Lifestyle investing is an approach to wealth generation that enables individuals to build wealth and gain financial freedoms that align with their dreams both in the present and future. It’s a mindset that extends beyond the almighty dollar. It takes into account a holistic perspective of life, considering how finances integrate into the bigger picture of living.
Lifestyle investments help generate cash flow and enable a happier, healthier lifestyle. But that doesn’t mean they sacrifice financial success for a lifestyle equivalent. On the contrary, here are a few ways lifestyle investments can positively impact your financial future, too.
1. Lifestyle Investments Codify Your Entire Financial Purpose
Lifestyle investing, when done properly, takes into account both your present and future needs. The investors at Edward Jones point out that “Supporting your lifestyle is not a need in isolation of others; by looking at the big picture, you can help to ensure that you’re saving for both your basic and lifestyle needs.”
The investment firm clarifies that identifying goals can help you gain a better idea of what you’re trying to accomplish with your needs. In the present, you need to keep food on the table and clothes on your back. In the future, you may want to travel or live in a specific location. A clear understanding of where you are now, in the present, is essential.
Lifestyle investing helps you identify all of these goals and objectives at the same time. They help you break away from the one-track-minded investment philosophy of the Ebenezer Scrooge type.
Remember, you aren’t saving money for money’s sake.
By making lifestyle investments, you temper the pure desire to make money by taking into account the reasons you’re making the money in the first place. I.e., you’re breathing purpose into your wealth generation strategy. Thoughtfully plotting your life course will provide an added sense of meaning that can translate to more targeted financial success in the future.
2. Lifestyle Investments Give You Better Perspective and Value
One of the biggest benefits of lifestyle investments is that they give you a steady sense of perspective. As we already touched on, as a lifestyle investor, you aren’t saving money with the black-and-white purpose of turning it into more money. On the contrary, you’re building wealth specifically to enable a certain lifestyle.
When you make financial decisions with this added knowledge in mind, it can help you keep a big-picture perspective – not just of wealth, but of the person you want to become.
For example, if you’re considering taking your young family on vacation after a great year of profits, you can take one of two approaches. On the one hand, you may decide that going to Disneyland or taking a cruise is expensive. You can afford it, but it would hold back your wealth-generation strategy.
On the other hand, you can assess your recent financial success from the perspective that it exists to enhance your larger lifestyle goals and ambitions. You have saved the portion you want toward a larger goal, you are making other wise financial decisions – so now, you also want to consider “the person you are becoming.” You are the person that invests time in your family and makes a happy, fulfilling life by providing experiences for them, too – which you can achieve by taking a well-earned vacation.
This may not lead to more money in your financial future. Nevertheless, it infuses each dollar that you make with greater value as you spend it on meaningful items and experiences.
3. Lifestyle Investments Provide Emotional Stability
When you invest with the explicit and singular goal of making money, it’s difficult to stay emotionally stable. You might feel over the moon from a certain investment. Then, the next day, it could drop, leaving your emotions in the gutter.
While you can mitigate risk, the ups and downs of investing are par for the course, no matter who you are. 2022 revealed a perfect example of the inconsistencies and unpredictability always present in life. For instance, the “crypto winter” (combined with the unexpected implosion of FTX) left many riskier investors with devastated portfolios. Tesla stock, which was a fan favorite for investors and was riding a magnificently long stretch of astronomical growth, dropped severely, as well.
For those wholly committed to compiling money, these setbacks can be devastating events. For those looking for wealth as a vehicle to enable their enhanced lifestyle, they’re simply life lessons with value.
One of LifestyleInvestor Justin Donald’s favorite quotes is, “If you’re going to lose money, lose it as early in life as you can.”
Obviously, the actual event of losing money is never a desirable thing. But the lesson is clear. If you can embrace the negative events as lessons on the overall upward trajectory, you can stay focused and emotionally stable throughout your investment journey. This leads to wiser decision-making and a brighter financial future.
Rewriting Your Financial Future With Lifestyle Investments
Investing is an incredible way to achieve financial freedom. However, the mere condition of being financially free doesn’t mean you’ll know what to do with that liberty once you attain it.
In fact, those who pursue wealth generation for its own merit often end up failing to find value outside of money-building activities.
Rather than fall into the trap of generating wealth for its own sake, use lifestyle investments to help you look past the dollar signs. Investing with a personal, long-term, big-picture purpose can help you achieve real, tangible results. It can put you on track not just to succeed but to provide purpose, perspective, and emotional stability for your financial future.
