Updated on 12.02.08

The Balance of Happiness and Saving for the Future

Trent Hamm

Grey Day Rock Balance by :mrMark: on Flickr!This past Saturday, I was a dinner guest at the home of a family friend of my wife’s parents. Over dinner, the conversation was lively and, as is often the case with my wife’s family, refreshingly frank.

One major topic of discussion was one individual’s (a person we’ll call Reggie) balance of several different aspects of his life as he approached retirement age. Reggie lives in a small apartment and has a very well-paying job, but he also has a taste for expensive vacations, taking two or three a year. He describes himself as “tolerant” of his job – he doesn’t necessarily want to do it for the rest of his life, but it’s not something he entirely loathes, either.

Reggie reflected that many people he knew had encouraged him to cut back on his travels and other personal expenses and instead start socking that money away for retirement. He argued that he didn’t have any interest in doing that, because if he were to do that, he would be foregoing trips that he could take now while he could still enjoy them in good health in exchange for a later period in his life where his health might not be as good.

And I wholeheartedly agreed with him.

There is no ready-made solution that balances saving and spending that works for everyone. Some people feel most natural when they’re very frugal, while others find a better balance with more spending in their life.

When I compare my own life to Reggie, I’m pretty sure that our spending is vastly different. He seems to splurge more on consumable items than I do (such as trips, food, experiences, and so on), for example, and I’d be willing to bet that in a given year I retain more of my income than Reggie does.

But we’re both in a reasonably solid financial state – and we’re both happy with where we’re at.

The key thing that everyone shares is a need to keep that spending lower than what you earn over the long haul. If you spend more than you earn, you’ll eventually have to pay the piper – and quite often, that process will be very painful. If you spend less than you earn over an extended period of time, you avoid that painful experience.

It’s a balancing act, to be sure. If we simply give in to every whimsical desire we have, virtually no one would spend less than they earn. On the other hand, if we were all highly austere, we would simultaneously deprive ourselves of many valuable life experiences.

My personal belief is that modern society tends to unbalance people somewhat on the side of more spending. The cultural cues that we all get tend to push us towards spending more, whether that spending is justified or not. Over a long period, particularly when that spending isn’t matched with appropriate income, we can get greatly out of balance.

What I’ve found is that the one sure sign that your balance is out of whack is that you’re unhappy with your life. If you’re afraid to open up your bills, there’s a balance problem. If you spend all of your time living as frugally as possible but feel empty at the end of the day, there’s a balance problem here, too.

The way to correct that balance problem is to start adjusting things – slowly but surely. If you’re unhappy with the amount you’re spending, find ways to cut back and take it a step at a time. Similarly, if your life feels as though something’s missing, don’t be afraid to dip your toes in the pool on occasion.

Life is all about balance. Don’t be afraid to actively see that balance that works best for you, even if it’s not the balance that others might have.

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  1. Hi,

    As an ex-Philosophy major I can tell you I’ve spent some time on trying to figure out how to be happy and lead a high quality life.

    Being happy is not about large amounts of cash, see Dan Gilbert’s excellent book, “Stumbling Onto Happiness” for some nice arguments. Rather, at least this is the logic for me, happiness is about family, financial security, and doing interesting and fulfilling stuff each and every day. Stress is bad as well (especially if it’s a by product of working for someone else).

    Your point about modern society is right on, especially in the Western world. Most folks really do believe that a fancy vacation or a German car will lead to happiness, they really do! I think the high spending folks are missing out on the beauty of a simple life, including:

    – valuable relationships with people (family and friends)

    – the security of not needing money to support a a crazy lifestyle (via savings and living below your means)

    – low stress because of not worrying about money.

    – the intrinsic feelings associated with doing something you truly love (like writing, producing art, or starting your business).

    Finding happiness is tough stuff but it starts with simplicity, living below your means, and finding true meaning in people and friends.

    My two cents…


  2. John G says:

    I agree with you and Reggie that life is worth living now! I also agree that you can’t be spending more than you earn, just plain common sense! To all the Reggie’s of the world – we are here for a good time not a long time – live, love laugh and travel.


  3. Carrie says:

    “If you spend all of your time living as frugally as possible but feel empty at the end of the day, there’s a balance problem here, too.”

    YES! I’m so glad that you said this because I think it often gets overlooked in discussions about frugality. The key is optimizing your spending, not hoarding every single penny for the sake of saving.

