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The best thing in life is to go ahead with all your plans and your dreams, to embrace life and to live every day with passion, to lose and still keep the faith, and to win while being grateful. — Charlie Chaplin
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Recently, I had a conversation with a young couple that perfectly described the question “Do I live for now or save for later?” They are both in their 30s and are both professionals. Mr. Husband stated that he was more likely to spend money on Present You than Future You. Mrs. Wife is just the opposite, saying she would be more likely to prioritize saving for future needs over current spending.
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Who’s Correct?
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I recently finished the book “Dark Matter“ in which a person’s life was portrayed as a long hallway filled with endless doors. Each doorway represented a decision. Each opened door created a new reality and a new life. Each door represented a different life that was created by entering the space behind the door.
I’m not a big science fiction fan, but I enjoyed this work and the perspective on life it portrayed. The story illustrated a unique way to explore the choices each person faces. There were five main points that I took away from this chapter of the book. The first point was that life presents an unlimited hallway of choices. The second point was that a decision (choosing a door) needed to be made before life could proceed. The third was that the action of opening the door had to be initiated to complete the decision. The fourth was that each decision opened a doorway to creating a new reality. The fifth point was that moving through a new doorway into each new reality created a new and different life experience.
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Is There a Clear-Cut Difference Between Embracing Life and Spending Now Like Mr. Husband, or Preparing and Saving for the Future Like Mrs. Wife?
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Let’s Take a Deeper Look at What Each Point Represents:
- Life’s choices– In its basic essence, life is a series of choices. These can vary from unimportant to extremely important. For example, what do I want to eat for lunch versus what do I want to do with my life? Your luncheon meal is a decision that affects caloric intake for that one meal whereas, what you decide to do with your life will have far-reaching ramifications. Studies have shown that reducing the number of decisions made daily reduces stress. Something as simple as the limiting of clothing options can have significant effects. This means one less choice at the beginning of each day. In my dental practice, this was a “no-brainer” as I wore scrubs of the same color each day. It was easy and less stressful to wear the same type of clothing each day, and required no thought or decision! The choice of spending now (living for today), or saving for tomorrow is one of those far-reaching decisions. Mr. Husband’s argument was no one is guaranteed a long life. Why save for a future that may never materialize if one dies at an early age? My answer to him was that it would be a much greater tragedy for Future You to arrive at retirement unprepared because Present You didn’t have the foresight and wisdom to plan properly. But, I also told him that I don’t think that it is a black-or-white decision. Most situations allow room for present spending and saving for the future. Saving for retirement through a workplace retirement plan means that retirement funds are deducted first. It also means that money left over after retirement contributions are deducted is available for current spending (See: MAXIMIZING WEALTH POTENTIAL: HARNESSING WORKPLACE 401(k) PLANS.) Money deducted before receiving a paycheck doesn’t feel like income you’re giving up because you never had access to the money. It’s much harder to receive a paycheck, and then set aside money for retirement that could instead be used for current spending. Studies have shown that automatic enrollment in workplace retirement plans dramatically increases retirement plan participation and results in greater retirement plan balances.
- Endless decisions– In “Dark Matter” not only were there endless doors, but also endless decisions. Do I open this door? Do I move down the hall and open the next door? Do I open the door and look in, but not enter? Do I go back to a door previously opened and enter? In the book, the decisions were endless. Life is a series of endless decisions also. What to wear, what to eat, how to get to work, how long to work, whether to work or not work, etc. are decisions that are made daily! And, these daily decisions don’t include any significant life decisions such as: whether I should be married, what profession should I choose, whether should I go to college, should learn a craft, should stay single, should have a family, should plan for retirement, should I spend all my money now, and all of the endless life decisions that we are faced with during each person’s lifetime. It is impossible to avoid all decisions. But, it is also possible to automate many decisions. Fewer decisions that need to be made each day equate to less stress each day. Many decisions can be automated, and thereafter, will require no thought or decision. Pre-planning clothing options for the week, pre-planning meals for the week, and pre-planning work and leisure activities for the week help to reduce decision-making, and its associated stress. Auto-enrollment in a Retirement plan and automatic retirement contributions are two decisions that can be automated, and should be automated! Planning for Retirement and implementing retirement plans are two things that are easy to ignore, but can have far-reaching effects at the time of retirement. It’s impossible to avoid decisions. But, the more decisions that can be automated, the more likely that stress associated with multiple daily decisions, and long-term decisions will be reduced. Present living can be enhanced, even without increasing spending or spending more today versus saving for tomorrow by reducing stress, pre-planning, and automating decisions. Life should be about creating happiness and reducing stress instead of focusing on spending.
