Financial Flexibility

Rebirth by Hannah Yata
I was at work, and it was just one of those days where everything that could go wrong did go wrong. The not so uncommon occurrence of my coworkers not knowing how to properly do their jobs meant I had to step in and fix their problems for them. It was a long day, and I couldn't wait to be done with it.... And then suddenly I was. I woke up, realizing that it was all just a dream, but then the nightmare began because I  had to get ready to actually go into work for the day.

Right then I knew I needed a vacation. It has been about 2 years since I've taken a "real" vacation. I've had some smaller few day trips but they weren't really trips about escaping for a while and really unwinding. That dream happened a few weeks ago and immediately after I started thinking about vacation, it took me a little time to decide where and when I wanted to go but today I booked my flight and on November 27th I will be flying to Japan for 24 days to truly recharge for a while.

This is one of the main reasons that I save a large portion of my income, so that I have financial flexibility.

Financial flexibility is basically the precursor to financial independence. When you finally reach financial independence you are free to live life without feeling restricted by having to exchange your time and efforts for money (within reason, if you decide to start buying yachts and planes then you will probably not be financially independent for very long). But financial flexibility is like the younger brother to financial independence, you have money stashed away so that if something comes up you won't feel as stressed about the money aspect of a situation. You can even take risks like changing careers to something more agreeable to your lifestyle because you have a financial cushion to fall back on.

Imagine a life where any monetary related stress is relieved. For example if you were in a car accident and had to buy a new car to replace it, or a medical emergency suddenly caused you to need to pay the maximum for your health benefits for the year (let's just say 10k). All of those situations suck, they are terrible to have to deal with, but if you didn't have to worry about the financial side of things it would make them significantly easier.

The other day a friend of mine posted on Facebook about how their refrigerator died and that they could not afford to purchase a new one. They started looking online for used/refurbished ones but weren't having a lot of luck there either. I feel bad for them since they are struggling when an unexpected expense comes up, having to pay possibly close to an extra months rent to replace a large appliance is not something you really want to deal with. If they had some financial flexibility in their savings/monthly spending then this might not be as difficult of a time for them. Sure the situation still sucks, no one wants to pay for a new large appliance, but things like that happen. In the end, the more financial flexibility you have the easier these unexpected events become.

On the other hand, I don't feel too badly for them since I know that just a few weeks ago they went to Burningman where they probably spent a few thousand dollars to hang out in a giant dust ball, so I know they can get by, it's just a matter of allocating their money to what they think is important.

Some people might call what I described an emergency fund, something stashed away for when the unexpected occurs and in my friends case I would agree with them. But in the end, isn't having money stashed away just building up some financial flexibility?

Since I've been diligently squirrelling away money for a number of years I've reached a place where I can have a lot of financial flexibility in case something comes up. In my case it was a bad dream that made me realize that I had been neglecting a part of my life that I think is very important to people, the part where you disconnect and unwind from it all.

Do you have financial flexibility? When was the last time you took a vacation? And more importantly do you have any advise for travelling to Japan?

14 comments:

  1. I hate when I dream/have nightmares about work. I feel cheated. My dreams should be about something awesome and non-work related unless I'm getting paid for them.

    24 days is quite the vacation. We've only taken long weekend trips over the past couple of years. Those are nice, but not enough time to really recharge.

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    1. Seriously, work dreams are the worst! I'm sort of a vacation hoarder, I refuse to take time off of work to do most anything because when I do like to go on vacation, I like to really escape. I need to learn to take smaller trips in between though instead of working until I'm reaching a breaking point.

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  2. Sounds like it's going to be an awesome trip - I've not been to Japan yet but it's definitely on my list of countries to visit in my lifetime - whereabouts in Japan are you going?

    t's great that you've saved up for such a big trip and also good that your work will let you have 24 days off - we're only allowed 10 days off consecutively, more if there's a 'life-changing event' eg getting married. Hope you have a fabulous holiday!

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    1. I actually am not completely sure on where I'm going yet, but I know the days I fly in and out of Tokyo. Other than that I want to go to Kyoto for sure and probably at least one of the smaller islands. I had a friend that went to Japan 3 months ago, I've asked her for details on it but I still need to make some more solid plans. I have some time though. :)

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  3. I think people often forget the long-term benefits of having an emergency stash of money at hand for when you need it. Money isn't there to just be spent when you earn it and as you have no idea of what could happen in the future it's vital to have financial flexibility. Great points!

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    1. That's how I feel about money, it's always good to have some stashed away in case you need it for a rainy day, and you never know when that might be.

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  4. Great examples of the benefits of financial flexibility, and just shows the power of at least moving towards FI - you don't necessarily need to cross the finish line to reap the benefits.

    I have a reasonable amount of financial flexibility thanks to a decent share portfolio, but I'd really only use it if things got desperate. I do have days like you described above, where I feel like just saying 'screw it, I'm taking a year off to do whatever I want!' - but that would set me a long way back on the FI journey. For me financial flexibility needs to come with a healthy dose of discipline and a strong goal to work towards!

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    1. Well, my trip won't set me back too much, it will probably be only a month or two of not saving (outside of my regular 401(k) contributions cause I'm not changing that). But it's not really like I'll be dipping into my savings to travel.

      I just like having the option to be able to do what I want, that's the biggest thing for me.

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  5. I have no advice for traveling to Japan. But I wholeheartedly agree that stashing away funds buys us flexibility in life. We (slowly but surely) built up enough funds so that one of us could be out of work for more than 6 months -- totally frees up your mental and emotional state!

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    1. Exactly, having the peace of mind that you won't be scrambling to figure out "what's next?" in case something comes up and you need to have a cash cushion to fall back on is priceless.... well I suppose not priceless, it probably has an exact dollar amount, but you know what I mean :)

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  6. Financial flexibility is so important. Things happen, and we have to expect the unexpected. Best to factor that in and try our best to live well within our means. This is why protecting and growing our income is so important, as the more it increases - while we maintain our baseline lifestyle - the more savings we accrue. To me, savings equal freedom of choice and time.

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    1. All of those things are so important, but I think the one that I find to be the most important that you said was "while we maintain our baseline lifestyle"

      Lifestyle inflation is a terrible curse. I think I've gotten so used to living below my means that I could easily inflate my lifestyle at any point in time but I choose not to. Now if I get a raise it all goes to savings because if I wanted to increase my lifestyle I already would have.

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