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Creating Freedom Through Financial Independence


The Lost Art of Moderation

August 14, 2020

There is one major hurdle to get past in the quest for financial independence…

The idea that you have to miss out on the good life in order to spend less and save more.

This is simply not true.

You don’t have to become a monk and abstain from all your desires (though I can think of worse things!).  But we struggle to see this because we’re blinded by living in an era of bingeing, excess and extremism.

The fact is, those who can manage a level of self-control and balance, whether through willpower, habits or lifestyle design have a huge advantage.

And if we harness this advantage, we end up with better health, stronger finances, more freedom and higher life satisfaction.  As you’re about to see, the key to all this is in the Lost Art of Moderation.


What is moderation?

Moderation:  the avoidance of excess or extremes, especially in one’s behaviour or political opinions.

We’ll just focus on behaviour today!

In my mind, moderation is being able to enjoy something in a sensible amount.  Not too much, not too little.  Importantly, there is a healthy level of control or limitation built into this enjoyment.


Why does moderation matter?  How can it help us?

Moderation is pretty damn useful in everyday life.  It helps us avoid terrible outcomes from indulging to excess like a wealthy Roman Emperor.

Whether that be alcohol, food, work, entertainment, sex, or others things humans are prone to do in extreme quantities.

It took us a while, but after studying the consequences of this behaviour, we now know that constantly trying to satisfy our short-term desires is a very unhealthy (and often self-destructive) way to live.

Our brains aren’t wired to be satisfied.  They aren’t wired to say no.  They’re wired to say, “more please.”

Luckily, a few of us understand this.  We realise that ‘toning it down’ is generally a good idea.  Because by avoiding excess in these areas, we get the benefit of better physical and mental health.

And it’s very similar when we pursue financial independence.  We don’t need to avoid things that costs money.  Rather, it’s about enjoying those things in moderation.  (related: If the FIRE Journey Makes You Miserable, You’re Doing it Wrong)


What this means in practice…

Let’s look at a list of spending categories and see how we can practice the Lost Art of Moderation.

These are some of the common areas which hammer our bank balance as we try to build a great life for ourselves.



Standard (excessive) approach:  Buy the most expensive place one could possibly afford.  Include multiple spare rooms for guests, and storing all those (mostly unnecessary and unused) possessions.

Art of Moderation approach:  Choose a slightly smaller property.  One with a slightly smaller footprint, in terms of land size and bedrooms.

And perhaps in a less expensive location, which still has good proximity to work and shops.  If this doesn’t fit, we can always switch jobs, locations, or style of property to make it work.  This way you have a safe and comfortable place to live without the cost blowing out.

(related: How to Deal with the Cost of Housing in Australia)



Standard (excessive) approach: The standard approach would be to have multiple cars for a household, without questioning whether it made sense or not.  And driving for all trips, because, isn’t that why we have cars?

Get a nice car because, you know, why not?  You work hard, you deserve it.

Art of Moderation approach:  Live closer to work to reduce to one vehicle (or even zero).  Own quality second hand $10k cars, instead of $30k-$50k (I’m just going to ignore insane choices like $100k Range Rovers).

Walk or ride to the local shops for groceries and errands occasionally.  Sometimes I’m a lazy shit and don’t follow this last point.  And you know what?  I’m always annoyed at myself afterwards.

This way we still get to travel in climate controlled comfort for most of the time.  Yet we simply reduce the waste of having too much cash tied up in vehicle ownership, and occasionally use our legs for transport instead.  What a wild thought!

(related: Driving Your Wealth with Frugal Car Ownership)



Standard (excessive) approach:  Assume that annual overseas trips is a mandatory and unquestionable part of a good life.  After all, people are much happier these days now that international travel is so accessible, right?  Hmm…

Art of Moderation approach:  Instead of annual overseas trip every year, let’s try something else.  What if we do overseas travel every second year?  (gasp!)  The other year we can take a nice, relaxing local trip.  There’s no shortage of beautiful places in Australia to visit.

We can also use our annual leave to have time off to spend at home.  This way we can make the best use of our free time and actually enjoy the time off, rather than be tired from the travelling.

Plus, this gives us a perfect taste of early retirement.  We want to be financially independent so we can get all our time back, so why not try it out in little bursts while we’re still working?

This dramatically reduces spending on ‘holidays’, brings FI forward, and gives you more genuine freedom right now.


Cafes & Restaurants

Standard (excessive) approach:  Eat out whenever desire strikes.  Grab a coffee on the way to work.  Quick stop at the sushi place for lunch, and Uber eats for dinner.  And who the hell wants to cook on the weekend?!

Art of Moderation approach:  Maybe we can actually cook our own food most of the time.  And maybe we can visit our favourite barista just a couple times a week instead of making it a daily habit.