  4. My own outlook is similar to Reggie’s. I am not happy unless I feel like I’m getting the most out of my younger, healthier years. However, I don’t go crazy with my money either. It’s definitely a balancing act, like many things in life.

  5. Joseph Lyons says:

    What a great reminder that I’m doing OK! It’s times like this that I think about my apartment and think, gee, maybe I should buy – keep up with the Jones’… And the reality is that my low rent allows me to travel and have a very fulfilling life.
    It’s easy to get caught up in the moment and think, “Boy, I really should save every dime because you never know what’s going to happen.” I can’t win on fear. I can only win through the fullest expression of my self.

  6. Steve S says:

    LOVE! this article!!! Reggies reminds me of myself. I live in a tiny one bedroom apartment, and work at one of the better paying hourly jobs in my small town. Instead of throwing that money away into big screen TVs and new Cadillacs, I spend my money on trips. Last summer was my first international trip. I went to Argentina for 2 weeks and had the best time! I met a lot of new and interesting people and made some great friends along the way. No less than a month later, I was off to Philadelphia to celebrate Independence Day. No better place than the Birthplace of our Nation! On the way home I decided to visit NYC for a couple days, and even hit up Niagara Falls for the day. I’ll be leaving for a 2 week vacation from the cold Wisonsin weather in less than a month to Aruba. After that, its Arizona for a week. I have travelled all across the midwest and south, branching out to Washington DC to the Rocky Mountains. I LOVE travelling, far more than I could love any car or fancy McMansion. All of this on a moderate income ($30,000). I am not totally debt free, but making sacrifices in other areas does free up money to create life experiences that I will cherish for the rest of my life!

    I love articles like these! I’d love to meet Reggie! :)

  7. Rachel says:

    “If you spend all of your time living as frugally as possible but feel empty at the end of the day, there’s a balance problem here, too.”

    How coincidental that this should appear in your post two days after I’ve decided to give into my inner “madness” (read: spontaneity) and buy the digital piano I’ve been wanting for a year now (I’m a musician, but I’ve been on such a strict budget for a long time that about all you could say about my life the past couple of years is that it’s been disciplined [but not enjoyable]). I’m glad to see that I’m not the only one reaching the conclusion that money saved does not necessarily mean happiness gained.

  8. Michael says:

    My philosophy: Spend all your $$ on hookers and blow if you want to, as long as you don’t wind up homeless or go looking for handouts when you’re old.

  9. Saver Queen says:

    Excellent point Trent, that balance is different for everyone. A perfect balanced state doesn’t necessarily look the same in every case. And Rachel, I agree – just as money spent does not equate happiness, neither does money saved. Finding that right balance, “enoughness” however, can bring great joy.

  10. Nick says:

    I really agree with this article. Too many people live beyond their means, and aren’t happier for it. On the contrary, many people save into oblivion, and barely enjoy their lives today, instead just perpetually investing for ‘down the road.’

  11. Movingonup! says:

    Well Written Trent! I like that you point out that life has to be balanced.

  12. Cathy says:

    I live my life very similarly to Reggie. I have a good paying job, paid off my debts, and have money socked away for retirement. However, I also have a reserve account for expensive vacations. I didn’t want my first time visiting the Caribbean to be when I’m old and retired. I wanted to scuba dive the reefs while I’m still young and pretty. Fact is, know one knows how long we have to live. The more I travel, the more I want to travel because there’s so many more things to see. I live frugally 48 weeks of the year so I can play in the sun and sand for 4 weeks a year.

  13. Chris says:

    I definitely agree. The most notable of this is society’s tendency to push people towards spending more than what keeps them balanced. It seems that it tends to make people think that they SHOULD want certain things rather than telling people to stay focused on maximizing their utility between spending and saving.

    As for “Reggie” wanting to be able to travel while still in good enough health to be able to enjoy those activities, I wholeheartedly agree. Some people have a desire to get out and see the world that will not go away, no matter how much they enjoy being frugal and saving money. Many people enjoy skiing, hiking, and camping which are things that some people might not be physically fit for, or won’t enjoy nearly as much, once they reach the age of retirement. If you’ve got a desire for something, then give in to it, but plan for these expenses as part of your financial objectives so that you can afford them and still be able to meet your goals.

    Good post Trent!

  14. Kim says:


    We have the same philospohy! We save 40% of our income – and 12% of THAT goes in the travel fund. Our luxuries – nice hotels, good food and great wine while on the road – are paid for with ca$h.

    There’s nothing wrong with spending money – provided you have it to spend!!!

