Spend For Today or Save For Tomorrow
Last week I logged onto Vanguard and tinkered with my investments. I didn’t sell or buy anything–nothing that I would call bad investing practice–but I did reduce the amount of money being shoveled into my beloved VTSAX each week by half. This reduction in after-tax cash going into the markets wasn’t driven by any emotion, though I did have an emotional wave of guilt wash over me when clicking the edit button on my auto-investments. It’s always the same internal debate of the saver: Spend for today or save for tomorrow? For me, this question arises when opportunities to do something cool and expensive now comes around.
Do I really have to reduce what we’re investing weekly? I thought as I typed different numbers into the auto investment value bar. I teetered between keeping the amount the same, maybe 25% less than normal…or 10%. Before I could waver anymore, I entered in the number I’d come up with months in advance and talked about in my monthly Coffee Chat with my wife.
It doesn’t feel good to take your foot off the pedal while on the road to Financial Independence. It sucks. Especially when making good time and the markets giving that extra push of momentum. My entire family seems to be locked in on our frugal arrangement. Our heads are down in the grind and we don’t even notice that half our take-home pay is being used to buy chunks of index fund shares. 2021 has pushed us to 40% of our FI number. Why disturb this oiled machine? Why shut it off when it’s humming and churning out better than I could have imagined.
Because it’s time for a little living for today. It’s time for overseas travel. It’s time to make up for the trip I’d originally planned for March of 2020, canceled, and rescheduled before my airline voucher expired in December 2020. Back in December, this October seemed far away enough that I hopefully wouldn’t have to reschedule again and face both disappointment and monetary loss.
It’s looking good so far. Portugal has now vaccinated 80% of its population. They are one of a few EU countries willing to remain open for non-essential travel from America. Everything is looking like a go for the trip. So the vacation bucket must get filled, hence our reduction in investing.
From the very start of our decision to officially pursue FIRE, my wife and I agreed that we take an international vacation once a year. This means at some point each year we will reduce down our investments to accommodate our life’s passion for crossing borders and oceans. I read an interesting blog article a few years ago about not missing out on life while you save for retirement. I think anyone pursuing FIRE should at least read it, it’s here.
With my kids both being under 10, we can’t spend the entirety of this golden age of parenting hunkered down counting dollars. Our kids want to hang out with us right now. It’s a good age to go out and do things with them before the teenage years kick in. We do countless free things on the weekends with them, but some outings cost money: going to Aquariums, museums, ball games…international travel. The same guilt I might feel for spending an extra hundred bucks on something, I doubly feel turning things down because I’m worried about keeping my savings rate intact.
On the other hand, a critical factor that makes FIRE so appealing to my wife and me is the potential to spend more than a few hours in the evening and chaotic weekends with our kids before they become adults and go away.
The more we save, the sooner we can have this unencumbered time with them; but the more we save, the more we sort of pause the types of experiences that might cost a bit more than a 50% savings rate allows for.
How do we balance these opposing forces of now and later? This is the eternal battle of the saver.
For me, the question lies in asking the simple question: What are we saving and investing for?
The simple and easy answer is: “We’re saving for FI, duh.”
But it’s more than that.
I save for tomorrow. I save for that shiny dream laced lucratively over the horizon, glistening in the distance like a welcoming beacon of hope. This glorious future of mine, the one I’m so diligently saving for, sadly doesn’t even really exist–nor will it ever. That includes my version of Financial Independence. I’ll hit my FI number someday and pull the trigger, but I’m sure that day, and all the days that follow, will be much different than I imagine they will be. I’ll be a different person in the next few years. I’ll likely have slightly different wants and dreams, so will the people I live with.
I’ve come to realize that the impermanence of what I’m saving for is why I’ll always feel like now is not the time I should be pulling my foot off the saving pedal. The attachment to things that are unstable and impermanent—my future, a monetary number, a specific dream— is the root cause of my “saver’s worry” that I’m either failing my future self or not fully enjoying the present moment.
