Early retirement is not about deprivation. It’s about spending money on what brings you joy | Canada Voices

Retirees from the FIRE movement are often perceived as being a bunch of tightwads. Supposedly, we are content to bike in the snow, eat cat food, and drink boxed wine as long as we don’t have to work.

After all, believing this movement is all about sacrifice and deprivation allows people to opt out and not even try to pursue financial independence.

I get where the frugality angle is coming from. But what people don’t understand is the difference between minimizing and optimizing. The FIRE (Financial Independence, Retire Early) movement isn’t about minimizing. It’s about optimizing.

Minimizing is about paying as little as possible. Optimizing is about maximizing value.

Optimizers realize that being a tightwad and paying the absolute minimum we can get away with may cost us more over time, if what we buy keeps breaking or harms our health.

When you focus on value, you are looking at the quality-to-cost ratio instead of just cost. Spending more makes sense if those extra dollars get you more benefits.

For example, as new parents, we’ve had to buy a lot of baby gear. Baby carrier, car seat, stroller, crib, bouncer, changing table – you name it, we’ve bought it.

If we were minimizing costs, we’d buy the cheapest baby bouncer from Walmart for $30. Instead, we bought a Baby Bjorn Bouncer for $100 secondhand on Facebook. That might seem a bit steep for a used item, especially given that a new alternative is cheaper. But I’m happy to pay more for value.

Not only are Baby Bjorn products better at keeping my baby occupied, but they also last longer and are in greater demand owing to their high quality. Even though I’m spending more on a used item, I can resell it on the secondary market for nearly the same price I bought it at, in which case it’s basically like renting it for free.

We also travel a lot, which means we need good travel gear. Instead of buying the cheapest $40 backpack, we choose to splurge on the brand-name Osprey because it has a lifetime warranty. Instead of $40, our bags cost us $200 each, but they’re worth every penny because after eight years of overstuffing them, abusing their zippers, and dragging them across multiple continents, they still look relatively new.

We also fly business class even though economy costs less than half the frequent flyer points, because waking up rested after a 15-hour flight is priceless. Minimizers would use as few points as possible so they can stretch their travel points to get more economy flights. To us, upgrading elevates our travel experience and is worth it.

But don’t confuse spending the most with getting the best value. An example of this is a luxury car. The cost of luxury cars isn’t just limited to the sticker price. They cost way more in maintenance than your run-of-the-mill Toyota and more to insure. Some even require premium fuel, which isn’t any more efficient than regular unleaded, and so – all else being equal – you’re paying more for each kilometre travelled.

From a purely utilitarian perspective, a car’s job is to transport you from point A to point B. Luxury cars, on the other hand, are all about status and ego. An optimizer like me looks at a luxury car and concludes: not worth it. When it comes to spending, don’t just pay the minimum or the maximum. Look at how you can optimize your spending to get the most value.

For example, looking at the Osprey backpack example from above, within 30 years of use, the company will repair or replace the backpack for free. I previously bought a cheap $40 with no such guarantee, and it only lasted a year before it broke.

When you look at cost per year, the Osprey backpack costs $200 for 30 years, or $6.66 a year. The non-name brand backpack costs $40 for one year. So even though it seems like a good deal at one-fifth the cost of the Osprey backpack, it’s costing you $40 per year by forcing you to buy a new one annually.

By looking at how to optimize your spending rather than minimize it, you’re making sure that every additional dollar you spend gives you additional value.

You work hard for your money. Why not trade every dollar for maximum happiness? You don’t need to deprive yourself. You also don’t need to waste it on things that don’t bring you joy.

If you learn to optimize instead of minimize, you’ll end up with more than you expected. No meals of just rice, or beans, or coupon-clipping required.

Kristy Shen and Bryce Leung retired in their 30s and are authors of the bestselling book Quit Like a Millionaire.