But you love your barista coffee?  I can tell you, the taste of freedom is better!  Save that shit for later, when you’re no longer trading your life away for it.

A healthy stir-fry doesn’t have to take longer than 30 minutes to prepare.  It takes nearly that long to get food delivered!

Save going out to eat on special occasions, lazy days, and to reward yourself occasionally (this doesn’t mean every weekend just for making it through the week!)

Okay, you can see where I’m going with this.  I could continue on with every single place we spend money, but that would probably insult your intelligence and turn this into a 10,000 word essay on what should already be blindingly obvious!

So let’s cut it off there and get into some other points.


The illusion of missing out

The funny thing here is, to others, the person who practices moderation looks like they’re scrimping and scraping.

It probably appears as though they’re trying to live on as little as possible.  When in fact, it is simply someone practicing the Art of Moderation.  Enjoyment without excess.  Or, to put it another way, enjoyment meets mindfulness.

Strangely enough, our student of moderation will also be getting the most benefits with the least amount of downside.

For example, eating one donut instead of four will give you the most amount of upside (in this case, the guilty pleasure of a tasty treat), with the least amount of downside (death by sugar, lol).

Someone using a second-hand four year-old smartphone gets 95-98% of the benefit of modern technology as someone with a brand new version, at about 10% of the cost (and earth’s resources).

But this isn’t well understood because it’s such a rare feat these days.  When more is better, when new is better, and when we’re chasing one consumer high after another – the carrot of satisfaction that is just out of our reach.


Moderation = effortless efficiency = financial independence

As you can tell by now, practicing moderation becomes a habit that is reflected across our whole lives.  (article on habits is in the works)

This leads to much more efficient spending, without focusing on the numbers.  And the behaviour becomes effortless because all we’re doing is practicing the Art of Moderation.

We’re not abstaining from the perks of modern life.  We’re not avoiding things which cost money.

We’re harnessing most of the benefits in a healthier way, with less cost, less waste and less pollution.

Now, a smartarse will be quick to point out that we can always enjoy yachts, Maserati’s and Gucci bags in moderation too.

But this isn’t about enjoying everything in moderation.  That’s not the spirit of the message.  It’s about enjoying what matters in moderation.  Because some of the things I mentioned (housing, vehicles, cafes etc.) are an almost inescapable part of modern life.

Once we decide what’s important to us, what things we do value spending money on, we can go ahead and enjoy those things in moderation.  That in itself gives us a sense of calm that we’re losing nothing.

Yet at the same time we’re gaining so much, because of the huge improvement in our finances and freedom.


Why does this work?

The reason this shit works is because there is no magic level of spending which creates a happy life.  You can hold some arbitrary number in your mind, like $50,000 per year, but it’s completely made up.

Humans have an unbelievable ability to adapt to new conditions in our life, whether we think they’re good or bad.  Studies have shown we end up returning to roughly the same level of happiness within about a year.  (Pat and I discussed this in our most recent podcast)

The secret to the good life is in our attitude, the way we meet our needs and how we approach each day.  And this is rooted in our habits and our mindset.

For a certain basket of lifestyle needs, you could meet it for $20k per year, or $200k per year.  One is not ten times better than the other.  Hell, one is not necessarily superior to the other at all.  It’s our perception which makes it so.

Both options are a choice.  You can chase big numbers if you want.  But recognise you’ll be giving up a lot more of your life in return.  In all likelihood, when you get there and the novelty wears off, you’ll be left with the realisation that you don’t feel much different.

For some weird reason, we seem to be terrible at correctly forecasting how we’ll feel with different life circumstances.  Especially what we perceive as negative.  But as sooky and soft as most humans are, we end up adapting just fine.

So while chasing big numbers might be exciting, it won’t make us happier.  It won’t make people love us more.  And we won’t feel more satisfied for more than a short time.  Funnily enough, after I finished writing this post, one of my favourite writers, Mark Manson, published an article about success which drives this point home better than I can.

Because of this, it doesn’t make sense to spend so much time, energy and money to attain more luxury and a supposed higher standard of living, when it’s not going to make us feel any different.


Have we been here before?

If some of this sounds suspiciously like my post about incremental savings, you’re right.  About half way through this post, I realised the connection!

But this lesson is always coming back to me because most people still don’t appreciate it.  The simple idea that a small improvement in every area of spending makes a huge difference overall, and can result in zero freedom or complete freedom in just a decade or two.

Just for making slightly more sensible choices across the board and practicing some old fashioned restraint.  But the internet is full of extremes.  So when people think ‘early retirement’ and equate it with saving, they think “Oh I get it – I have to spend no money!”

In their mind, it’s all or nothing.  All enjoyment or no enjoyment.  Maximum spending or zero spending.  100% sacrifice now for some possible reward in the far distant future.

But it’s not like that.  The truth is in the middle, in the Art of Moderation.


