Recently, a reader of this blog tracked me down on Facebook and asked me a very interesting question. Just to be clear, I don't recommend doing this (even if I am indulging this behavior by writing this post). I may be terrible at answering questions, but I'm somewhat responsive over email, so maybe try me there first.
Anyway, the question went something roughly like:
And by roughly, I mean exactly, given that I took a screenshot of the question.
There's a few reasons I find this question interesting:
- I spend a lot of time thinking about my money.
- I spend a lot of time thinking about what I want out of life.
- I'm not sure I agree with the premise.
I responded on Facebook with an incoherent wall of text, as I am wont to do. For this post, I'm going to attempt to organize and format my ramblings into a semi-intelligible post.
The core of the question assumes that 'saving money' and 'experiencing life' are fundamentally ('somewhat') in conflict, which makes sense, to a certain degree: Doing stuff costs money, doing stuff is a key part of experiencing life, so it stands to reason that experiencing life costs money. The counter-argument I'd make here is that we're in control of how much those two things are in conflict.
Our lives are made of a billion different knobs that we can tweak: how many jobs do we want to have, what hobbies do we pursue, who do we spend our time with, what shows/books/media do we consume, etc, etc. I think that one of the most important sets of knobs we can tweak are the knobs that control how we define success* within our own lives. Once you define what success is, 'experiencing life' is just the vehicle we use to be successful.
For example, if success for you means 'having lots of nice things', experiencing life is probably going to involve buying lots of nice things, which will limit your ability to save. On the other hand, if success means 'challenging yourself to be better', experiencing life can be done pretty cheaply.
I'm obviously oversimplifying things, and everyone's idea of 'success' is going to be different and way more complicated than my examples above. That said, the premise is still true, we can control how much experiencing life impacts our ability to save.
To what end?
The other assumption baked into the question is that the questioner's idea of success involves saving money. Now, I'm all for saving money, but having money for the sake of money isn't all that useful. Money is a means to an end. If you have the means to reach that end, more money doesn't really do anything for you. This is largely in line with the idea that people don't seem to get any happier after they make about $105,000 a year. So for those cases where 'saving money' and 'experiencing life' are in conflict, it makes sense to ask what you're saving for, how much it will cost, and when you want it by.
Otherwise, the game of 'saving money' becomes an infinitely deep rabbit hole. Without a target or concrete motive, it's easy to drive yourself insane trying to optimize every little expenditure in your life. I try to focus on just the top three or so costs (or potential costs) in my life, like rent, food, and medical expenses**. I figure that once the larger expenses in my life are managed, I've done my due diligence and can cut myself some slack in other areas that account for a much smaller percentage of possible expenses.
Applying all of this to my own personal experience: I've tried to define what success means to me before. It's been a year and change since I wrote that though, so let's take another crack at it. Success to me means getting stronger/faster/smarter than I was before, cultivating the relationships I care about, exploring my hobbies (travel, blogging, etc), and eventually being financially independent.
Financial independence definitely requires saving money, but it's relatively easy to put an upper bound on just how much money. For example, I'd like to be financially independent before 40 and be able to buy a modest home in a relatively low cost-of-living area and support either a small family or a few large dogs.
Let's say that I'd need $60,000 a year to do that comfortably. Using a conservative safe withdrawal rate of 3%, I'll need to save $2 million before I'm 40 to make it happen. I can subtract how much I've currently saved from that $2 million, assume a 4% growth on my investments and get a rough idea of how much I need to save per year to reach that goal. Doing the math, it works out to less than I'm currently saving, which is to say I shouldn't let 'saving money' get in the way of my other success metrics.
One way that I want to 'experience life' is by catching the total solar eclipse in July, which means travelling to South America. I had traveled to Oregon with some friends to catch the total solar eclipse in 2017, and the experience was sufficiently life-changing that I'd like to make a hobby out of it. Knowing that I'm saving enough money to make my other goals work out in the long run means that they aren't in conflict with each other.
*I say 'success' instead of 'happiness', because I don't think that happiness is necessarily the goal to strive for. This Oatmeal comic explains it pretty well.
**I "control" my medical expenses by taking care of my body (and teeth) and just being supremely lucky that I don't have any chronic illnesses.