- Taking action– in “Dark Matter” the protagonist not only had to choose among endless decisions, but this choice had to be followed by an action. Once a door was chosen, the protagonist had to physically move through the doorway into the unexplored space beyond the door. Unless the required action was completed, no benefit could be derived. Does this mean taking action by spending now instead of saving for the future? In this instance, taking action should be interpreted as moving forward to implement plans for present and future needs. The best-formulated Retirement plan is only a plan. A Retirement plan is only beneficial if it is implemented. The action of creating and implementing a comprehensive Retirement plan brings each person one step closer to a successful retirement (See: AVOIDING A FINANCIAL HURRICANE BY CREATING AND UNDERSTANDING A FINANCIAL PLAN.) Planning for retirement is one of those things that is easy to ignore. But it’s also a proven fact that the earlier a retirement plan is implemented, the greater the chances of success. Overcoming inertia is hard! It’s been said that a journey of 1000 miles begins with a single step. So, if you look at retirement as a journey of 30 to 50 years instead of 1000 miles, then early-stage plan implementation is one of the necessary action steps.
- Opening doors to a new reality– many decisions have no appreciable effect on life. Whether a person eats a burger or tacos for lunch will probably not change the course of their life. But even the smallest decision, under certain circumstances, can have far-reaching effects. What happens if that same person meets a future spouse at the hamburger place on that particular day? A trip for tacos instead of a burger would mean the future spouse remains unknown and the person’s whole future is radically altered. In this instance, the simple choice between a burger or tacos has had a profound and life-changing effect. So, if every choice has the potential to be life-changing, does making the decision of soup or salad become a stress inducer? For almost everyone, the choice of a burger or tacos for lunch will not be life-altering! But, how about Mr. Husband’s spending plan? The choice of spending now, instead of saving for the future like Mrs. Wife, will be life-altering! Money spent today becomes unavailable for investment, future growth, and compounding (See: COMPOUNDING MAGIC: HARNESSING THE EIGHTH WONDER IN YOUR FINANCES.) These things are essential for future wealth creation and financial independence. Spending money on present wants and experiences is acceptable as long as future needs aren’t ignored. Does anyone plan for a future diet of cat food as the main course? Each decision in the present creates a new and different future reality, and the ultimate consequences of today’s choices are hidden in an unknown future. Proper retirement planning and implementation don’t ensure future success. But, proper retirement planning and implementation can significantly increase the odds of success by shifting the odds in each person’s favor! Create the future reality you desire by making current decisions that provide the best opportunity for success. Nothing in life is guaranteed, but there’s nothing wrong with nudging things in your favor.
- Creating new reality– One of the most unique storylines in “Dark Matter” is that each door that was opened created the opportunity for a new and different reality that changed the protagonist’s life from that point forward. Each door and each decision was an inflection point that created an alternate reality and changed the future course of the protagonist’s life. It struck me that each person has the same ability! Every decision that a person makes has the potential to alter and change the course of that person’s life. No person needs to stay stuck in a job position, relationship, or friendship that becomes toxic. Everyone, by their life decisions, can change and positively impact the rest of their lives. But what about Mr. Husband and Mrs. Wife? Should Mr. Husband continue living for the present, and should Mrs. Wife continue focusing on saving for the future? After reading this blog, it is obvious that they both can make decisions that will alter the rest of their lives. I feel the answer lies somewhere in the middle. Mr. Husband needs to choose to become less focused on current spending, and more focused on saving for the future. Mrs. Wife should choose to become less focused on the future and spend more time being present at the moment while spending and enjoying some percentage of her current income. The happy ending for their story is that they can change their reality to focus on happiness now and in the future.
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Every individual and couple is faced with the same question! Do I focus on present spending or do I focus on saving for the future? For individuals, it is an easier situation to address as the person has only themselves to consider. For couples, it is a more difficult problem, as husbands and wives have different personalities, emotional bases, and financial biases. It’s hard for couples to modify or change personal beliefs for the benefit of the couple. Deep-seated financial beliefs and spending patterns that couples refuse to alter cause the failure of many marriages.
Happiness is not the result of all our present spending. Nor is happiness the result of current self-denial to provide capital for retirement savings. Each person and couple must come to terms with what is the best mixture of current spending and saving for their individual needs. Neither Mr. Husband nor Mrs. Wife is correct. The correct answer lies somewhere in the middle. Happiness also lies somewhere in the middle for this couple if they can create a new reality where both current spending and saving for the future are valued.
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Final Thoughts
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- The question of “Spending now versus saving for later” can present a substantial problem for couples, especially if spending patterns differ.
- Life is a series of endless choices. Many decisions are not impactful, but some are life-altering. The problem is that the actual result of many decisions is not evident until well after the decision is made.
- Each life decision is an inflection point and changes the course of a person’s life from that point forward.
- The decision to spend now versus saving for tomorrow is not a black-and-white decision. The correct answer necessitates a blending of both philosophies.
- Happiness is created if couples can create a new reality where both current spending and saving for the future are valued.
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