Final thoughts

If we were to add up the savings from practicing this philosophy, it amounts to many hundreds of thousands of dollars over a decade, which then multiplies itself in the decades following.

If people learn nothing else on this blog, understanding and following this one simple concept is enough to change our financial lives forever.

So I’ll have to keep thinking of different ways to preach this message until it sinks in 😉

We can shortcut the gigantic waste of our personal energy by realising that a simple life in modern day Australia is inseparable from living ‘the good life’.

In fact, you could argue a simple life is the best there is.

By practicing the Art of Moderation, we keep our desires under control, rather than indulging them endlessly.  And this has the wonderful side effect of making us much stronger, mentally and financially!

How have you practiced moderation in your own life?  Let me know about it in the comments below…


24 Replies to “The Lost Art of Moderation”

  1. Best thing we did three years ago was get rid of second car, I’m a FIFO worker so half the year it wasn’t even used, then wife only worked part time so In reality I only really needed it 4 days a month… gave the car to my son, I cycle where I need to go now on the days my wife works… helps keep me fit at 53 too 🙂

    We also cook loads at home, shop every couple of days for the ingredients, so we only shop the shopping list, meals taste so good using fresh ingredients and spices, plus we hardly throw waste food away now as we shop just what we need rather than a big once a week guess what we might need shop

    1. Such a good point Mark! Because of the C word situation in Melbourne right now, I’ve been going to the supermarket twice a week at the moment (I walk there so I can’t physically carry everything we need for a whole week all by myself!) and I’ve realised that over the past couple of weeks we’ve spent less on our groceries than when I do one big shop (and we’re of course avoiding throwing out veggies that weren’t used at the end of the week!).

  2. Dave,

    Sage words. Nothing quite like a splurge, a binge or some occasional excess to make one appreciate the value of moderation. It may be boring, but being balanced is the cornerstone to a happy and varied life.

    All the best.

    1. Cheers David. And because the balance helps build a happy life, it creates contentment rather than boredom.

      1. Moderation is for Smucks! Nah, only joking, you’re spot on!

        I remember a study done some time ago, in which it was concluded that one’s happiness doesn’t increase much with one’s increasing wealth, once a little more than basic needs plus a bit were met. Ever increasing wealth doesn’t result in greater and greater happiness. It plateaus!

  3. This is my new fav post of yours. Diving into the psychology of finance is so interesting. I couldn’t agree with you any more. I’m guessing you’re more or less a ‘Minimalist’ in a few categories in life. I low key want to frame “I can tell you, the taste of freedom is better! Save that shit for later, when you’re no longer trading your life away for it.” with a picture of a beach (or some other corny and cliche background) and put it up on our wall haha

    1. Haha glad you liked it! Yeah, I’m definitely a bit of a minimalist at heart, which I’m realising more as time goes on 🙂

  4. I really love the fact that there is a huge overlap between financial responsibility and environmental responsibility. Many actions tick two boxes that are important to me.

    1. Cheers Lachy. That’s a good one! I hadn’t heard that before, so I looked it up. Here’s the definition: “moderation is more satisfying than excess.” Perfectly put!

      1. Thanks Dave! I try and remind myself of this quote often when I feel myself wanting more or unsatisfied and being greedy

  5. I really like Paula Pant’s idea of “you can afford anything, but not everything.” I am not afraid to spend money on things that I value. This year I spent 18K on an overseas holiday for a single person! But where the FI comes in is not wasting money on shit that I don’t value and consuming things for the sake of consumption or for the sake of showing off. Spend freely on things that are important, but cut out the crap that isn’t needed.

  6. Nice one dude. I find moderation in exercise. Rather than going to the Gym I train with my Kettlebells down by the bay in town I don’t go crossfit but I do enough that I can achieve leather large strength gains but also able to work and surf without feeling sore. I would say I get out of two pieces of equipment than most do by paying to go to the gym.

  7. I think the research say it is somewhere around 40000 a year that enables ppl to live a comfortable life, housing wise, holiday wise, car wise. Not excessive but having options. I know some ppl live on lots less, particularly if house paid off, however I think the point was that Theresa discernible increase in happiness to that figure and minimal discernible increase in happiness from that point 🙂

    1. Thanks Hannah 🙂

      I think I’ve seen a number even higher than that thrown around in terms of income. But I wonder if the research accounts for the fact that if we spend $1 but have $2 we’re likely to be slightly happier than if we simply earn $1 and spend $1, for the simple reason that we feel more secure and have more options available to us. Spending is the same, but the wealthier person is happier. I think the studies could overlap these things and suggest that higher income/spending are the same thing and both increase happiness.

      Having wealth/income above our minimum needs is useful for this reason, it gives us freedom and options. So I think that’s part of it, which maybe isn’t considered.

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