So I just introduced the idea of being financially independent to you. That is, the concept of having enough money to do (mostly) whatever you want. That includes playing video games all day. This means if you want to do that, you need to retire from your 9-5 job. The next question is: How do I get there?
I’m glad you asked! Let’s get started.
Step One: Find out how much you are spending and where.
We can’t start without a baseline. In fact if you look up a lot of other websites about finances, they will tell you to start finding out how much you are spending and what you are spending on. As soon as you have a situational awareness of your financial situation we can start on some of the most troublesome problems.
There are several ways of doing it, some of which include programs, applications and even back to old school spreadsheets.
I personally use Mint because it’s free and I can carry it everywhere on my phone app. I also can’t be asked to sit down and manually break it down. (I don’t exactly have full control but the amount of information it spits out at me is rather enough for I wanted.)
This might be a big shock to you about finding out how much you spent. Brace for it.
Step Two: Target Problem Spending Areas
Were you surprised that you were spending over $1000 going out to eat? Yeah, that was me when I first started doing this as well. Don’t feel bad. So now we find all the problem spending habits we have and tackle it with a plan. Let’s take going out to eat as an example.
Going out to eat was one of my biggest areas. I’ve resolved to start making my own food at home, even though it was more time-consuming.
So here’s the thing. You must look objectively at how much you are spending in each area and then resolve to make a plan. From then on you have to figure out that plan and execute it. Don’t look at it with “Oh man, I think I might need this!” but rather “Do I really need it now?”. Using your car to get to work can fall into those grey areas, but really, look at it. If you have to, make a budget. Mint is actually pretty good in this place.
Unfortunately splurging on our video games fall into this area. But don’t worry, I’m here to help you make better decisions.
Step Three: Where do I put this extra money now?
So you now find that you have extra money. Congratulations!
But wait. Don’t spend it on that game you wanted just yet!
Here’s the deal. We’re going to get ahead of the competition by investing it. Your money should be working for you. But you also need to find where you need to put this money. You can’t just dump this money in a high-savings account anymore. The return on that is abysmal!
Find out what tax free savings/investments accounts are available in your country and put it in there. If you have a retirement savings plan available, put it in there! If you don’t have one, start one! Start contributing early. The earlier you start, the better! In the US, this is called a 401k. However, I’m in Canada so this is called a Tax-Free Savings Account. (I only have basic knowledge so there’s much more out there to look into!) It doesn’t hurt to have a both a Retirement Savings Plan and a Tax-Free Savings Account. Just be aware about the limitations or the taxes will come and bite you in the back.
However, despite all of this, my dad also parted me with this good advice: “Life is too short. Don’t be afraid to spend it once in a while to increase your happiness.”
So here’s what I do, and I think it’s a good plan so I’ll share it with you. I put in contributions from my paycheck into my investments. I also give myself reminders that by the end of the month I will put in half of my paycheck into my investments. Anything I have left over will be for my fun, entertainment and other small things that suddenly come up. I’m proud to say that I still buy a couple of games (but not monthly! $60-$70 a month is still too much!) every year and still come up positive in savings.
Step Four: Work at Getting Good and Watch your Money Grow
There’s usually more things aside from just this. There’s stuff like optimizing your cash flow, legally getting around the system, but usually that needs some time for research and actually getting to it. Your money in that account won’t sit around and do nothing. Those bucks are going forward and working their butts off for you. You’ll be able to see it grow especially if you have Mint installed.
So if you’re like me, who’s still working a good time of the day, this is pretty much all there is there to it. I also spend more time trying to get my stuff together to get good at my game. I spend a good amount of time getting good at a game I’m focusing on but I also work on working on my content. This is all a patience game. Your money works for you while you work on your skills so you are armed and prepared for when you decide to leave your job.
There’s a huge sense of accomplishment and progress for becoming good at what you do. This to me, is my secret to happiness. I have a ton of ongoing projects going on that I am working towards finishing becoming super good at. By getting good at whatever you choose to do, your next path is chosen. For me, that’s video games. For you, well, that’s canvas for you to fill.
So What now?
These are just the basics! There’s so much more in this realm that we are talking about and covering. It’s like trying to learn how to aim in Counter-Strike. Can’t get good unless you have a good understanding of the fundamentals.
So what were your biggest spending areas?