Leveling Up: Times When You Shouldn’t Be Saving

Saving is a concept that’s on the lips of just about every financial advisor alive, from bloggers to the CPA sitting across a real desk from you. I’m all for saving, and it’s something I practice in my own life religiously. But saving should never become something that is pure habit. After all, we are all saving for something, right? I regularly advocate for emergency funds to be cultivated, and investments to be made in addition. But there are several situations in life where I think it is appropriate to throw these habits out the window, at least for a time, in order to pursue a greater financial good.

Anyone who has played video games understands the concept of Leveling Up. Leveling Up is all about taking your standard of living and improving upon it. This is usually a personal victory of some sort, some fear or bad habit that you’ve conquered. Maybe you’ve gotten in shape for the first time in your life. Maybe you finally got rid of your car and are getting around on a bicycle. From a purely financial perspective, Leveling Up is about moving from relative poverty to relative wealth. As with the physical fitness example above, you’ll notice the differences only very gradually, but they will come. You’ll start to notice that you don’t have to struggle to cover your bills. You’ll start to have extra income with which to enjoy yourself. And you’ll be able to invest in your future more effectively.

This last bit is the most important part of leveling up financially. And it’s these opportunities where it is often appropriate to forego caution, at least within reason. I’m talking about milestone life moments, like buying a house, investing in higher education, getting married, or starting a business. Each of these stands to benefit you enormously over the coming decades. With a house you can build wealth and equity faster than almost any other method. With better education, you’ll potentially increase your earning potential. As a married person you’ll have loads of tax breaks, not to mention have the financial (and emotional) support of another person. By starting a business, you stand to increase your financial standing by an order of magnitude or more.

But to achieve any one of these, most people need to spend a lot of money. Most people aren’t born with extra resources, so in situations like this, I am an advocate for spending savings, going into debt, and selling personal assets. There is a company that purchases annuity payments, for instance, for situations just like this, when people need a lump sum all at once to pay for a big life purchase. People fear financial moves like this, because they are risky. I won’t deny this, but I will say that with a realistic perspective on future earning potential, risk tolerance, and other factors, you’ll be able to know if you can handle a big investment in your future. Consider these investments very carefully. They’re all traditional ways that people grow more wealthy, in addition to achieving more personal satisfaction. Leveling Up is worth it. Make it a personal goal, study all aspects of the decision, and you’ll probably be glad you took the risk.

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