By Joe Dyton, WCI ContributorOn its surface, saving money seems to be a positive idea. When we save money, we’re setting some aside for emergencies, retirement, a child’s college education, or a future event like a wedding or vacation. Taking the proper steps to have funds available for any or all of these events sounds like a win-win sort of action, doesn’t it?
It turns out, not everyone would agree. While there is no downside to saving money, some might view doing so as depriving themselves of a more fun and fulfilling life. After all, many of the fun things we eat, wear, and attend cost money. Some feel that every dollar stashed in a savings or retirement account is one less dollar that could be put toward living our best life.
But does saving and living have to be an either-or proposition? Isn’t there a way to put money away for the future and live a fulfilling life today? There is a way to do both—it just takes some planning, decision-making, and a bit of discipline. Keep reading to learn how you can live more even as you spend less.
Spend Big on Some Things, But Not Everything
Ideally, it would be great to spend top dollar on all of our meals, clothes, travel, entertainment, housing, and everything else that we buy over the course of our lives. For the truly wealthy, that type of spending is possible. Everyday employees, even well-compensated ones, often don’t have that type of financial flexibility, however. This doesn’t mean that big spending is off the table—you just have to decide what you want to put your hard-earned dollars toward the most and scale back elsewhere.
Ramit Sethi, a personal finance adviser and author, shares similar advice. He encourages people to spend extravagantly on the things they love—as long as they cut costs mercilessly on the things they don’t. In Sethi’s case, he has no problem spending thousands of dollars on a single sweater, but he also drives a car that’s almost 20 years old
Think about the things you love and wouldn’t mind spending more on. If you enjoy traveling, maybe you take an extra trip this year or spend more on airfare and stay at a nicer hotel. The tradeoff could be eating at home more often or sporting a more modest wardrobe. The important thing is that you can find things that you’re willing to scale back on (spending less) so you have more money to spend on the things you enjoy the most (living more).
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Will a Particular Purchase Make You Happy — And Is It Worth It?
Another way to spend less money and have a fun, fulfilling life is to spend your disposable income on things you love, not just want. It can be easy to buy something on a whim, but how happy will you be in a week or two when you look at that thing and realize your money would have been better spent elsewhere?
This concept is expertly explored in Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence by Vicki Robin and the late Joe Dominguez. The authors look at money as “life energy.” In other words, we exert a certain amount of energy for each dollar we earn. With this in mind, Robin and Dominguez ask the reader to think about their purchases in terms of how many hours of life energy that takeout dinner, pair of shoes, or television cost them. When we look at purchases in terms of hours spent and not just dollars, we may take another minute before we hit “buy” on our computer or swipe our credit card at a retail store.
Again, there’s nothing wrong with spending money. It’s a matter of what we're buying and if it’s going to make us happier in life. A fun family vacation is likely worth all the hours of life energy you spent to afford it. The newest cell phone or a pair of shoes that you saw and “just had to have” might not be once you're a few days removed from buying them.
There are three key questions Robin and Dominguez challenged readers to ask themselves as they look at their spending:
- Will I receive fulfillment, satisfaction, and value in proportion to the life energy spent?
- Is this expenditure of life energy in alignment with my values and life purpose?
- How might this expenditure change if I don’t have to work for a living?
These are questions you may want to consider as well before you make your next big purchase. How much happier do you think you’d be knowing your money has gone toward the essentials and things you deem worthy of your life energy?
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You Can Live Well While Spending Less
Saving much more than you earn might not sound like much fun in the short-term, but the practice can lead to fun experiences down the road—experiences that you can afford without issue thanks to those savings. For example, if you’re fortunate enough to save 40%-50% of your income, you’re much more well-equipped to make an unexpected purchase, whether it’s something necessary (home or car repair) or recreational (last-minute vacation or concert tickets). On the other hand, if you are saving very little of your income, you may find yourself scrambling to pay for that unexpected issue, and that last-minute adventure is pretty much out of the question.
Additionally, there’s a hidden benefit to thinking twice before buying—you’ll wind up with a lot less “stuff.” The stuff we buy “just because” tends to pile up after a while. Depending on what you’ve accumulated over the years, you might end up spending more money to store, insure, maintain, or repair it. Along with asking yourself how much life energy a material item will cost you, consider the space it will take up in your life.
How to Spend Less of Your Income
We’ve explored the benefits of saving more of your income; what about how to actually do it? Tracking your spending is a good way to start. Fortunately in this technological age, there is no shortage of apps that make it easy to monitor where your money is going every month.
Afford Anything podcast host and financial journalist Paula Pant suggests adopting an “anti-budget” to help reduce spending. This concept has you automatically divert savings from each paycheck. The funds go into a separate account, which is used to pay debts, make investments, or to save cash.
“Relax about the rest,” Pant says. “The purpose of a ‘budget’ is to make sure you’re saving enough. So, cut to chase: pull your savings from the top, and whatever is left over is the amount you can spend. End of story.”
There’s also the tried-and-true tradition of spending less. This doesn’t mean getting your paycheck, paying your bills, and not spending another dime, however. You can apply the spending less practice to things you enjoy doing—look for deals when you travel or go clothes shopping. Check and see if that big-screen TV you’ve had your eye on is on sale. Again, it’s not about avoiding spending, it’s about spending less—so you can live more.
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Downsizing our house, belongings, and life in general has given happiness a boost for us.
I work half as much, our house is 35% smaller, my taxes will drop by a massive amount, and we buy almost nothing except food, drink, and travel.
Our vacation and restaurant budget have increased and hiking has become our go to for enjoyment beyond these.
I recently pondered what I thought was a “great day”.
Get up when you want. Make a nice breakfast at home (or start your day at your favorite breakfast restaurant.)
Drive to the Blue Ridge Parkway. Pick a hike and get’er done. For us, this is usually three to five beautiful miles or about two hours.
Hike back to your car and drive to a local vineyard. Drink a bottle of wine (and water) with your sweetie and have a charcuterie lunch or light snack.
Drive back home and take a nap…get up after some quality sleep (or whatever), and prepare for an early dinner at one of your favorite restaurants. Walk it off around the downtown or at home full of gratitude and gustatory contentment.
If we don’t go out for dinner, I cook. Then we watch the sunset from the deck or cozy up to a fire or talk with our kids. Sometimes we watch a show on a streaming service. We don’t have regular TV anymore.
We made our retirement home like a resort. Some of the time we don’t even have to leave home to have an excellent day.
Our budget has been cut almost in half, but my happiness index is up to about 9/10 these days. When I worked full time plus weekends, it was hard to get up to a 7/10.
In my case, I think higher net worth and higher income makes me happier and spending reduces my happiness.
We have considerably more inflation-adjusted income now than we did 20 years ago. Our real networth is higher. Our spending is down in real terms. I am definitely happier.
I do not believe that reducing our saving rate, reducing our net worth and increasing spending would make me happier.
Appreciated this post. Thank you both for continuing to put out the goods.
I don’t think I’ve heard the term “financial infidelity” before. It made me wonder if I should also consider “stealth wealth” as a form of financial infidelity. 🤷♂️😁
Great post!
We lived below the so-called ‘poverty line’ in college and were happy, and we’re far above it now and still happy.
As time goes on, we’ve learned that fewer possessions and more experiences have made us more contented. We spent 17 weeks traveling in our small RV this year, and it was the best year of our lives.