When you’re paying off a debt or reaching some other financial goal, you usually have to cut back on restaurants, movies and other fun stuff. After a while, that can get old. But working hard to reach your financial goals doesn’t mean you can’t enjoy life. You just have to find a balance.
Some argue that money goals are silly. It doesn’t make sense to deprive yourself now, they say, when you have no idea what your future will hold. What if your scrimp and save for retirement only to meet an untimely, young death? That would suck.
On the other hand, what if you do live well into your 60s, you have nothing saved, and you’ve spent most of your life avoiding debt collectors and worrying about how to make ends meet? That also sucks. Overall, it’s just about finding a balance. Here’s how you can work toward your money goals without feeling like they’re taking over your life.
Prioritise Your Spending
When working toward your goal, you don’t want to deprive yourself completely. A lot of people make this mistake and end up wrecking their budgets and, in turn, their goals. It’s helpful, in the long-term, to leave some room for spending in your budget.
That being said, you don’t want to go completely nuts, either. The key is to splurge wisely by prioritising your spending. Here’s how.
- List all the things you spend money on each month.
- Determine your essential expenses.
- Find ways to cut back on those essentials, if possible.
- Of your non-essentials, determine what you enjoy spending money on most. (Maybe it’s restaurants. Or weekend road trips. Or even lattes. Lattes get a bad rap in the frugal world, but hey, maybe they’re your thing.)
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Nix the non-essentials you don’t get much out of. (Maybe you really like your lattes, but never actually watch movies on your pay TV).
- If something brings you a little enjoyment, find ways to get it for free or cheap.
- Come up with a number for your spending/entertainment/splurge fund. Whatever you want to call it, figure out how much “budget breathing room” you’re comfortable with.
- Focus your spending fund on the areas you enjoy. If you can save money in those areas, even better. That optimises your spending budget.
The bottom line: cut back on the stuff you don’t care about so that you have more money to spend on things you do care about.
Focus On Experiences Over Things
Remember: spending our money on experiences makes us happier than spending money on things. Researcher and SF State Associate Professor of Psychology Ryan Howell told Science Daily:
People actually do know, and accurately predict, that life experiences will make them happier. What they really underestimate is how much monetary value they will get out of a life experience. Even though they’re told experiences will make them happier and they know experiences will make them happier, they still perceive material items as being a better value.
Keep this in mind when you prioritise your spending. Chances are, experiences make you happier than things, too. The goal is to find a balance between saving and enjoying life, so it probably makes sense to focus your spending money on experiences.
Find Ways To Have Fun On The Cheap
Saying “The best things in life are free” may be clichéd;, but true. But, then again, fun experiences often cost money. Travel, for example, is one of the most universally enjoyed activities, and it can be pretty expensive. But that doesn’t mean there aren’t plenty of fun ways to entertain yourself on the cheap. Some of my favourite examples:
- Go to the movies on discount days.
- Take advantage of the public library. Not only do they have plenty of free resources, many of them host cool free events.
Remember the Purpose of Your Goal
It’s easy to be swayed by the “you only live once” argument when you’re working toward your goals. It’s tempting to stop paying off your debt or saving for your retirement and live it up in the present.
As enticing as it may be to give up, keep in mind: you’re saving or getting out of debt for a reason. Money doesn’t buy happiness, but financial freedom does give you flexibility, options and security, and all of those things can make a big difference in your day-to-day satisfaction. Financial site Frugal Fringe puts it this way:
When you save, you receive instant gratification because every day you get to watch your wealth grow. Non-savers are always stuck in second gear (and it hasn’t been their day, their week, their month, or even their year). Savers, on the other hand, settle comfortably into a lucrative overdrive.
Let’s look at this graphically: the blue line below represents the net worth of a saver; the red line represents the net worth of a non-saver. The vertical line down the middle of the graph represents the present moment in time.
Obviously, this graph is totally silly and not at all scientific, but it does perfectly illustrate the point. As writer A Noonan Moose puts it, a non-saver might dream of travelling to Paris someday. But for a saver, that dream is more tangible because they have the savings that could actually pay for a trip.
Celebrate Your Milestones
Finally, don’t forget to plan small celebrations when you do reach a goal. Set smaller milestones so your goals are more accessible. Then, maybe reward yourself with a small luxury. Your luxury could even be a free one — a day off, maybe. Or, if your goal is saving, consider a goal-based account that will reward you for socking away a certain amount.
Celebrating your milestones gives you something to enjoy, and it motivates you to keep going. And that can go a long way toward finding a balance between getting your finances in shape and living a full life.
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