Can the battle between frugality and “living life” cease to exist? And if so...
How do you strike that elusive balance?
Let’s examine “balance”, shall we?
It’s a soothing word to smooth over underlying conflict between two camps.
First, there’s work-life balance. A conflict of time spent between work and life outside of work.
Then there’s the balanced diet. A conflict between different food types. Natural food vs. junk food. High-fat vs. low-fat. High-carb vs. high-protein. And so on.
And not to be outdone…
There’s also the balanced budget. In personal finance, it’s taking the money we earn (after tax) and allocating chunks of it to: fixed and variable costs, savings, investments, debt payments, etc. A balanced budget is achieved when 100% of our money is properly allocated.
The conflict comes when we overspend in one area because it takes away from other areas.
Excess can be avoided with balance.
But - is balance just unicorns and rainbows?
YOLO Isn't a License to Blow Your Money
Here’s the thing: There’s no freedom in living paycheque to paycheque.
If we get everything (we think) our heart desires and blow away our money like tomorrow doesn’t exist - what can happen?
Here’s exhibit one: A 31-year old pharmacist who lives with his parents despite earning $130K per year. He gets his mom to do his laundry and make his meals - so he can party in Miami with the boys on weekends.
Frugality can be a self-imposed cage of boring mediocrity to people like exhibit one. Because if frugality is an exercise of balance, and balance by definition implies evenness (smoothing out highs and lows), then wouldn’t you be missing out on the highs of life?
The problem with this shallow yolo mindset is that people end up dependent on money to buy escape from real life’s struggles. But after the “high”, there’ll be an inevitable drop. What happens then?
People get stressed over money and and depressed over being “stuck”. Eventually they may find themselves blowing money they don’t even have. Now they’re stuck with debt in a job they hate.
How Do You Define a Life Well Lived?
Let’s not tiptoe around it:
Frugality is work because it involves time and effort.
Take food for example. For me, eating healthy is a habit because it’s part of my life. But make no mistake about it, cooking our meals requires both my effort and my time. Do I wish I’m outside playing with my kids instead of cooking on a Sunday afternoon? YES of course. The only thing is, we need food to eat. And buying unhealthy take-out food regularly is not an option for me.
What can I do about it? I make sure I cook as efficiently as I can. I meal plan and cook in big batches once or twice a week.
With frugality, over-thinking and guilt can be a struggle:
Is this really a need...or just a want? Should I spend money on _____ when I could be saving more instead? What if there was a better deal I missed out on?
What’s a Smart Saver to do?
Stephen Covey recommends in his book the The 7 Habits of Highly Effective People, to begin with the end in mind. Ask yourself this:
How do you define a life well lived? Zero in on what’s truly important to you.
Answers may not come quickly, but keep digging. If something pops into your head, write it down then ask yourself why. Go beyond the surface and dig deeper by asking yourself a series of ‘WHYs’.
You can create a plan on how to get there. Because it’s never too late to create a future that you want.
A Habit of Frugality
Even if frugality involves time and effort, and over-thinking it can be a struggle…
It’s a means to accumulate money for your future quicker. A means for financial security and peace of mind.
It’s self-restraint from impulse and extravagance.
Without self-restraint we’d lose sight of what’s reasonable, what’s considerate, and what’s appropriate if we let our emotions run wild without reason.
In weight loss for example, self-restraint takes the lead so we say NO to picking up that bag of kettle chips AND tuxedo cake from Costco.
When it comes to physical fitness, self-restraint takes the lead to make sure we stick to our new workout schedule.
What about saving money? There’s no shortage of awesome books and blog posts with practical guides on how to save money. Million Dollar Journey shares 28 ways to save money. And here are 15 tips from Boomer and Echo.
And of course, Stephen’s top money tip is to plan ahead. Self-restraint takes the lead so that we stick to our plan before making a purchase.
But the thing is…
Consuming information will NOT create change. Putting them into action will.
A Balanced Action Plan
You’ve heard it before: Cut costs on your nonessentials. And spend guilt-free on what’s important to you.
According to T. Harv Eker’s Secrets of the Millionaire Mind a balanced allocation of your income (after tax) may look like this:
- 50% necessities
- 10% long-term investing
- 10% savings
- 10% play and fun
- 10% education and self-improvement
- 10% giving and charities
Eker recommends creating different accounts to funnel your income into. The money in your “play” account, you can spend guilt-free to nurture yourself.
YOLO is never an excuse to live paycheque to paycheque.
But being the Grinch is no fun either.
So where do you draw the line between excess, balance, and deprivation?
Start by figuring out what you really want in life. Zero in on what your priorities are - and imagine the kind of life you want to create.
It’s also good to review and reassess your priorities from time to time. Because chances are you’re not the same person you were 10 years ago. Or even 10 months ago.
Balance is elusive because it’s a moving target dependent on 5 factors: age, family status, income, health and time constraints. These factors strongly impact how we define what’s important to us right now.
As your priorities shift over time, how you define balance evolves.
Balance can work - but only if you put in the work.
Make your daily choices count. Afterall, you only live once.
Question for You
Tell me: How do YOU define balance?