Spending Money to Enjoy Life Now vs. Saving and Investing for the Future
By: Brian Kim - October 18, 2007
This is an issue that many people have probably wrestled with at one point in time or another in their lives, probably during their 20’s and 30’s.
One side of the issue claims that since you work hard for your money, you should spend that money to enjoy your life. Travel the world, eat at all the nice restaurants, wear the best clothes, drive the nice cars, in short, live life to the fullest. Life should be enjoyed. You shouldn’t live like a miser. What if you die tomorrow? All that money you saved would’ve been no good and you would’ve never really got to experience life. And add to that, what good is money when you’re too old to do the things you want to do which you’re perfectly able to do when young?
Then you have the other side of the issue.
The other side claims that if you save and invest your money now rather then spend it on enjoying momentary pleasures, your financial future will be secure and you won’t have to worry about not having enough money for retirement. It’s better to have a fat bank account show you the miracle of compound interest rather than live life paycheck to paycheck. In short, it’s a tradeoff, but in the end it’s worth it.
Both sides of the issue argue good points, hence causing the dilemma that people often find themselves in. The ideal solution here would be to find the middle ground between the two sides, but the issue has seemingly been painted as black and white in people’s minds. It’s either or. You can’t have both. You’ve got to choose between the two.
Let’s explore the two sides and see what we find.
When people choose to spend their money to enjoy life now, it simply means they’re putting precedence on the present over their financial future. It doesn’t necessarily mean that they’re using ALL their money to enjoy the present – it’s just enjoyment of the present is where the money goes first and anything else can be potentially saved for the future. How that money is spent to enjoy the present will be different for each person. It might entail buying a nice big house instead of a starter house and buying a nice car along with that, expensive clothes, expensive trips and vacations, etc.
There’s nothing wrong with any of that stuff. There’s nothing wrong with that at all.
The only potential negative side to this is once you start to going down that path, it’s very hard get off of it. It’s hard to “downgrade” your lifestyle because you become so accustomed to your current one. Humans are creatures of habit and if this lifestyle keeps going on, it becomes harder and harder and harder to save for the future, which is something you must do eventually. You can’t escape it. And you never know when financial disaster may strike too. If you find your income shut off for whatever reason, all of a sudden it becomes really expensive to “maintain” your lifestyle and then the credit cards come to the rescue. By the time you get back on your feet financially, you find yourself in a hole you dug yourself into and you have to spend time and money to get out of it just to get back to your previous position.
People say life is short, but in reality, it’s long. It’s long and it becomes really long when you get old and find yourself not being able to survive with the money you have.
By spending your money to enjoy the present, it’s also costing you opportunities. Opportunities to start your own business, to invest for the future, or just to save for a rainy day to help when your income suddenly gets shut off.
Now, let’s look at the other side. If you save and invest for the future, you incur opportunity costs as well. You can’t really “enjoy” life now. You have to sacrifice the present for the future. You can’t eat out at nice restaurants all the time, you can’t buy that new car you’ve always wanted, and you can’t buy that big house down the street.
But let’s stop for a second, because who’s to say that’s what enjoying life is all about?
It’s easy for the majority of people to fall into that mode of thinking because that pressure to enjoy life now comes from the fact that we’re bombarded with the message that it’s what we should be doing and the only way to do that is to do exactly what the people in the TV commercials do.
But what happens when you do get all that? When you do get all those things so you can “enjoy” life now?
You adapt.
You eventually adapt to that level of utility. It brings enjoyment for a little while, but it eventually subsides. The only way to get it back is to repeat the same actions you did before that caused you to experience that enjoyment, hence locking you into habit.
Think about it. Open up your closet door and look at the clothes you bought last year. They don’t seem all that appealing now to you do they?
Think of that car model that you thought looked really good when it first came out. Look at it again 2-3 years later. It doesn’t look all that great either does it?
That’s not to say you should completely avoid all these things. It’s just to say if that’s your #1 guideline you use to enjoy your life, you’re going to find that your life isn’t going to be very enjoyable and that enjoyment is going to wear off eventually and pretty quickly as well.
When you put the whole materialistic pursuit in its place, the more important things in life tend to become much clearer.
Purpose, self actualization, relationships, families, friends – these, along with many other aspects, are the things that make your life enjoyable.
You can enjoy life now in that respect without spending too much money so you can in turn, save and invest for the future.
It turns out you can have it both ways - it’s just that some people didn’t realize what enjoying life was truly all about.
When you live a simple life, it’s really easy to see what the more important things in life are. So long as you adequately take care of your basic needs – food, clothing, and shelter, your level of utility will not get that much higher when you spend money on trying to get a better “version” of your needs. They’ll go up, but eventually come back down to your original baseline after time.
I’m not saying you should become a total miser and never go out and enjoy life in the materialistic sense. It’s good to go out and eat at a nice restaurant every once in a while and take your family on vacation, just so long as all of that is kept in the proper perspective.
You can enjoy life now by focusing on the things that really matter instead of wasting money to give yourself momentary spikes in utility. You can have the best of both worlds simply by focusing on the more important things in life now and by doing so enjoy life in the present and the future.
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4 Responses to “Spending Money to Enjoy Life Now vs. Saving and Investing for the Future”
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October 19th, 2007 at
Hi Brian,
I’ve added you to my list of tags to join in Alex Shalman’s “Caring Compassion Charity”.
The idea is for you to write about something you’re passionate about. I know you’re written a solid article about passion, and think that you’ll be the right person to contribute.
You would link to me and I would link back to the originator. You can find my article post here:
A Purpose Driven Life
October 23rd, 2007 at
Hi Lawrence,
Thank you very much for the invite. I appreciate it.
However, I don’t think I’ll participate in this one for various reasons. I’ve just got too much on my plate at the moment.
October 24th, 2007 at
No worries Brian. I understand.
Good luck on your new book and drop me a note when it’s ready
November 22nd, 2007 at
[…] Spending Money to Enjoy Life Now vs. Saving and Investing for the Future - a common dilemma for many people. Life is short; should we spend or save? […]