Live Your Best Life Today without Sacrificing Tomorrow

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The key to life, happiness, and wealth involves balancing your future needs with your present desires so that you can live your best life while still enjoying a fulfilling retirement.

It’s a constant tension. Present vs. future. Future vs. present.

Do I spend all my money on the fun stuff I want now? Do I keep it all stashed away for future needs? As kids, we reached for immediate gratification, almost without fail, being extremely present-focused.

Sooner for some, later for others (and perhaps never for yet others…), we grow up and realize that if we keep spending like there’s no tomorrow, tomorrow will show up anyway, and we’ll face it with little freedom of choice, potentially unable to take care of ourselves anymore, like Aesop’s fabled grasshopper.

“Growing old is mandatory. Growing up is optional.” – Quote often attributed to Chili Davis.

The Obvious Solution. Or Is It?

The obvious way to avoid sharing the grasshopper’s end is to be uber-frugal, socking away every possible dollar toward future needs. That’s the path followed by adherents of the Financial Independence, Retire Early (FIRE) movement.

These fine folks are determined to earn as much as possible and spend only the barest unavoidable minimum, socking away 30, 40, 50, or even up to an incredible 70 percent of their income over 10-15 years. This, to build up a million-dollar-plus portfolio so they can retire in their 40s (if not earlier!).

There are several problems with this approach.

It’s hard to sustain such incredible levels of frugality for over a decade without giving up on it.
Nobody promises us we’ll be here tomorrow, let alone in 10-15 years, so your multi-year sacrifice might be in vain if you don’t survive to enjoy the fruits of all that deprivation.
A million dollars, or even two million dollars, doesn’t guarantee a 40-50 year retirement unless you’re willing to live on $20k – $25k (until you can start your Social Security retirement benefits, which will be a small fraction of what you’d get if you worked a full career because you’ll only have 10-15 years of earnings while your benefits are based on your 35 years of highest earnings).

Especially that first point reminds me of a joke about a farmer who, meeting a friend, complained bitterly. He had fallen on hard times and wanted to minimize his costs by reducing the amount of feed he gave his donkey. “Then, just as I got him used to eating almost nothing, the donkey up and died! Now I have to start all over with a new donkey!” he concluded miserably.

Don’t make yourself that donkey!

I Made Mistakes that Taught Me an Important Lesson

When I was younger, I fell prey (like everyone else) to being overly present-focused. I recall spending my first four paychecks on a hi-fi stereo system because I really wanted it.

Was that the best use of my then-very-limited resources?

Not at all.

Sure, I enjoyed listening to music on that system for years. But it’s been decades since I had to sell it before moving to the US, and I never missed it afterward.

Had I instead spent just enough to get a moderate-quality system and invested the rest, my portfolio would probably have an extra $60k in it today.

When I moved to the US, I spent $8000 on a three-year-old 3.8L V6 Ford Taurus LX. For me, at the time, that was an insane upgrade relative to the 10-year-old 0.9L 4-cylinder Ford Fiesta I had before moving here.

Thing is, I had to borrow $6000 at 10.4-percent interest (ouch!) to buy it!

Had I practiced moderation, I’d have bought a less-impressive-to-me car with just the $2000 cash I had for this purpose and invested the money saved on auto-loan payments.

Had I done that, my current portfolio would be another $100k larger.

For years, I obsessed over our budget, trying to cut it as low as I could. I’d review it and re-review it multiple times a month. I’d keep track of every penny we spent and made myself miserable whenever we spent what I deemed to be too much.

It’s only in recent years that I’ve learned to let go of that level of concern.

It took many years longer than I wish it had, but I finally learned the right lesson and chose to pursue what I believe to be the overall better path — moderation.

The Better Solution to Live Your Best Life

Balance.

It’s what lets us live our best life overall, enjoying life in the present while being mindful that our future self, like a baby, utterly depends on our present-day choices.

We need to grow up enough to realize that sacrificing our future self’s needs to gratify short-term wants is a bad trade. However, we need to grow up enough to also realize that all is not black or white. That there are infinite gradations of gray in the middle, and that’s where the best path lies.

Don’t focus on just your next step without looking a few years (or even decades) out to see how that step will affect your ability to reach your ultimate goal.

On the other hand, don’t (completely) sacrifice the present for the future. Don’t so over-commit to the end result (future success) that you sacrifice your ability to enjoy the journey (current happiness).

That’s the path to misery and burnout.

Here’s how two professional financial advisors help clients find balance and reduce stress.

Zack Swad, CFP, CWS, BFA, AWMA, AAMS, President & Wealth Manager, Swad Wealth Management, says, “I help clients create balanced lives by first helping them get crystal clear on what is most important to them and then prioritizing those elements. Then, we categorize where their money goes between fixed costs, investing, savings goals, and everything else.

“That helps us understand where things currently stand and figure out what doesn’t align with their priorities. This in turn helps identify where they may want to redirect money from one area to a different one that aligns better. For example, if they want to retire early, they’ll want to divert more money from low-priority spending to investments. Being intentional about your spending doesn’t necessarily mean you can’t have a daily Starbucks drink, but rather making conscious decisions on where your money goes to help you live your most fulfilled life both now and in the future.”

Sean Polley, Private Wealth Manager, CEO, Polley Wealth Management, says, “We coach clients to set up a proper emergency fund and fund their future goals and objectives. This helps them feel comfortable with their current spending because the projections show they’re on the right course. Since life is dynamic, with both expected and unexpected life transitions, this needs to be an ongoing process that helps you stay on course and confident in your spending.”

The Devil Is in the (Ever-Changing) Details

Have you ever watched a circus high-wire act?

