lexus ES 350h. Some call it a Toyota Camry with leather, but I remember being so excited about it. However, every time I pulled into the doctor’s parking lot between a Porsche Panamera and a Tesla, I couldn’t help but feel like my car isn’t all that great at all.
Happiness Fades Quickly with Things
We all assume that something will make us happy as long as we have that item. The truth is that after the big surge, it isn’t long before we start thinking about when to replace that with something better.
There’s all this talk these days about “sparking joy” thanks to Marie Kondo. Look at the items you have around you in your house. How many actually spark the same joy as when you bought it? I’ll bet there are so many things sitting in the kitchen drawer that you once thought were the best things in the world.
So, I Spend Money on Experiences
So, over time, my spending patterns have changed. I used to buy the nicest new technology I could afford, like the newest phone, tv, or laptop. On the flip side, I used to skimp on experiences and now I’ve seen it all evolve. I now have become more free with spending more for a better experience.
For example, I’m focusing on traveling as much as I can with my family. We used to take one big trip a year, and now my goal is to do it 3-4 times a year. It’s not always about staying at the nicest hotels but about maximizing the experience.
I’ll spend money to see my favorite sports teams win championships. I’ll freely pay to knock items off the bucket list. I also won’t hesitate to pay to see shows and concerts that my wife and I are interested in.
And the thing I spend a good deal of money on is eating out. Sure my wife and I enjoy a home-cooked meal, but we really love the experience of trying out different restaurants. We’re parents and so our “going out” on weekends now consists of a nice meal with a few friends. Great conversations happen over food… and wine.
Well, I Do Buy Some Things
That isn’t to say I don’t spend money on things at all. You just have to know what brings you sustained happiness.
I always dreamed of buying a Porsche when I became an attending. However, I’ve come to realize that I actually don’t enjoy driving all that much. I think years of sitting in hours of traffic have killed any joy of driving for me. If I could, I’d Uber everywhere. I’d much rather sell my car and spend all that money on really nice vacations. Unfortunately with kids, practically you need a car.
However, some people truly get pleasure from driving and, for them, that’s a worthwhile experience. So when I see people buy nice cars, I never judge them. Maybe each drive is an amazing experience and that’s what brings them happiness.
So the things I do buy are usually experience-oriented, like books, courses, or an iPad to read and work on (while I travel). I no longer shoot for the newest and best, but I focus on value and function.
I’m always trying to use money to maximize my life. That includes buying my time, but it also includes buying experiences. In fact, I’ve become so hungry for those experiences that I want to share as many of them as possible with friends and family.
But in order to actually experience these things, you need both money and time. Passive income allows for both, and I hope that it does just that for you.
What are some experiences you won’t hesitate to spend money on? Comment below!