A few years ago, a company’s director asked me to speak to his employees about saving and investing. Before I began the presentation, he privately explained why he invited me. “I don’t want my employees to make the same mistake I made,” he said. He earned several million dollars a year. And although he looked rich, if he lost his job, he only had enough savings to sustain his lifestyle for a handful of months. This reinforced something for me: financial security doesn’t always relate to how much money you make. What you do with your money can be so much more important.
Kristy Shen and Bryce Leung didn’t earn such eye-watering incomes. But as young engineers living and working in Toronto, they earned far more than the typical household couple. Typically, those who earn more than most spend more than most. People’s peers often influence their lifestyle decisions. People can easily slip into a lifestyle of buying expensive cars, taking five-star vacations and over-extending themselves to buy expensive homes. And because their professional peer groups do it, they just think it’s normal. “The more you make, the more you spend” often rings true.
But Kristy and Bryce were different. For starters, Kristy spent her first eight years growing up in rural China. At one point, her family subsisted on just 44 cents a day. China’s economic development has been impressive. But as I explain here, much of the country still struggles to make ends meet.
When Kristy’s father earned an opportunity to study in Canada, his young family eventually followed. Kristy, in fact, still recalls the first time she drank Coca-Cola. “I was eight years old,” she says. “My dad gave it to me soon after we arrived in Canada. Drinking that can of Coke symbolized to me that I had ‘made it.’” Ironically, her nose began to bleed from the massive sugar rush.
On many levels, this was symbolic. Kristy now lived in a country of abundance. Bryce, who was raised in a middle-class family, and she were soon earning strong incomes. But they embraced a simple, modest lifestyle over a materialistic sugar binge.
“We wanted to buy a house in Toronto,” recalls Kristy. “But home prices kept rising, so it was getting discouraging. Each time we saved another $100,000, we found that home prices had risen by at least that much.” Bryce, however, had an epiphany in 2008. They could continue to rent their low-cost apartment and pile the money they had earmarked for a home down payment into a portfolio of stock and bond market index funds.
“We started to invest in 2008,” recalls Bryce, “just before the market crash.” But instead of freaking out when the stock market tanked, the couple stayed the course. “We had a portfolio of 60 percent stocks and 40 percent bonds,” says Kristy. We rebalanced that portfolio as stocks dropped, which allowed us to take advantage of falling prices. And we continued to add more money from our salaries every month.”
Bryce enjoyed his job as an engineer. But Kristy’s heart was elsewhere. “I didn’t like working as an engineer. I wanted to write instead.” Bryce soon recognized that he had a creative flair as well. The couple wrote three children’s book manuscripts, of which one (Little Miss Evil) was published.
By 2014, their investment portfolio had risen to $1 million. They figured they could retire, based on withdrawing an inflation-adjusted 4 percent per year. Now, here’s the amazing part: Kristy and Bryce were just 31 and 32 years old, respectively.
Four percent of $1 million is just $40,000, so you might wonder how they managed. They were too young to earn Canada’s equivalent of Social Security. They wouldn’t be able to supplement that with a pension either. And, they lived in one of Canada’s most expensive cities. So they chose to do something completely out-of-the-box: travel full-time.
You might think traveling is expensive. But by spending time in low-cost countries like Thailand, Kristy and Bryce found they could live more cheaply than if they were staying at home.
I don’t actually recommend early retirement. Research suggests people don’t live as long when they leave the workforce early. But Kristy and Bryce haven’t stopped working. They just work differently. In 2020, they published a bestselling book, Quit Like a Millionaire. Their fun, easy-going writing style, narrative stories and solid financial advice make it one of my favorite personal finance books. They also write regularly on their popular blog, Millennial Revolution.
No, you might not be able to quit your full-time job when you’re just 31 years old. But that’s not the point. Instead, if we say no to materialistic urges and ignore what Mr. and Mrs. Jones are buying, we can save more for our futures. This can, in turn, provide us with choices: to work longer or not…to work part-time or not. No matter what stage of life you’re in, I think you would enjoy their book, Quit Like a Millionaire.
Andrew Hallam is a Digital Nomad. He’s the author of the bestseller Millionaire Teacher and Millionaire Expat: How To Build Wealth Living Overseas