“How Do I Balance Enjoying the Moment While Saving For the Future?”

This is a great question that I get a lot. It can be pretty easy to get wrapped up in a financial goal like paying down a credit card and forget to smell the roses, but it’s imperative that we do! In this blog post I’ll give a few recommendations, but ultimately what it comes down to is the “5 P’s”. Ever heard of them? Proper Planning Prevents Poor Performance.

So in this case, I mean plan to enjoy the present. For one that may mean budgeting $50 a month for coffee shops, because lattes make them happy. For another it could be splurging for the fancy gym membership because they make great use of it. Here are some strategies to strike that balance:

Set Clear Financial Goals: Start by defining your financial goals, both short-term and long-term. These could include saving for a vacation, buying a home, or building a retirement nest egg. Having specific goals gives you a sense of purpose for saving, it also can give you a finish line to work toward even if you set another goal right after accomplishing this one.

Create a Realistic Budget: I think it’s pretty safe to say very few people can pull off a $100 monthly food budget. Develop a budget that allocates a portion of your income for both current expenses and savings. Ensure that your budget reflects your priorities and values yet also allows for both enjoyment in the present and financial security in the future.

Automate Savings: Set up automatic transfers to your savings or investment accounts. This "pay yourself first" approach ensures that you save a portion of your income before spending it on non-essential items. It helps you reach your goals faster and is proven to successfully help you save more.

Build an Emergency Fund: Having an emergency fund in place provides financial security and peace of mind, allowing you to address unexpected expenses without derailing your long-term savings goals.

Prioritize Debt Management: First of all, stay out of debt and live within your means. If life happens and you have to take some on, high-interest debt can hinder your ability to save and invest. Focus on paying down high-interest debt while ensuring you make at least the minimum payments on other debts.

Live Within Your Means: Bet you didn’t see this one coming. Avoid the trap of lifestyle inflation, where your spending increases as your income grows. Continually assess your wants versus needs and resist the urge to keep up with extravagant spending habits.

Embrace Minimalism: This one is a love/hate thing. Consider adopting a minimalist mindset, which encourages you to declutter your life and focus on the things that truly matter. This can reduce the desire for unnecessary spending and help you live in the moment with less financial stress. This can be naturally in line with the way someone is already living their life, or it can come across as the same kind of preachy that the avocado toast haters bring to their financial blogs. I honestly am not even close to the world’s best minimalist, but I do try my best to minimize buying things just because they’re on sale.

Practice Mindful Spending: Before making a purchase, ask yourself if it aligns with your values and priorities. Mindful spending can help you differentiate between impulse purchases and meaningful experiences. I also try what we call the six month rule in my family, if I still want something after six months of wanting it then it’s probably a justifiable purchase and I allow myself to consider buying it. No tamagachis here, but definitely a new blow dryer.

Set "Fun Money" Aside: I pretty much said this at the top of the article. Allocate a portion of your budget for discretionary spending on activities, hobbies, or experiences that bring you joy in the present. This allows you to enjoy life without guilt, which is essential. Just be sure to set a reasonable amount given your income and goals.

Regularly Review and Adjust: Your financial situation and goals will change over time. Regularly revisit your budget and financial goals to ensure they remain relevant and adaptable to your evolving circumstances.

Seek Professional Advice: Consider scheduling a money date with Rachel here at Prosperity. She can help you create a financial plan that balances your current and future needs effectively.

Remember that achieving a balance between living in the moment and saving for the future is a dynamic process. It requires conscious decision-making, regular assessment, and flexibility to adapt to life's changes.