It’s a high-stakes activity, especially if there’s no safety net.

If you look closely, you’d see how the acrobat constantly adjusts, making minute corrections to maintain his or her balance.

At least in this regard, balance in life is no different.

You can’t balance your current pleasure and happiness with your future needs, pleasure, and happiness through a one-time set-it-and-forget-it decision.

Balance won’t necessarily be 50/50, nor can it be static.

It could be 90/10 today, 70/30 next year, and 40/60 in a couple of decades.

You might lose most of your income at times, forcing you to shift dramatically to 100/0! That’s the high-wire equivalent of teetering on the verge of falling off to one side and shifting your balance pole as far as you can to the other side to help you regain your balance.

Balance is about realizing and accepting that change is inevitable - your environment changes, you change, sometimes your environment changes you, and sometimes you change your environment.

Accepting all that lets you keep shifting your balance as needed, informed by such changes.

Erik M. Baskin, Founder, Financial Planner, Baskin Financial Planning, agrees, saying, “Balancing today vs. tomorrow is a constant tradeoff in financial planning. Finding that balance is perhaps the most important thing I do for clients. You need both quantitative and qualitative inputs to make better decisions about these tradeoffs. As a financial planner, I do the best I can to provide useful quantitative inputs by analyzing savings rates and the range of dollars needed to be invested today to reach a client’s long-term goals, including retirement. Once we have those quantitative inputs, we can have a better conversation about qualitative inputs such as family, location, job, stress, and other things that affect decisions about what to do today. I believe this mix of numbers and words and the ability to help a client make the best decision with the information available is what makes a financial planner invaluable.”

5 Tips for Implementing Balance into Your Financial Life

First Tip: It’s All Personal

The first and most important tip is to search within yourself. What makes you happy? What are your goals and priorities?

Once you figure that out, prioritize spending your time and resources on maximizing the presence of these priorities in your current life and maximizing them over time.

But again, remember that this isn’t a once-and-done exercise. Make it, e.g., part of your New-Year practice to reassess those priorities and goals.

Second Tip: Quantify Your Goals

Determine the cost associated with each of your priorities and goals and by when you want (or need) to achieve each.

Also, how much of what’s needed is already in hand?

From those pieces of data, you can figure out how much you need to start setting aside each month for each goal and whether you may need to set aside less for some goals now so you can concentrate on more urgent ones, later increasing your emphasis on those currently lower-urgency goals.

Depending on how you invest your funds targeting a specific goal, you can expect them to grow over the years or decades. You can (and likely will need to) add monthly or annually to that investment, but those additions will also grow over time, so you don’t have to plan on saving the full cost of each goal.

Third Tip: Think of the Future in Current Terms

To make it psychologically easier, try thinking of investments for future goals the same way you think of spending on something you’d buy today.

Both take dollars out of your checking account. The question is this — which brings you more happiness, satisfaction, and contentment over the long term, and which will you regret doing once you’re a week into the future, a month, a year, or a decade?

Fourth Tip: “Conventional Wisdom” Isn’t Always Wise

Remember that you don’t have to accept every “pearl of conventional wisdom” about your goals and what they “should” be. Many say you need to pay off your mortgage before retirement. But given that doing so pits your mortgage-busting goals in competition with your retirement-fund goal, it isn’t necessarily your best bet.

If your portfolio grows large enough to easily cover your mortgage payment from your retirement income, there’s nothing wrong with continuing to have mortgage payments well into retirement. In fact, over so many years, the difficulty of carrying the payment will drop dramatically due to inflation. My parents, for example, had to pay half my dad’s monthly salary when they purchased the home I grew up in, but their last payment had declined in value so much that it would have been about the cost of a neighborhood restaurant meal for a family of four.

Fifth Tip: It’s Unlikely Starting on a Big Goal Will Ever Get Easier

Especially if your goal is big and hairy, it’s unlikely to ever get easier to reach if you put off starting. So, start right away or at least put in place a specific plan as to when you’ll start and how you’ll reach the goal on schedule starting then.

Are You Living Your Best Life?

Your present needs and wants stand in opposition to your future ones.

Worse, the power of compounding returns means that every dollar you spend today takes away dozens of dollars from funds that could otherwise be available decades in the future.

However, that does not mean you should commit to years and years of a miserably frugal existence in the hope that your future prosperity will make it all worthwhile.

You need to learn to manage these opposing ideas.

Quoting F. Scott Fitzgerald, “The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.”

If you can hold in your mind those two opposing ideas – the enjoyment of your life in the present and investment for your future self’s prosperity, that’s your key to life, wealth, and happiness.

Caveats

There are a couple of important caveats to all of the above.

If you’re objectively poor, you have very little margin allowing you to plan for the needs of your future self; in this situation, you can only do the best that you can, and hope factors beyond your control will favor you later in life.
The above concentrates on financial choices and prosperity; this doesn’t mean there are no non-financial aspects, nor even that the financial ones are somehow more important than, e.g., your health, your family, your friendships, etc. – they aren’t more important, they’re just the intentional focus of this article.

About the Author

Opher Ganel, Ph.D.

My career has had many unpredictable twists and turns. An MSc in theoretical physics, a PhD in experimental high-energy physics, a postdoc in particle detector R&D, a research position in experimental cosmic-ray physics (including a couple of visits to Antarctica), a brief stint at a small engineering services company supporting NASA, followed by starting my own small consulting practice supporting NASA projects and programs. Along the way, I started several other micro businesses and helped my wife start and grow her own Marriage and Family Therapy practice. I draw on these diverse experiences to write about personal and small-business finance to help people achieve their personal and business finance goals.