The Secret to Living Large and Building Wealth

The Misunderstanding Surrounding Money Management

There’s a fundamental misunderstanding surrounding financial freedom and money management. People often assume you must be either reckless or wealthy if you’re spending money on seemingly extravagant items or experiences. In my case, neither is true. 

Everyone has a unique perspective on money; unfortunately, not everyone sees it as I do. Many people think they know better when it comes to your finances. 

They look over your shoulder and question your every move, so you need to rise above these comments and instead focus on what has genuinely set you up for financial success.

The Role of Stewardship in Building Wealth

Financial stewardship isn’t a term you hear daily, but it’s been the cornerstone of my financial strategy. 

My husband and I have maintained ordinary incomes for most of our lives. Despite this, we’ve successfully built wealth by balancing two key factors:

1. Becoming great investors
2. Being phenomenal stewards of our wealth

When we earn a dollar, we’ve mastered the art of allocating portions for daily expenses, bills, and what I call “forced savings.” 

It’s a systematic approach to money management that’s proven effective for various individuals, from teenagers to high-net-worth investors.

The Freedom in Proper Capital Allocation

Being meticulous in how you allocate your capital pays off in unexpected ways. 

For example, when it’s time for an international holiday or to purchase another property, there’s no scrambling around or guilt. The money is already there, set aside for such occasions. 

In a nutshell, the better you allocate your income, manage your capital, and monitor your investments, the easier it becomes to make big-ticket spending decisions, whether going on holidays or buying a new car.

The Common Pitfall: Reactive Spending

The trap that many fall into is living reactively, financially speaking. People often earn a decent income but spend without a plan, hoping something is left over by the end. 

When the time comes to spend on a big-ticket item, they scramble to reallocate funds, often dipping into savings or funds set aside for other purposes. 

Instead of reacting to financial needs as they arise, a proactive capital allocation approach allows your money to work for you.

Investing in Today and Tomorrow

The key to financial freedom is learning to live well today while investing for tomorrow. 

Many struggle with this balance, thinking it’s an either-or choice between enjoying life now or saving for the future. But why can’t you do both?

Here’s the idea: invest in your lifestyle with a slight timeline lag compared to setting aside capital for your future. 

Simply put, you can invest in immediate experiences without compromising your long-term financial health. The trick is to prioritise what holds the highest value for you.

What We Value: Experiences Over Materialism

People often find it baffling to see us enjoying luxurious holidays or providing extraordinary experiences for our kids. 

But for us, it’s not about flashy cars or extravagant accessories. What we value most are experiences. 

Since our children were born, we’ve managed our finances in a way that allows us to make these experiences possible. 

It’s not rocket science; it’s simply a matter of economics and allocation.

Final Thoughts: The Power of Guilt-Free Spending

Financial stewardship empowers you to live on your terms, aligned with your values. 

It provides you with the freedom to spend your allocated capital guilt-free, whether on life-enriching experiences or investments for your future. 

So the next time someone questions your spending habits, you can confidently say that it’s all part of a well-thought-out financial strategy that allows you to live large and build wealth simultaneously.