When we first were married my husband was in the Army and we were stationed in Anchorage, Alaska. We were 22 and 23 years old and just starting out. Of our group of friends we were the only ones that were married, and for a while the only ones in a relationship. We were surrounded by young Lieutenants whose motto was “invest in your youth;” Meaning they weren’t concerned about investing in their future, but in the present. They were making memories, taking incredible trips, and having a blast. Fortunately, my husband has always been financially savvy, and even from a young age has taken steps so that we can live comfortably and still plan for the future. Now with a few more years and a little more knowledge under my belt I understand the importance of saving, and also finding the balance between investing in your future and investing in your present. So how do you find that balance? What can you do to work forwards financial freedom and yet not feel imprisoned?
One way that we safeguard our finances is by automatically withdrawing all of our investments each month. We have our 401K and HSA contributions automatically deducted before we even see the money. If we don’t ever see that money, than we can’t spend it. And you get a tax break by doing this. We then have our IRA contributions autodrafted each pay period, immediately after being paid. Again, to avoid spending and forcing ourselves into spending money wisely and not wildly. We never miss this money because we never see it.
Dave Ramsey in his podcast this week briefly touched on finding balance between budgeting and spending freedom. When trying to determine the amount of money you want for fun and play versus budgeting/saving/investing/paying off debt, you need to ask yourself “What’s the trade-off?” Because every penny you frivolously spend isn’t going towards paying off debt. This is pretty straight forward advice; If you aren’t saving it, you’re spending it. Is it worth it? Sometimes it may be.
When I think about whether or not something is “worth it” I don’t just think about it from a financial standpoint, is it mentally worth it? Will I experience guilt for the purchase, or will this psychologically beneficial? Saving money and paying off debt is exciting; Getting a new handbag is exciting. One of those will be mentally positive the other will be exciting in the moment and then cause guilt later. So how can you have fun and excitement and still have a life? Budget some fun into your finances! If you love going out to eat, put that into your budget. We don’t eat out much, but we do allot money each month to do so. We also try to be thrifty with our choices when we go. Sure I’d love to get a couple of El Presidentes or Patron Margaritas, but do I want to spend $8 on a drink? Yes, but I probably wont. Another great example of this is golf for my husband. Golf is something he enjoys, but it’s also an outlet for him. A way for him to relax, be physically active and blow off steam. A round of golf at our local course costs approximately $25, and he plays about a round a week. To our family, this is worth the money. The psychological benefits outweigh the financial costs.
It’s still important live your life, and do things that bring you joy. To enjoy hobbies and activities in which the financial trade-off and personal gain meet your standards. So what’s your trade off? How do you stay on budget and also allow yourself a little fun here and there?