To save or not to save? Most people will choose saving despite having no idea what they’re actually saving for. It’s easier to put money away than to put some serious thought behind what you actually want the money for.
When I dropped out of college, this was my mindset. I read all the financial books and blogs I could get my hands on and the advice was all surprisingly consistent:
- Start saving when you’re young on a regular basis.
- Put the money into tax free accounts that you can’t touch until you’re about 60 years old and you’ll get rich.
I figured I’d save a sizable portion of my monthly income and that would at least ensure I was financially secure.
This post will share how and why my mindset changed to a radically different investment philosophy, how it works, and why you should do the same. I’ve gotten returns upwards of 75 times the original investment and you can too.
Life doesn’t need to be a long slog towards the pot of gold at the end of the rainbow. You can have you cake now while still investing in your future long term.
This post will show you how.
A quick caveat: the advice here is controversial. Most people in your life won’t approve of it. You won’t read about it in books and you certainly won’t hear of it in school. If you want financial advice that everyone will pat you on the back for following, this post isn’t for you.
If you want massive returns in a short amount of time and a genuinely exciting life, read on.
The Best Investment I’ve Ever Made
That was the cost of the last minute flight I’d just purchased from Austin to Charleston.
It was March 2014 and I’d been invited to fly to Charleston by Praxis founder Isaac Morehouse to sit in on some marketing meetings. He’d made no promises but I knew this was a chance to get in my foot further in the door at a company I hoped to work with.
The decision hadn’t been an easy one. I was making okay money at the time but had a lot of recent expenses. Traditional investment advice had taught me to save as much as I can and $800 on a flight seemed irresponsible.
I spent the money on the ticket anyways on a hunch and went to Charleston for the weekend. I spent the weekend offering some suggestions for Praxis marketing, translating some of the lingo some contractors were throwing at us for Isaac, and by the end of it, I’d been offered a job.
The hunch I had then has informed every financial decision I’ve made since. From spending over $15,000 on flights in 2016 to putting up my own money to fund the development of the Praxis website behind closed doors and spending $1000 in my colleague’s Kickstarter, it’s been a constant operating principle.
That is, strategic spending is a better investment than passive saving.
It’s easier to see how it works now that I’m two years away from that decision.
Suppose I had put that money into an investment account.
Following the standard advice, I could have expected a return of around 6%-10% maybe. Not bad. It’s better than a low interest savings account to be sure. By the end of the first year, I would have earned at most around $80 assuming I invested nothing else.
Most people do something like this and financial gurus will tell you to do the same.
Now look at the purchase of the ticket to Charleston.
At first it seems like a waste of money, but that $800 landed me a job. In one year that job paid out over $60,000 in direct salary and equity worth even more.
In terms of direct financial gain, my “investment’ in that ticket paid out 750 times more than 1 year of putting that into an investment account.
But that’s not the whole story.
My work with Praxis has translated into paid speaking opportunities, consulting opportunities ($100k), and experience and credibility in the marketplace (priceless). That credibility and experience have allowed me to build another side project that is currently doing about $12,000 per month. None of this is to mention the returns I’ve seen in my personal life, which include friends, travel, and more.
At this stage in my life, there is nothing I could invest in that would give me this kind of return.
That is strategic spending.
Now let’s look further at what it is and at how you can do it yourself.
Against Saving: The Art of Strategic Spending
Strategic spending means fundamentally that you need to rethink what you mean by “investing.”401ks, IRAs, savings accounts, stocks, and bonds might have their uses, but they’re no longer the default path.
It means recognizing that the creative person can get a far bigger return by spending money on themselves than by locking it away into the stock market for a later date.
I’ve visited Ecuador and Prague on a whim, spent thousands of dollars to speak to a famous author, and covered my client’s Facebook ad budgets for months, and I’ve gotten a better return on investment than any of the above “smart” options.
Rather than “how can I save money and maximize my return on investment in future?” the question becomes “how can I spend money NOW to maximize my return on investment?”
Under this framework, a $1,000 vacation might be a better investment than funding your 401k if you’re able to lock down a client or business opportunity during that trip.
You might be better off spending a couple hundred dollars building an online course that will earn $1,000 per month than dropping that money into a savings account.
Taking a potential customer on a ski trip or spending your own money on a project as an employee might yield a far greater return than a standard index fund.
This mindset requires a process of active thought to be able to see hidden value where others cannot.
The best part about it is that it can allow you to have your cake and eat it too. While conventional investment advice is almost always predicated upon the assumption that your best years are ahead of you, this advice states that the best years whatever you make of them and that the waiting period can be sidestepped with a bit of creativity.
Does all of this mean you should never save? Of course not.
I have some automated systems set up to save some money every day, but here’s the thing: I don’t really save without a definite end in mind and I’m not afraid to “strategically spend” that money on a moment’s notice if I see an opportunity arise.
Hence why I’m on a plane to Prague as I write this 😉