When I first started out in my financial independence journey, I felt miserable and powerless. Every week I was working 40+ hours a week only to have it all taken away to pay bills. Working hard for somebody else just so I could survive, eat, and live. This cannot be my life forever! I had to budget for fun money.
The only reason I kept on going for 2 whole years without quitting or failing was because of that decision. That was the saving grace that stopped me from throwing in the towel.
You may be asking, “what is fun money?” Fun money is money that you are allowed to spend on anything that you want without feeling guilty.
It ranges from collectible items that adds zero value to your financial life to the peter pan hat that you bought in a Renaissance fair that’s collecting dust in your closet. (Not that I did such a thing…). To everything in between.
It’s a way for you to stay sane throughout the process. Especially when your savings rate is 50% or more. Before I started going through the financial independence journey, I read countless personal finance blogs.
Every single one of those blogs touted “I saved 50%+ of my income! 50%? That’s nothing, I saved 60%+!”. After exposing myself to such language for years, it was easy to be swayed that those goals aren’t just achievable, but easy as well.
I couldn’t be more wrong.
Fun Money Keeps You Sane
It was frustrating. My money was taking care of my needs like food, water, and shelter but it wasn’t taking care of my wants like travel, new computers, or games.
I watched every week as my money went to utility companies, landlord, and grocery stores. There had to be a better way.
Therefore, I implemented a measly fun budget of $500 per month that I could spend on whatever I wanted. Guilt was not an option. Sure, I did not purchase glamorous things like the new Tesla Model 3, but I bought things I had never owned before.
I bought a faux marble dinner table from Walmart for $200 that still perfectly works 4 years later. King-sized beds went straight to my bedroom after sleeping on a twin mattress for 5 straight years. It was not much but I was moving upwards in life. Slowly but surely.
The best part about my fun budget though is that I spent money on fixed goods like furniture and clothing that lasts 5+ years. Spend on a nice dinner table once and not have to buy another for 5 – 10 years. Meaning that money is now freed up for a completely separate and different fun purchase. Now I can get behind that.
What Does This Mean For You?
Achieving financial independence is simple but difficult. It’s simple in the sense that all you have to do is save and invest. It’s difficult in the sense that you have to do it day in and day out. Consistently without fail.
It consumes so much of your time and effort, even if you automate the vast majority of the work. Think about it. 90%+ of the financial blogs that you read today like Financial Samurai achieved financial independence in early 30’s to late 30’s. Some in their 40’s and even 50+.
A minority of people achieve FIRE in their mid 20’s, let alone late 20’s. I hope to achieve it by late 20’s but it’s a difficult journey. Why is it so difficult? As humans, we have so much wants! Buying things we need is ridiculously easy. All we need is food, water, and shelter. We don’t even need insurance to live, cavemen lived just fine without it.
However, only buying things we need is a depressing life. All you do is wake up, work, go home, sleep, and do it all over again the next day. During weekends, you stay still and silent in your apartment and start the cycle all over again the following Monday. It’s completely doable but not a life anyone on Earth wants to lead. Therefore, you need to incorporate some fun in your budget so that you can keep on going!
The Rewards are Worth It
There were definitely days where I had random bouts of anger. Even though I had a fun budget, I still wasn’t enjoying life, I was surviving, avoiding buying anything even if I knew it would bring me joy. However, without it, I would have gotten even angrier at the world. I am proud to say I no longer feel those things in my body.
These days, there’s definitely financial stress still lingering in my mind. Questions like “should I really go to Chama Gaucha for dinner to celebrate?” pop up randomly. My muscles still tense up when reading news of mass layoffs crushing the labor market.
However, I feel much more secure in my financial life because I put in my dues for the past four years. Also, because I used my fun budget towards things that I don’t have to buy again, I’m reaping the rewards by buying even more silly things for the fun of it.
Now I really spend on things that are truly fun like traveling out of town and seeing friends. Buying an air fryer. I’m happy to say that it’s only the beginning, as well.
The moral of the story is, have a budget where you spend on anything that your heart desires without caring about the consequences. The FIRE journey is a long one, you want to make sure you have a good time going through it as well.
One day we will both achieve our financial goals together.