The irony of being a saver is that I have more than enough money to justify splurging on 1st class tickets, 5-star hotels, and dining out for every meal while in Europe. I have enough money to last our family a decade or so without having to work.
Yet here I am trying to squeeze every efficient dollar out of all my decisions. The mindset required to save a giant chunk of income consistently makes it difficult to throttle the reason why you shouldn’t choose the cheaper option all the time. It’s very hard to turn the spending switch back on, even if it’s temporary. But I know that every memory I make taking my kids to far-off lands will be worth it years from now. My oldest will be turning 8 years old in Lisbon. My hope is that she will carry that memory with her forever and I’ll never look back at our accumulation phase of FIRE with any regret of “holding back on now” during this golden age of being a dad.
So back to balancing out spending for today or saving for tomorrow. I see two truths to the question of enjoying the moment or securing a better future. You can’t separate the two from each other.
Today and tomorrow are the same. When I save, I choose today and tomorrow. When I spend, I’m still choosing both. I don’t view today and tomorrow as independent entities. Nor are they one. They are interconnected by a web of delicate strings, like that of a marionette, each pull today changes my future tomorrow. And I also need to remember that today, was once the “future” of yesterday. Inverting the phrase also makes it clearer and truer for me: today is what I’m saving for and tomorrow is what I’m spending for.
One of my greatest fears is to be an old man with many regrets. I like to frame any tough decision through this lens. I know for sure reducing my savings rate to create awesome experiences with my children and wife will be something I’ll never regret. Achieving Financial Independence a year earlier, but missing out on life in the process because I’m only focused on saving? I’m not willing to take a risk on having that regret.
What about you? How do/did you handle splurging in the FIRE accumulation phase? Are you trying to balance out living today or are you hunkered down to FIRE as fast as possible?
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the wonderful thing is that saving/spending is not binary. it’s not like you’re turning the spigot filling your reservoir from 100% to zero or…even worse, taking it to zero and taking on consumer debt to travel. i know as i get older my tastes and wants have certainly changed. i would rather reminisce about some stuff i did than try and do it again. that’s where your premise is spot on to me. once you own those memories nobody can take them away.
i’ll tell you the one thing that changed our life was starting a sinking fund for travel and gifts. when we had 2 medium incomes it was something like 10k/year and we put that in every paycheck just like another bill. it was a liberating way to just decide to do something and there’s the money!
Absolutely. Your first sentence is really what I was trying to convey in the entire post. Right you are. Taking on debt to go traveling would be a huge mistake. And yeah, for me traveling is still investing, just not in the monetary sense, more the life sense.
I like that idea about saving from day 1 for travel. It would definitely take some if my self imposed burden away by reducing my investing amount. I think I’ll have to try something like that out.
Thanks for commenting Freddy! Always good insight.
Balance man. It’s all about the balance. And I like to frame it as a negotiation in my mind – an ongoing negotiation that will never end. We win some and we lose some.
My two cents, your kids are only young once, spend it. I also like that take that traveling is an educational investment in itself. Not everything in life can be fit into a numbers equation.
A lot of this is psychological simply because we have a saver personality. So even spending on something great like a vacation to a foreign country feels like it’s going against our nature. But it’s not, it only feels that way. Which you have recognized.
I’m actually going through the same thing as you. I cut down my weekly after tax investing because I spent my cash buffer on house projects. So I’m building that cash buffer back up. It’d be nice to always keep investing, but lifestyle is just as important. If you’re not living a rich life now, no guarantee you’ll pull it off when you have more time. Because like you said, we change. Five years from now our entire mentality might shift.
Good post bud and nice writing.
Very true. Balance. Such a hard thing to put into practice…for me anyway. Funny how we negotiate with ourselves. Such a constant battle. But that’s life.
Yup. There’s more than one type of investment. I get caught up in the monetary returns of my money that I forget that money can be invested in other ways, sometimes more rewarding than a percent increase in dollar value. The saver personality is certainly a double-edged sword. It wields more good than bad, but man can it make some situations tough to enjoy. Homeownership can be a tough deal on the savings. I noticed that I spent a bunch the first year or two after buying. Now it’s just maintenance and way cheaper, though I pay with time. Especially after acquiring tools. We do one big project a year, our focus has turned to durability projects now that we want to turn this place into a rental, rather than dream home stuff.
