The Intangible Benefits of Saving Money: Flexibility and Robustness

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tardisNeed a break from the charts? Morgan Housel has an insightful article Let Me Convince You To Save Money that includes no historical data, no survey results, no fancy infographics. Read the whole thing, but here’s my favorite excerpt:

But the best reason to save is to gain control over your time. Everyone knows the tangible stuff money buys. The intangible stuff is harder to wrap your head around, but can be far more valuable and able to increase your happiness. Savings gives you options and flexibility, the ability to wait and the opportunity to pounce. It gives you time to think. Every bit of savings is like taking a point in the future that would have been owned by someone else and giving it back to yourself.

In my experience, every incremental bit of savings changes your life in intangible ways. Going from paycheck-to-paycheck to having $1,500 in the bank lets many things become minor speed-bumps instead of derailing your life. It’ll also make you happier according to (sorry!) the research: Does Cash Make You Happier Than Income or Paying Down Debt?

Continuing onward, going from having a basic emergency fund to $10,000 gives you the ability to take career risks without fear of starvation. You feel like you can put your full effort into a new business, or take a different job with less stress. I personally made a life-changing career switch at about $50,000 net worth.

Finally, going from $10,000 to $100,000 is amazing because that’s when you realize that reaching financial independence is a matter of WHEN, not IF. It’s a sign that you’ve put in the dirty work and figured out the hard bits. To put it crudely, “The first $100,000 is a b****.”

In biology, the term robustness refers to the “persistence of a system under perturbations or conditions of uncertainty”. In computer science, robustness is the ability to “cope with errors during execution and cope with erroneous input”.

In today’s world of questionable safety nets, having adequate savings improves the robustness of your family’s lifestyle. First, you can endure an expected car repair. Then you can endure a temporary blip without a job. Finally, you can go without a job whenever you wish (aka retirement). Your savings rate fuels all of that.

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  1. Completely agree with you. I began by becoming debt-free as quickly as possible. Then, I did as most Americans and simply lived, spending too much. But I still saved some, created an emergency fund, and so on -which allowed ever more flexibility, and a career change. I’ll never forget how nice it was to have an emergency fund and know I could do absolutely nothing for six months and yet survive just fine. We’re now aiming higher – for financial independence – and watching things grow ever faster. My last career transition happened without even blinking about it – we had more than enough resources in case things went poorly, but instead, they went really well and our savings never even dipped. Instead, I found myself free to pursue the opportunities that arose which, inevitably, led to more income opportunities. Now, we have growing flexibility every single day: I watch how much we could make by doing nothing at all – it just steadily rises…

  2. Thank you for combining several great resources together, while making this strong point.

    Speaking for saving, investing and Charlie Munger, my favorite story is how he worked for himself an hour a day every day to get ahead:


  3. Whats the Tardis photo about?

    • Haha… good question. The initial title of the post was about how saving money lets you control your time (bolded portion of Morgan Housel quote). But after some edits I felt like saving money was more about having the ability to maintain your desired lifestyle even with bumps like an unexpected car repair, temporary job loss, and eventually permanent job loss (aka retirement).

      … but I forgot to change the photo.

  4. There’s no way I would be able to hold down my life right now if I didn’t have any savings in the bank. My paycheques fluctuate so much that I’d be screwed if I lived paycheque to paycheque. I know that come the fall my income will change for the long-term (better), and having a cushion right now gives me peace of mind to wait until then and try to use my time productively, and as an investment, without panicking! It’s good to see there’s research behind it, too!

  5. Thank you for sharing. Mrs. SFD and I place a very high premium on financial flexibility, so much so that we eschew maximizing our retirement savings, instead investing up to an employer match, and then keeping our remaining investments in a taxable account. This ended up working in our favor when a great investment property came on the market, but it came with a few circumstances that required us to put a much larger down payment down than we had been planning on. Our staunch belief in flexibility allowed us to easily acquire the house, and we’re now better for it.

    Of course, just because it worked for us doesn’t mean others should follow suite. We insist that people do as we say (max out those retirement accounts first!), and not necessarily do as we do.

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