The Battle Between Your Present And Future Self
Determining your financial priorities is like having a battle between your present and future self. Decisions that make your present-self happy and content might have dire consequences for your future-self. Conversely, you don’t want to torture your present-self for the chance to be happy and prosperous in the distant future.
We’re raising a young family and with that comes a host of competing financial priorities for us to balance today. It’s easy to think we can put off saving for retirement, or even the next big purchase, until later in our working years when we’re more established in our careers and the pressures and impact of child care is lessened. But that means screwing over our future selves – making life more difficult tomorrow due to our choices today.
Related: How much of your income should you save?
What are we struggling with? A mortgage, car payments, rising grocery bills and insurance, to name a few. Not to mention prioritizing paying down the mortgage faster with contributing to our retirement plans, squirrelling something away inside our TFSAs, and saving for our children’s education.
And after a demanding week at work, coupled with a hectic schedule of kids activities, we want to unwind with a glass of wine (or three) and find something not too terribly expensive for the family to do on the weekend.
Come summertime, with the kids out of school, we’re ready for a holiday. Our Facebook feeds fill up with pictures of friends enjoying exotic vacations and trips to Disneyland. There’s pressure to compete, but we’re content with a week renting a cabin in the Rockies, which is more our style.
I often wonder how others seem to be able to do it all. The big house, two new cars, maybe a boat or an RV, kids in multiple activities, dining out two or three times per week, plus a time-share or vacation property to boot. Present-self must be elated.
We make some difficult choices with our discretionary spending, often foregoing certain activities such as a concert, an impromptu trip, or an expensive meal, because we simply can’t make it work financially.
But then I remember that we’ve already made a deal with our future selves by committing 20-25% of our income toward saving and paying down debt. That money is earmarked in our budget just the same as any other fixed expense, like the mortgage, utilities, and insurance.
Related: Financial Independence – why I pushed it back five years
So while we have to compromise on how to spend the rest of our income, it’s comforting to know that we’re not just spinning our wheels. Our financial plan is moving us forward to help us reach our goals, even though it sometimes feels like we’re struggling to get ahead.
We make savings a priority because we know that tough choices will always be there when it comes to our discretionary spending. Let’s be honest – if we didn’t prioritize some money for saving, and suddenly had an extra $2,000 per month unaccounted for, we’d probably find a way to spend it (while still wishing we could afford that trip to Europe, or a cabin by the lake).
This is why the pay yourself first concept is so powerful. We have this amazing ability to adapt our spending to the income coming into our accounts. Sure, we’ll spend every penny in our account once it’s there, but usually no more. So if you’re in the habit of automatically whisking away 5 or 10 percent of your pay cheque into savings or extra debt payments, you’ll barely notice that your account is a bit lighter at the beginning of the month – you’ll simply adjust your budget, either mentally or on paper, and carry on.
It’s a tall task to strike the right balance between your present and future needs. It’s not really a fair fight either because your present-self is in control today. Having a written plan helps, as does automating your savings with the right amount to match your goals. As for the rest, spend and enjoy it. If you’ve made future you priority number one, your present-self deserves some love too.
Hello,
This is a good summary on the effort and conflicts there are today to have a future you design yourself!
It is great to read and remind us how some simple actions like automation to pay yourself first do make the difference in the long term.
Amber tree
The irony is that as you get older and may have more money in the bank, you often think back to your younger days when you had much less money, but you seemed to be happier. There are certain joys in accomplishing more with less. And you look back with somewhat fond memories of the struggles. Success and satisfaction with life are measured by many yardsticks.
Nice post Robb! This post summarizes in a way why I’m doing this RV trip next week. A lifetime experience for sure, a great timing to enjoy the present time and also a chance to break the pressure you’re talking about. Our life will be much different when we come back.
And yes, that doesn’t mean I’m not thinking about future anymore. But my needs have changed, so will me future ones!
Cheers,
Mike
Our first home had nothing in the backyard. After 7 years we had it landscaped, with a pathway around it. We spent a lot of happy time with our toddlers wandering around that path, or watching them peddle around it on their trike. It gave us so much joy, we wondered why we hadn’t done it sooner. When we moved out of state, the first thing we did was the landscape. We’ve been frugal in many many ways, but some things are intrinsically worth the cost, if you can manage it, including that trip to Universal/Disneyworld we did last year instead of paying down more of our business loan. It’s now a treasured memory, and there is value in that as well. Don’t get me wrong, saving is critical, and according to the “millionaire next door” authors we’re half-way between an aaw and paw. Both our cars are 17 years old, and running fine, with over 250K mi each, and I couldn’t care less about buying a new one. I think what’s critical is to understand what brings you joy, and what doesn’t.
“Money speaks only one language – if you save me today, i will save you tomorrow”