How to Build Financial Flexibility Into Your Life

When I was a kid, my parents taught me that the key to life was a good education. A good education meant a good job. A good job meant stability, high wages, and being able to support yourself and your family.

I saw my parents do this, provide a great life for my sister and me, and it was further proof that this was the path.

As I grew older, I would learn that it is a good path but it’s not the only path. One of the benefits of the Internet, and of social media, is that you can see how others are living their lives and borrow the ideas you like. You don’t have to accept it all or nothing, just borrow bits and pieces.

That’s what I do with all advice on the internet and it has served me well.

I don’t want to retire early but I see the FIRE movement and I love how they’re turning the traditional work situation on its head. Save aggressively, invest prudently, and retire early. You don’t have to wait forty years to quit a job you hate.

The idea I take from FIRE is that by saving aggressively and investing prudently, you give yourself options.

You can retire early but you aren’t required to retire early. You can switch jobs to something more fulfilling. You can take time off and create your own sabbatical. If you’re financially independent, you control your time.

It’s all about financial flexibility.

And there are a lot of different ways you can build financial flexibility into your life.

Table of Contents
  1. Rent Instead of Owning
  2. Save Aggressively
  3. Give Loyalty Sparingly, if at All
  4. Protect Yourself at All Costs
  5. Build Up That Emergency Plan

Rent Instead of Owning

The long-held advice on homeownership is that buying a home is better than renting one.

With renting, you’re “throwing rent away and not building equity.” You aren’t “putting down roots.” The list of reasons is very long. It’s also a bit judgy.

You may be paying a premium and giving up stability when you rent. Rents could be increased, you could be asked to leave after your lease, you don’t control your destiny to a certain extent, etc.

But those are features of renting, not drawbacks.

Renting can be expensive but you are paying extra for flexibility. If you rent a home, you can leave as soon as your lease ends. Heck, if you wanted to leave before your lease ends you can just go. You are responsible for paying the rent, or subleasing if it is allowed, but you don’t have to sell the house.

When you own, you’re on the hook for everything. If something breaks, you can’t call a landlord. If you want to move, you have to sell the house and that’s an arduous process that is very expensive and has a lot of paperwork.

If something breaks and you want to move, you have to fix it before you go!

There’s the famous quote from Fight Club – “The things that you own end up owning you.”

When you own a huge asset like a house, it’s a consideration whenever you make decisions. Can you take on an exciting new opportunity knowing you have to sell your house to do it? You have to uproot your family, pack up your possessions, and move it to the new place – is it worth it?

If you rent, that’s one big question taken off the board. If you rent, you move whenever you want. You just pack up your stuff and walk out the door.

Save Aggressively

It took me a long to realize that money is time.

When you go to work, you’re trading your time for money. When you buy things or services, you’re trading your time for stuff.

Some of this stuff you need to live, like food, shelter, clothing, etc. But when you pay a premium for some products, you’re making a voluntary trade. If you buy a Louis Vuitton purse, you’re deciding that you are willing to trade more of your time for a purse.

And that is 100% perfectly OK! (not that you need my permission)

My point isn’t to say that you should pay just the bare minimum. Not the slightest.

My point is that you need to make that trade in your mind.

When you save aggressively, you’re getting yourself closer towards a time when you don’t have to be beholden to anyone. When you have enough money, work is optional. You work because it satisfies you in other ways beyond financial reasons.

When people talk about having F.U. money, which is enough to tell your boss to pound sand, it’s not really about being able to tell your boss what you really think.

It’s about having the option to tell your boss what you really think.

Plus the benefits of saving aggressively start way before you have saved enough for work to be optional. When you are living on significantly less than you earn you have a ton of flexibility in your finances. Financial emergencies become a thing of the past.

Events that used to be emergencies, such as the car breaking down, home repairs, or even getting laid off can be handled much easier when your bills are low. Yes, you’ll have to save less while you recover but you have a lot more options and a lot less stress when these events occur. And they will occur.

Buy luxury if that’s what you want. Anyone who says otherwise isn’t worth listening to. You made that money, you decide how you want to spend it, and if you want to pay a million dollars for something, do it.

