Ian Bloom, CFP® Covers the Extras tier of the Hierarchy of Cash Flow. All of that extra stuff we want, that’s advertised to us constantly, is a lot more exciting to purchase if you know you don’t have to give up your future goals and dreams to acquire it!
What’s up internet? My name’s Ian Bloom. Welcome to nerd finance. I’m your resident financial life planner and huge nerd. In today’s episode, we’re going to be talking about the final stage in this hierarchy of cash flows, which is extras. From a gaming perspective, which is how I like to talk about everything if you haven’t figured that out by this point in the series, extras is when you are super powerful in the game. Not only do you understand the system, but you have maximized it to your benefit in every other aspect possible, and now you’re just adding the icing on the cake. That cool legendary sword, or that piece of equipment that enables you to dominate any of the enemies or opposition you come up against. Extras is really just the extra stuff to enjoy the spice of life.
It might be getting takeout once a week. It might be spending extra money on gaming accessories, or sporting equipment, or going to concerts. Any of those things can be extras that are very enjoyable. And as we already talked about, extras can be woven through the different stages in some form or fashion. We do live in a consumer culture. So you will be advertised a lot of extras, like maybe that League of Legends skin that you want, or maybe that really good food that you saw in the commercial.
Those things are okay to buy occasionally for yourself in any one of these stages. But once you have all four of the previous stages taken care of, you get to enjoy the extras that you can afford guilt-free, which is the amazing part. It’s way less stressful to spend money on extras when you know that the other things are taken care of, you have made sure that you have a roof over your head and the utility bills paid, you’ve made sure that you can continue to do that for the next six months, regardless of what happens with your employment. You have money that is growing towards your future and your financial independence, and you have some of the things that were core to the things that you wanted out of life. Whether that be that extra home in the mountains, or the cool car, or the trip to Europe.
And so now you get to focus on spending money on yourself, just for the heck of it. And boy, is that a joyous place. When you see people who are clearly living in the extra stage and have no guilt about it, you can see the joy on their face when they give to others. You can see the absolute purity of the fun that they’re having. And it’s all because they made sure to address the other four stages first. And moreover, all the other four stages and the extra stage look different for every person.
Some people like to live their lives very frugally. And so their retirement contributions in the future stage might not need to be that large. And some people like to live their lives a little lavishly. And so their retirement contributions might need to be greater in that same future stage, which may delay the amount of money that they have to focus on the extras. But whatever the situation is for you, just make sure that you’re taking care of the core things before you move on to spending money on all of the flippant extras, though they are very enjoyable.
I hope you have a wonderful day. And I hope that this video has been, and the series has been, very, very helpful to you. The cashflow, a hierarchy tool is one that I have loved using with my clients. So I hope it benefits you as well. Have a wonderful, wonderful day. And thanks for watching.