Wednesday, August 15, 2018

The Regrets Of Saving Money For FI vs Spending To Get Happiness

Have you ever struggled with the thought of saving more money for financial independence vs spending to get happiness now? For people like me who are on the journey to financial independence, we often think that if we don't spend more on some items we wanted to, then we can achieve financial independence earlier. Its always a trade off for saving money vs spending to get happiness.

In recent weeks, the conflict of saving money vs spending to get happiness right now is constantly on my mind. It went on into a state of confusion and anxiety as well. I have been a saver all my life and spending more money on something which I don't think is valuable affects me a lot. The numbers run through my head and my mind keeps thinking what if I didn't spend this amount? Will this affect my plan of financial independence?

The Regrets Of Saving Money vs Spending To Get Happiness

I chanced upon a podcast which was a conversation between 2 people who had achieved financial independence early in life. They both had enough passive income to live their life in their late 20s and early 30s but it was through extreme saving and investing. In the podcast, they were talking about the regrets they had because they turned down friends gatherings and forego trips just to save more. After they achieved financial independence, they looked back in their life and felt lots of regrets for sacrificing so much early in life.

Another thing which caught my attention is that they also mentioned the motivation for achieving financial independence early is because of anxiety. This is the anxiety that money is not enough and they wanted more to feel secure. To think of it, actually my motivation for achieving financial freedom is also because of anxiety. This made it very difficult for me to spend money unnecessary without comparing prices to get the best deal. Even when I tried to live away from a budget, mentally in my mind, the numbers are always there and when I spend a little more, my mind would give out an alert.

I have also lived with the notion that money does not buy happiness and spending unnecessary on material goods does not give lasting happiness. However, in actual fact, money does buy happiness especially when we spend on experiences with people. It also builds relationships and create memories of a lifetime.

Spending a little more doesn't hurt?

If money does buy happiness and can create memories, so spending a little more doesn't hurt right? I am still trying to learn this part where I just spend money without thinking about the trade off for financial independence. In fact, spending a little more doesn't really deviate myself from the financial plan. Instead of focusing on how much more I can save, I should focus on what I can spend more meaningfully on. This doesn't apply to everyone. If you're already spending close to 100% of your salary, then you should be focusing on saving more. For those of us who are already saving perhaps more than 50% of our income, then it may be good to review our expenditure to spend a little more on meaningful things.

Meaningful things which we can spend on includes:
  • Gathering with friends
  • Overseas trips with family or friends
  • A nice meal treat for your loved ones
  • Participating in events to create memories
  • Buying gifts for people

What about financial independence if I spend more?

Now, spending a little more doesn't hurt but does it affect our goal to reach financial independence? Or maybe I should put it in another way, if we can't reach financial independence earlier, then does it matter if we reach it later? 

Many financial bloggers have wrote about how they saved more than 100K in their 20s. More often than not, this is done through lots of sacrifices unless we have a high income which is not the case for most people in their 20s. I used to save even on drinks and food just to save that extra few dollars. Looking back, maybe if I didn't do that, it wouldn't hurt much also. I would think there are some regrets which I had, living a life of fearing to spend money. 

As my income grows, spending money is not as painful but there are still conflicts in my mind on this when it comes to certain spending. In the podcast which I was listening to, it was also mentioned that one of them couldn't bear to spend $13 on breakfast when on the same morning she got a $6000 cheque for a side hustle. Its really not about how much money we have or earn but the mindset that we have. 

Never in my life would I have thought that the ability to spend more could be as bad a problem as the ability to save more. We have often heard of people who can't control their spending but not much have been said of people who do not spend a lot. For our own life, I always believe there should be a balance. Life is short so spending some money on people we love is really a privilege. We may not have a chance in the future when they are gone. There will be lots of regrets by then. 

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  1. Hi, this really resonate with me really well right now. Im turning 29 this year and i only started planning for financial independence last year. Previously i was more of spend to get happiness kinda of guy, and now im more thrifty when it comes to spending. Similarly my goal is to achieve 100k cash through savings and investment by end of this year, which is daunting at times as I tend to feel bad after spending eg $30 on a meal with friends when i can actually eat a decent meal for $4-5 on my own.

    1. Hi Singaporean,

      Yes when we are focused on a savings goal, it becomes harder to save money. While it may not be a bad thing bec this forces us to save more but I'm still trying to find the balance between saving and spending. For now, my way is to increase my income so i can still reach my savings goal even if i spend more.