Lifestyle Creep Adjusts Freedom

Shaan Puri and Sam Parr discuss how financial freedom goals need constant revision due to lifestyle improvements and changing circumstances. They share personal experiences about setting financial targets and why initial goals often prove insufficient.

Key Points:

• Initial Financial Freedom Goals:

  • Shaan initially thought $6M would be enough for financial freedom
  • The calculation was based on earning 5% returns annually ($300k/year)
  • Original spending was under $200k annually, providing a 30% buffer

• Reality of Lifestyle Creep:

  • Spending naturally increases over time
  • Started paying for more things
  • Travel style improved
  • New ways to enjoy life discovered
  • Don't want to feel limited by money when discovering new experiences

• Revised Financial Targets:

  • Real number closer to $10-11M for basic financial freedom
  • Aspirational number is $25M and up
  • Need to over-buffer for lifestyle improvements
  • Original calculations didn't account for natural lifestyle evolution

• Psychological Impact:

  • Achieving financial goals doesn't create the expected satisfaction
  • Each achievement leads to setting harder goals
  • It's about the chase - "born to hunt"
  • Need to accept that hitting goals won't change much
  • Goals serve as benchmarks for the next challenge

• Key Learning:

  • If you're not trying to be disciplined with lifestyle (which Shaan isn't)
  • Need to account for natural desire to enjoy life fully
  • Initial financial freedom calculations often underestimate future lifestyle costs
  • Better to over-buffer than under-buffer for future lifestyle improvements