Appreciate you stopping by and supporting. Thanks for the comment.
Agreed with Freddy and Q-Fi, it’s all about balance. As I say “Life’s made of memories, not money,” so spending now on things that are high-value and create exceptional memories for you and your family are definitely worth it.
When I was in saving mode, I really didn’t cut corners on investing in experiences or stuff that enhanced my joy like kayaks, fishing gear, etc. Just kept it sensible and it all worked out. As it will for you!
Nice quote. Spending now is always worth it. Even now looking back at my past travels, the times I splurged are the most memorable…and I don’t even ever think about the price or cost of the splurge.
That’s my goal. Keep it in moderation with a focus to the future, but still keep on doing the things I’ve always wanted to do. Just the other day I signed up for sailing lessons. I’ve always wanted to but kept balking on the price. I think I’d regret not sailing the SF bay since I live in sight of it nearly my entire life. Balance.
Thanks for commenting Mr Fate. Appreciate your insight as always.
Hey Noel!
I’m hoping this comment hits you while planning the last bits of the Portugal trip or, hell, maybe on the way there…or while there! October has arrived. 🙂
I really enjoyed the way you’ve tried to bring to life that push-and-pull, that anguish, of saving and spending. Really, I think it’s healthy to have some difficulty there. You should *want* to invest in your life, today, just as much as you want for tomorrow. It *should* be difficult or, I think, it’s indicative of some problem in one direction or the other.
Back in June, we were quite sure we’d *also* be in Portugal by mid-October. At this point, it’s probably a bit late for us to try to put it together as we dawdled with the pandemic and did a bunch of trips over summer within the US. But, I know we’ll visit Lisbon and Porto and all the other beautiful places you’ll be trekking through eventually.
Hey Chris. Yes, that push and pull spending anguish is real. It’s so hard to find that perfect balance between the pole of save and pole of spend. I think searching for “perfection” is really the root of the problem. There is no perfect spend/save ratio. Every situation in life where money is involved has to be evaluated on its own on its ROI, and it is not all about making a profit, as we all know…but it’s much easier said than done for me.
Too bad about your trip. There are some pretty good deals right now for accommodations. I was wondering if the trip would be possible, as just a few weeks ago they were shutting things down in Portugal…Fingers crossed things keep trending for the better. It’s gonna be nice to get some travel in, its been too long for me.
Thanks for stopping by and commenting!
Hey Noel, I totally relate to this take. My biggest fear is to find myself 30 years in the future with way more money than I ever needed, and realize that I should have spent more money (and time) during the early years rather than achieving that 70% savings rate. Especially knowing that my time with my kids will slowly wain as they get older. We’re trying to loosen the purse strings and spend more on experiences these days, and hopefully I can lose the job in the relatively near future.
It’s a tough balance to maintain. So much of good personal finance tactics revolve around saving and saving, not much is said about spending. I find it super hard to find the sweet spot because it’s a moving target. It’s the toughest part of FIRE. I can say with all honesty that spending more on experiences has never ever led me to regret, especially when it comes to the kids. Now buying material objects, that’s another story.
Thanks for stopping by to read and comment. I appreciate it.
Beautifully said, Happily Disengaged. Reminds me of the saying if you cannot enjoy the present, you won’t be able to enjoy the future. FIRE shouldn’t prevent either reality and one must live in a state of ebb and flow with saving and spending if they don’t want to burnout. Your post does a great job articulating my thoughts on this subject, I will definitely be reading more of your content.
Thanks Olaf. Very true. Its an ebb and flow. Which makes it tough to find a peace between the two. I feel it’s a constant refinement of goals to get to what would be an equilibrium between the two spheres of save and spend….much easier said than done of course.
Nice looking blog you have too. I’ll be checking it out as well. Thanks for swinging by.