financial independence

Wealth Without Saving

I’ve never had a budget in my life. Yet I still achieved financial independence. Here are the strategies that got me there.

“Save more than you spend”

“Pay yourself first”

“Start with a budget”

We all know the advice of many FIRE bloggers – if you seek financial independence, you must resign yourself to a life of re-using tin foil and dumpster diving for your meals.

Or, at least: spend less on things that you “don’t need”, such as expensive housing, a nice car, luxury vacations, etc.

But as Oscar Wilde once said “I don’t need the necessities… it’s the luxuries I can’t do without.”

Let’s face it, racing a sports car down Highway 1, splurging on a room with a view, the occasional table service at a hot nightspot: these are some of the things that bring joy to life. And what is life without a little indulgence and excitement?

I’ve never been able to stick to a budget for more than, say, a week or two. It just seemed that, especially in my youth, life had far to much to offer – and I never had the discipline to ignore it. However, I didn’t want to spend my whole life in debt, with no financial cushion, or work for a living until I was in my 60s. So I was forced to come up with other strategies to achieve financial independence.

If you are in the same predicament: seeking FI, but with no discipline to budget, here are some guidelines that worked for me and may benefit you as well:

Make a Lot of Money

If you do absolutely nothing else but this, you are way ahead of the game. Accumulating wealth is vastly easier by starting on the “input” side.

Yes, easier said than done, but I’ve addressed the key ingredients for a high income in a previous post. In short, achieving a high income isn’t easy – it takes ambition, a high risk tolerance, perseverance, serial failure, and sometimes even hard work. But there’s no getting around it -you can’t frugal your way to real wealth.

One extra bonus: achieving a high income builds street smarts, character, and above all – confidence. I have never met a mid-six figure earner that wasn’t completely comfortable in any social or professional situation.

Let me be clear-  a high income doesn’t guarantee wealth by any means – but it’s a solid jumping off point for these other, budget-free strategies.

Take Advantage of Forced Savings

Once you’ve achieved (or on your way to achieving) this high income, the easiest way to accumulate wealth (without budgeting) is to take advantage of any forced savings your company may offer. For me, this included:

  • 401k Plan – these allow you to sock away $20k per year before taxes. On a $200k salary, you won’t even notice the difference in your paycheck. And company matches can grow this amount by another $10k or even $20k.
  • Deferred Compensation: for 5 years in mid-career, I deferred about 50% of my income. Many companies offer these plans to their higher salaried employees: it’s kind of like a souped up 401k, where you can set aside a large chunk of your pre-tax income, then take it as a distribution after you leave (over a 10 year period or lump sum, if you prefer). I and many of my colleagues did this. To this day I am still living (in part) off of these distributions.

Buy a Nice House

If your idea of the perfect  Saturday night is  playing Scrabble or baking banana bread at home (and there’s nothing wrong with that), then by all means, save a bundle and buy a foreclosure in Cleveland, Ohio. But if you find yourself making a great salary, drawn to the high life and unable to budget, you might as well buy a place in an expensive market. Most expensive cities have paired ongoing growth with strict building codes that limit development, resulting in decades of high octane appreciation. And, if you’re making good coin, you’ll probably find yourself in one of these places anyway.

Between appreciation and principle reduction, you’ll probably make a bundle when you sell. In fact, I used this strategy myself, using the high-six figure profit on the sale of my (2 bedroom) primary residence in Los Angeles to fund my real estate investing career.

Buy Nice Things

We’ve already established that you can’t control your spending. So if you are going to go hog wild, at least buy things that will hold their value. I have already sung the praises of high-end sports cars, even good shoes – add to that art, collectibles, high end watches. Anything you can liquidate when you’re ready to quit that job and suddenly need to “create” savings to live off of.

The combination of these simple strategies has enabled me to achieve a rare trick: financial independence and semi-retirement in my 40s. All without a budget. And I also didn’t deny myself very much either (as readers of my blog can attest).

If you’re like  Oscar Wilde, and just can’t do without the luxuries, you may want to try some of these approaches yourself.

Attributions and Inspirations

Here are a few other blogs and posts that provide some more insight into the strategies described above:

Invested Wallet: How To Increase Your Salary

The Fioneers: How I Increased My Salary by 100%

Passive Income MD: Is a Mortgage a Great Way to Force Savings?

Have you achieved FI without a budget? Have you employed any of the above strategies? Tell me about it in the comments!

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