Just know the trade you’re making.

Give Loyalty Sparingly, if at All

You should be loyal to friends and family, not necessarily to the company you work for.

Companies are businesses and businesses aren’t people. They’re a collection of people governed by policies written by other people (who may or may not even be there anymore). You don’t owe your company loyalty as a default.

Businesses operate on one principle – make more money. If they aren’t making money, they can’t continue operating and then everyone loses. And making money isn’t enough, they need to be profitable and that means increasing revenues and/or decreasing expenses.

You are an expense.

If you ever think you’re underpaid, try to get a competing offer. You’ll either get a higher salaried offer or you won’t, which settles it.

If you’re concerned that companies don’t like this, don’t be. You’re right. They hate this. They want to pay you as little as possible. It’s not personal, it’s business. If things go south, chances are you’ll lose your job. Less revenue means less money to pay employees. We saw that in many businesses in 2020 because of the pandemic.

Loyalty is for your friends and family. Maximizing your earning potential is showing loyalty to your family because the time you spend away from them should be as profitable as possible. They (and you) should get as much benefit from this sacrifice as you can give them.

Another aspect of “loyalty” has to do with debt. The prime directive of personal finance is to avoid committing future funds to spending obligations; commit them to saving obligations. In other words, don’t take on a lot of debt unless it furthers your goals.

Be loyal to your future self.

When you carry debt, you’ve locked some of your future cash flow into servicing that debt. When people talk about good or bad debt, they’re making judgments on what you spent the money on. A house and an education are seen as “good” whereas a pizza on your credit card is considered bad.

It’s all bad when it comes to financial flexibility because it reduces your choices.

Protect Yourself at All Costs

You want to have a fully stocked emergency fund and you want to be fully insured so one single thing can’t sink your financial ship. We are required to get car insurance if we own a car because accidents happen and can be extremely costly, especially when people get hurt in the process.

Make sure you are fully insured because you don’t want something seeming innocuous to sink your future plans.

For example, renter’s insurance is very cheap and 99.999999% of the time you won’t need it. But that fraction of a percent time you do, it can save you a tremendous amount of money. My friend Martin at Studenomics was renting out an apartment when a sewage pipe burst and practically destroyed everything inside. Thankfully, his renter had insurance and it not only made him whole but got him a place to stay while the unit was being cleaned.

We have homeowners insurance that helped us recover from near-$70,000 homeowners insurance claim from damage due to a burst pipe.

Depending on your financial situation, umbrella insurance may make sense too. That’s a catch-all for when something slips through other insurances and is an insurance backstop that could save your butt.

Insurance can seem like an unnecessary financial cost and it is… until it isn’t. 🙂

Build Up That Emergency Plan

We all know about emergency funds but an emergency plan is just as important. An emergency plan is what you would in the event of specific emergencies. It’s value is that you build the plan, and refresh it as needed, when you’re cool, calm, and collected.

It’s easier to research water heaters and get quotes when your basement isn’t flooded because your tank is rusted out!

This plan is also important if the emergency knocks you out and someone else has to do something in your place. With a written plan, they have a better sense of how you’d handle the situation and try to do it in a similar way. An In-Case-of-Emergency Plan is perfect for this as it establishes a template for common(ish) situations so you aren’t stuck racking your mind as to what to put into your plan.

Financial flexibility is crucial and building more of it into your life and systems can only help!

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About Jim Wang

Jim Wang is a forty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Empower Personal Dashboard, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

>> Read more articles by Jim

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

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Accidentally Retired
2 years ago

I think the single most important thing you can do is save aggressively. As a former employer I can say that I tried to reward those who worked hard and went above and beyond. This included promotions when deserved and bigger than cost-of-living raises. So loyalty was rewarded in my case if you were in A-player. Anyways, I ended up accidentally retired purely by saving as aggressively as possible. When I sold my business we didn’t inflate our lifestyle in any meaningful way, everything went into investments. Save aggressively, invest and no matter what you are earning you can retire… Read more »

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