It’s important to pay off all your consumer debt. It’s important to save for retirement. It’s important to save for your children’s college education. It’s important to build up an adequate emergency fund. But it’s also important to have some fun in the process. It is imperative to strike that delicate balance between tackling your financial goals and enjoying life’s pleasures. Sure, bills need to be paid and money needs to be saved or invested, but it does not mean that you can’t enjoy yourself while you’re working towards those financial goals.
In college and the few years thereafter, I never really thought much about my financial future. It’s probably safe to assume that not too many people at that stage in their lives put emphasis on the future. I was more concerned with the way I dressed than the amount of money I had stashed for retirement. I’ve always valued money, but I just didn’t know what I was to do with it. I was focusing on the “present” and thought that the future would take care of itself. I told myself, “I’m young. I have plenty of time to save for retirement and all that long-term stuff.” Although I didn’t assume any debt (aside from my student loans), I also didn’t put aside any money. Essentially, I spent all the money I earned. I was having a lot of fun, but I had nothing to show for on my balance sheet.
It wasn’t until several years ago that I started to focus on the future. I read books and articles on the importance of saving for retirement and other financial goals. I studied statistics and charts outlining the advantage of investing early. I became deeply engrossed in personal finance. In fact, at times it became an obsession. I had become so focused on my financial future that I was doing so at the expense of the present. I wasn’t having fun. I was turning down invitations to events and activities, all because I didn’t want to spend any money. I managed to save and invest quite a bit, but I was miserable for it. Personal finance is about allocating your resources efficiently so as to maximize the things and goals most important to you. I had forgotten this very tenet. Traveling has always been important to me, but in my quest to better my financial future I had neglected it as well.
Why did I completely shift my focus from the present to the future? Well, it’s because I was thinking about the past. After my personal finance revelation, I had major regrets in the financial path I was taking. I thought to myself, “I can’t believe I just wasted all those years. I could’ve turned those early years into A LOT more money in the future.” I looked back. I wanted to make up for those lost years, so I hunkered down and followed a monastic approach. I had taken it to the other extreme. When you let your past dictate your present and your future, no good things will come out of it. The past can be useful. When utilized properly, it can serve as a great guide for the present and future. You just can’t dwell on the past and think you can change it. What’s done is done. Learn from the past and use it to your advantage.
Moderation is key. You can’t solely focus on the present and neglect your financial future. You don’t want to create additional stress for your future self. You don’t want to resort to eating cat food in retirement. You have to look out for the well-being of your future self. At the same time, you can’t be so obsessed with the future that you’re not enjoying life today. What good is all the money in the world if you’re old and can’t really enjoy it? I want to travel the world, but I don’t want to have to do it all in my 70s, 80s and 90s. I want to take advantage of my youth and live life to the fullest extent possible. In doing so, however, I do understand there are limitations. I want to have some fun now, but I also want to ensure that I’m taking care of myself and my family in the future.
You have to budget both for the present and for the future. You need to be able to include a category for “fun” in your budget. For us, traveling comprises an enormous chunk of this category. When you get a bonus, it’s perfectly fine to buy something small for yourself. After a long week of work, it’s okay to go out for drinks with the co-workers. There’s nothing wrong with taking out your significant other to a nice dinner every now and then. You deserve all of the above. Just don’t do it too much. Do it in moderation. Make sure that you’re still tracking your spending and have all of the other financial bases covered. The wife and I are not perfect by any means. We still struggle to find that perfect balance. There’s so much that we want now, but we also want it good for our future selves. Thus it is important to strike a balance between the present and the future, while allowing the past to be your guide.