3089: Want to Live a Happier Financial Life by Erik Carter of Fianacial Finesse on Freedom, Happiness & Experiences

[00:00:00] This is Optimal Living Daily, Episode 3089 Want to Live a Happier Financial Life by Erik Carter of financialfinesse.com And I'm Justin Malik. I read to you every day of the year including holidays But on Sunday, I share an extra episode from another podcast in the Optimal Network

[00:00:18] And today's episode is coming from our podcast covering all things money Optimal Finance Daily So that let's get right to the bonus episode and Diana's commentary as we optimize your life Want to Live a Happier Financial Life by Erik Carter of financialfinesse.com

[00:00:42] Very rarely do I find a personal finance article that resonates with me as much as one I recently read called How to Live a Happier Financial Life First, I love the title. When it comes to finances sometimes we get so caught up in

[00:00:56] the numbers that we forget the whole point is about maximizing happiness, not money. Sometimes that means spending more money on certain things but often it actually means spending less. The article's following points do a good job of differentiating which is which Biggest Time Waster, Commuting

[00:01:17] I remember hearing that the length of their commute is the biggest indicator of how unhappy someone is. I don't know how accurate that is but there has to be some truth in it. After all, time spent commuting is less time doing whatever else would make you happier

[00:01:33] whether that be a hobby, spending time with family or friends, sleeping or even working That's why they say time is money. Yet when people are choosing where to live the length of their commute tends to play second fiddle to sexier topics like

[00:01:48] how nice the home is or how cool the neighborhood is. When I was in law school I chose to live across the street from campus rather than a more fun area and it was one of the best decisions I made.

[00:02:00] Now I work from home most of the time so it's not an issue for me. Instead, I choose to live within walking distance of the places I tend to go to the most and I find that it's worth paying a premium for. Best Investment Attribute, Humility

[00:02:16] I can't tell you how many people love to tell me what they think the market is going to do or how overpriced it is. The reality is that no one has consistently outperformed a simple buy and

[00:02:27] hold strategy by timing the market. Many people have lost a lot of money trying though. The same goes for investing in individual stocks. If the vast majority of mutual fund companies run full time by some of the smartest people on Wall Street with all the resources of the

[00:02:44] major investing firms can't beat the market over the long term, what makes you think you can? If you can, you'd have to be running a mutual fund since you'll probably have more fun and

[00:02:54] make more money than you are now. If not, understand that it's not much easier to pick a fund that will beat the market either since very few do and those that do tend to actually

[00:03:05] do worse than the average fund going forward. So what should you do? Be humble by buying simple low-cost index funds and holding them for the long term. You'll outperform the vast majority

[00:03:18] of people who think they can do better. Key to financial success, cheap housing. I'm a big believer in how small savings can add up to big savings over time but big savings can add up to even

[00:03:32] bigger savings over time. For most people, the biggest expense is their home but this is a particularly dangerous expense because it's also typically the hardest to get out of if you need to.

[00:03:43] If you pay extra for a shorter commute, you can save money by buying or renting a smaller place. It may feel a little uncomfortable at first but I've lived in both large and small homes and found myself adjusting to both to the point where it didn't really matter.

[00:03:59] Having a bigger place just meant having to walk further to go to the bathroom. Best way to spend money, experiences. So what should you spend money on if not housing? One is experiences. My girlfriend and I love to dine out and travel. While I can certainly cut back

[00:04:16] a little here too with more meals cooked at home, I definitely feel like I'm getting more of my money's worth in both time and enjoyment than if I spent it on the latest gadget. There are always exceptions but if you think about it, you've probably enjoyed the

[00:04:30] experiences you paid for more than the gadgets you bought. When you consider that a lot of experiences also cost little to no money, you're getting even more bang for your buck. So if you're going to treat yourself, do so with experiences that you'll remember fondly

[00:04:46] rather than another toy that you'll quickly tire of. Top financial goal, not working for money. This is the other main thing I like to spend money on, financial freedom. The more you have in savings, the less financial stress and anxiety

[00:05:03] you'll feel. When you have enough savings, you can even decide to walk away from your job and do something else, whether that's travel, a more enjoyable but maybe less lucrative career or fulfilling your entrepreneurial dreams. You don't have to hate your job to appreciate not having

[00:05:19] to do it. I love mine but I would also love having those kinds of options. In fact, we recently had a couple of former employees who took what they learned at Financial Finesse to leave

[00:05:29] and start their own companies. So what's the bottom line? Spend less on housing and trying to beat the market and more on a shorter commute, experiences and financial freedom. While there's no guarantee your odds for a happier financial life will likely be greater. You just listened to

[00:05:51] the post titled Want to Live a Happier Financial Life by Eric Carter of financialfinesse.com. When I think about the intersection of money and happiness, many times it comes down to pondering

[00:06:04] the optimal and most efficient use of resources. So in the commuting example, I used to have a 40 minute commute on the subway and over time I was able to shift to a remote working arrangement

[00:06:16] with no commute. However, when I did have that commute, I tried to optimize the time. I would read and listen to podcasts and meditate or use the time to plan and decompress from my day. Even when we're moving towards better uses of our resources of time and money,

[00:06:33] we can still find ways to optimize in the circumstances we have now. I'll say this about cheap housing and living in a smaller space. Learning to enjoy it will serve you very well in the long run. Not only do you save money on the actual housing,

[00:06:49] but you'll be forced to acquire fewer possessions and in my experience, develop the capacity to enjoy less. There's a sense of freedom that comes from not needing a lot materially to be happy. I learned this when walking the Camino back in 2017 which is a 500 mile trek across northern

[00:07:07] Spain. For two months, my only possessions were what I carried on my back and it helped me realize that I don't need all that much stuff. In fact, I was constantly reevaluating

[00:07:19] what I could get rid of so that my pack would be easier to carry. It became a metaphor for life in a way. What can I get rid of materially or otherwise to create more space so that I can enjoy the

[00:07:32] experience of life more fully? That'll do it for today and another installment of Optimal Finance Daily. Have a happy Thursday. Thank you for being here every day and listening and I'll see you on the Friday show tomorrow where your Optimal Life awaits.