First Steps to Financial Independence

In the story, the grasshopper made music all summer and laughed at the industrious ant, who worked hard to store up grain for the winter. But when winter arrived, the grasshopper was in trouble while the ant was safe and well-fed.

Here’s a full version of the fable.

My family lived like grasshoppers. When we had money, we spent it. We borrowed or scraped together enough cash to enjoy ourselves today, because who knew what tomorrow would bring?

It wasn’t as if we spent our money on bad things: after necessities, it went toward education, travel, art and art supplies. But we never had any savings.

So now I’m coming to the point in my life where those savings would have come in handy. Why, oh, why, didn’t I start a savings plan years ago? Well, because I didn’t know where I would be in ten or twenty years. I didn’t know if I even would BE a part of that distant future, so why not enjoy life now?

So I’m doing what I always do when I want to change directions: Get advice from trusted information sources online and in books.

I started with David Bach’s book Start Late, Finish Rich. I like that he says it’s never too late to start. Also: “Smart people learn, plan and take action to get a better life.”

David Bach is known for his “latte factor” concept, in which he urges people to consider the money they unconsciously spend on small and unnecessary luxuries. Instead of spending it on things that don’t really matter, he argues, that money could be saved for a rainy day.

This has made some people mad. It made me mad, too, for a while. When you don’t have a lot of money to begin with, it feels like a punishment to be told that you shouldn’t brighten up your day with the little things that make you feel better. Small pleasures make you feel like you’re worth it. What’s so bad about that?

However, as I thought about it some more, I realized that the key phrase is “unconscious spending.” If money is slipping through your fingers without you even noticing it, how is that bringing you joy?

So I came to realize that it’s important to discover ways to feel good that don’t involve money. Also, if I’m going to spend money, the spending has to “spark joy,” as Marie Kondo (of “Tidying Up” fame) expresses it.

Other books on my reading list:

The Wealthy Barber by David Chilton

The Alchemist by Paulo Coelho

The Richest Man in Babylon by George S. Clason

A Random Walk Down Wall Street by Burton Malkiel

Warren Buffett Invests Like A Girl (and why you should, too) by Louann Lofton

The first three books on the list are written in the style of parables, where a novice learns from the master. They start with the importance of saving money, establishing a nest egg.  So that’s what I’m doing now: trying to find ways to squeeze out a dollar or two so that I can set it aside.

The last two books contain a different kind of advice. Once savings have been achieved, the next step is to make the money work for you — investments. As a number of experts have said, an “asset” is something that makes money for you, not something that costs you money.

But that’s far down the road from now. At the moment, my goal is to start putting money in a savings account. Maybe someday I will see that magical compound interest working for me, and that will be a good thing.

So I’m making the switch from being a grasshopper, living in the moment and ignoring the future, to being an ant, working hard today to be prepared for the years ahead. Will it work? Will I have the determination and persistence to build up my savings? Will I ever learn enough to be a successful investor?

In a few years, we’ll see.