“Money can buy many things, but nothing more valuable than your freedom.”

Why it was said

JL Collins writes this in The Simple Path to Wealth (2016), the book that grew out of letters to his daughter about money and investing. It sits beside his warning that the things you own come in turn to own you, and it underlies his idea of F-You Money: enough savings to be able to say no.

What it actually means

Collins measures money by what it lets you refuse rather than what it lets you buy. A bigger house, a newer car or a more expensive lifestyle each come with costs that tie their owner more tightly to a salary, and so to whoever pays it. Savings work the other way. Every month of expenses set aside widens the range of choices: leaving a bad job, taking time to care for someone, turning down work that conflicts with your values. The line is a test to apply to spending decisions, not a rule against enjoying money. It also explains the rest of his method, from avoiding debt to investing in low-cost index funds, which serve this one goal. How much freedom a given amount buys depends on income, costs and circumstances that differ widely between people and countries.

How to use it

1. 1Work out how many months of your current expenses your savings would cover, and set a target for raising that number by one month this year.
2. 2Before a large purchase, write down how many weeks of work it costs and whether it will add a recurring cost, then wait a week before deciding.