Balancing ‘Living for Today’ with ‘Saving for Tomorrow’
Full disclosure: this is not an analytical blog. You will find no charts, graphs, or data. What you will find is the opinion of a person who has gone through a few things in life and wants to share something with you that you probably already know: tomorrow is not guaranteed.
In the financial planning world, we spend a lot of time modeling growth rates, optimizing portfolios for tax efficiency, and projecting retirement scenarios for our clients. This is undoubtedly an important exercise, but it is also way too easy to lose sight of the primary purpose of money: to fund a meaningful life. The most complex challenge most clients face is not volatility, market downturns, or inflation; it’s finding an acceptable balance between enjoying your wealth today and preserving it for tomorrow. I would argue that the first step to finding that balance has nothing to do with your account balances and everything to do with discovering what actually brings you joy. Essentially, I’m saying you need to Marie Kondo your life (not everyone will get this reference, but I hope you do).
The Danger of Only Looking Ahead
It’s easy to fall into a pattern of perpetually delaying gratification. I know this because it happened to me. When my wife and I were expecting our first child, she expressed the desire to be a stay-at-home mom. I was in full support as we both agreed that this was the best path we could go down for our family, but as two 27-year-olds with student loans, car notes, credit cards, and a penchant for spending what we wanted, when we wanted (all of which we could comfortably afford with two incomes), we realized quickly that our lifestyle had to change. So, we got to work saving money and paying down our debts as quickly as we could. This was not an easy shift (for me, I’m the spender), but we eventually began swapping dining out with meals at home, dates to the movie theater with dates on the couch, and weekend trips to visit out-of-town friends with Facetimes and phone calls. Simply put, we built habits that allowed us to financially accomplish our goals. And surprisingly, it felt good. Really good.
We treated “not spending money” like a game. For every trip we didn’t take and every meal we cooked ourselves, we saw it as a win. We became so hyper-focused on frugality that it fundamentally changed how we operated. While there are plenty of people who would say that this is a good habit to build (and I would agree, to a point), I would also argue that there are experiences we missed out on because of it. While we were a young couple raising children (two boys born 19 months apart), it’s probably safe to say we weren’t going to be world travelers, even without those habits. But I do know that our pendulum shifted too far in one direction; we were terrified to spend money, even when we could comfortably afford it.
Almost nine years later, we’ve learned that sometimes, it’s okay to live for today. Life experience has taught me the hard way that not everyone gets to enjoy the fruits of their labor, and that the future is guaranteed for no one. We still try our very best to save at appropriate levels, pay our bills, and do what we can to keep our lifestyle from outpacing our budget. But when we have an opportunity to experience something new or do something special with our family, we take it. We are by no means a perfect example of balance, but we’re working towards it by recognizing that our predisposition for saying, “we’ll do that in a few years,” is potentially more of an aspirational statement than the promise to ourselves that we once thought it was.
Letting Your Budget Shape Your Lifestyle
As advisors, we constantly preach the concept of “paying yourself first,” and regardless of the words I’ve written so far, this is still very important. The permission I’m encouraging you to grant yourselves to spend on the goods, services, and experiences that bring you joy should really come after you’ve met your obligations. And if we’re treating saving for the future as an obligation, then it’s no exception to that rule. Build your budget, determine how much you should be saving to support your ideal future lifestyle (perhaps with the help of your financial advisor!), and determine what’s left. That surplus becomes your lifestyle line item.
If you find that there’s not enough money at the end of your month, you really have two options: earn more or spend less. If earning more isn’t realistic for you and your situation, then move to option B. Do the hard work and go through a detailed budgeting process. Download your bank and credit card statements, categorize your spending, and take an honest look at how your dollars are being spent. The results can be eye opening (they were for me).
Once you’ve come to, pick yourself up off the ground and determine your own definition of what is necessary, and what is “fluff”. Life has undoubtedly become more expensive, but don’t let that broad statement become your excuse to simply stick with the status quo. Do you need 12 different streaming services and multiple gym memberships? Is DoorDash a necessity, or should it be treated more like a once-in-a-while luxury? Maybe your answer is yes to these questions, but my guess is there are items in your spending that you could live without.
Once you’ve gone through this exercise, determine what your true surplus looks like, and craft your lifestyle around what you can realistically afford. Be reasonable, but don’t be afraid to be aspirational. Determine your “non-negotiables,” and make the shifts necessary to build the life you want. If the process breaks, go back and revisit options A and B, then hold yourself accountable. There’s an old saying about excuses that I’ll get in trouble for writing here, but the basic premise is that everyone’s got one and they don’t smell great. Life’s too short to keep pushing your desires down the road until it’s too late. Do the hard work and make the changes that your goals require. I truly believe that you’ll be glad you did.
Remember, Comparison is the Thief of Joy
When people do decide to spend, that spending is often misaligned with their actual values. We live in a modern world, one where the lifestyles of others can be accessed 24 hours a day through an app on our phones. It’s incredibly easy to see what others have and decide to try and upgrade your lifestyle, not because it brings you joy, but because it reflects the desires of those around you. Just because we understand that it’s human nature to compare ourselves to others doesn’t mean those comparisons won’t creep into our subconscious minds; moving into the larger house, buying the luxury vehicle (honestly, it’s probably a lease), or paying for the exclusive country club membership often has less to do with individual desires and more to do with the perception of success. True financial independence means making intentional choices that are free from external expectations.
Here’s a good exercise to put into practice when you’re contemplating your next lifestyle upgrade: apply the "5 Whys". Ask yourself why you want the item, and then continue asking “why” to each answer until you find your true motivation. If the core reason is external validation rather than internal satisfaction, it’s a pretty clear sign that that money is better spent elsewhere. By avoiding the temptation to keep up with the Jones’s, you might just free up cash flow that can be redirected toward your actual priorities.
Tying It All Together
One thing I’ve learned to be true is that wealth is not merely a number on a statement that should be maximized at all costs. It’s a tool. When wielded correctly (and intentionally) it can act as a safety net for the decades ahead while simultaneously serving as an engine for your happiness today. The right balance will look different for everyone, but the core philosophy remains the same: save enough to ensure your future is secure, and spend purposefully enough to ensure your present is a life that you’re proud to call your own.
Disclosures
Investment advisory services offered through Elevate Wealth Management, LLC, a registered investment advisor. The firm’s ADV Brochure and Form CRS are available, at no charge, by request at information@elevateasset.com or 307.461.5550 and are available on our website www.elevateasset.com. They include important disclosures and should be read carefully.
This material has been prepared for information purposes only and is not intended to provide, and should not be relied on for accounting, legal, investment, or tax advice. No investment decision should be made based solely on information provided herein. There is a risk of loss from an investment in securities, including the loss of principal. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for an investor’s financial situation or risk tolerance. Before investing, consider investment objectives, risks, fees, and expenses. Elevate does not provide tax or legal advice.