  15. Jade says:

    Awesome post Trent! Would love to see more like it.

    I should have my boyfriend read this. He tries to be cheap about vacations, I try to be cheap about the rest of my life so I can have money to go on a nice vacation, and then I listen to him gripe that I’m spending too much money on my vacation. Maybe we just have different priorities…

  16. Dan says:

    I’m definitely not going to live my life by the differed life plan I’m quite happy to work my whole life if it means I get to enjoy my whole life and not just the last few years of it. I think with a little bit of smarts I’ll still be able to have a “retirement” in my later years.

  17. What Reggie is doing, matches with Tim ferris suggestion of taking “Mini-Retirements to Get More Out of Life.” My view on this to take early retirement (instead of taking mini retirements now) and do extended vacation in the later years.
    A Dawn Journal

  18. This is something I just figured out a couple of months ago. It’s a hard realization for someone who is so focused on saving and scrimping. It’s like, “Whoa, what are you going to do with all this money once your old?”

  19. valletta says:

    My father never got a chance to travel. He keeled over from a heart attack, unexpectedly, at 49. It changed all of our lives. We got a big insurance check and a grief that has still not abated, 25 years later.

    Balance is my goal and it looks very different than some of my friends and family. We chose not to have children. We started our own business. We know we will be receiving a large inheritance some day but we could be 70 by the time that happens (or dead!) so we don’t depend on it but it’s comforting at the back of our minds. It allows us some perspective, we know we are fortunate, we work on behalf of others when we can.

    We plan for tomorrow but live for today, it’s all we are guaranteed.

  20. CreditShout says:

    Hey Trent,
    I couldn’t agree more with “The cultural cues that we all get tend to push us towards spending more, whether that spending is justified or not.” I think we live in a society where we are made to feel think that we need to have more (through advertising and the media) regardless of what we already have.

  21. SS says:

    Great post. I like reading what other people are doing. I like the idea of traveling when its the
    right time for yourself. This time is the right time
    for me. My daughter is 18. I am single and I hope
    that we will travel soon. I am going to make an effort to save so we can go places. We want to go to New York, Paris.

  22. I wonder if lack of balance has more to do with uncertainty, than unhappiness.

    The overspender spends all of his money because he’s not sure if the opportunities he has to spend money will still be around, if he will be healthy enough to enjoy them later on, or if he will even still be alive. Maybe his income will increase a lot, or maybe he will win the lottery. He knows what he wants now, so he spends money on it, to guarantee he can have it, rather than risk the uncertainty of not having it in the future. His worst nightmare is that he lives to be 100 years old and in perfect health, but penniless.

    The oversaver saves all of his money, because he’s making a decent income, but knows that someday he will not be able to earn enough. So he saves and saves, believing one day he won’t be able (or willing) to earn as much as he does now. His worst nightmare is that he dies in an auto wreck at age 40, with a million dollars in the back, but not having enjoyed a day in his life.

    If you could tell people exactly how much money they will make every year for the rest of their life, (and the age they will live to), it would radically alter people’s spending and saving habits.

  23. Amateur says:

    What a great post, Trent. I agree with that, save some, spend some, money is a means to an end and everything ends whether it is pleasant or not. Whenever I see something I could afford and would truly enjoy, I do not hesitate and get it, use it up (or eat it up!) and know that I got my money’s worth. It’s just slightly harder in today’s economy, but things will change as always.

  24. I do agree that hoarding every single bit of money and never spending any for fun is a little bit silly. We don’t have a lot of extra money, but we do save up for a family vacation each year. It’s not a necessity, and of course we could put that money in the retirement fund, but we want to go on vacations now with our kids while they’re still here at home with us.

  25. Chris says:

    Many people I know struggle to find this balance between saving and spending- and it’s not necessarily for travel. It can be for a hobby, for home improvement, or perhaps an expensive car they have always wanted. I agree that you have to splurge once in a while, otherwise you just aren’t living! I’ve caught the travel bug myself and we’re going to San Francisco in early January. Can’t wait!

  26. Diane says:

    My boyfriend’s favorite saying is “Extremes are Evil”! And I’ve come to believe that’s true in so many areas of life…

    When it comes to money, either way – spend it all or save it all – you’re at an extreme and out of balance.

    For me, spending is partly based on a need to do things and make memories with my sons (17 & 22 now) when I have the opportunity. That won’t always be available!

    So I try to find a balance between being reasonably frugal/saving and enjoying experiences as we have the opportunity.

    Whatever your pleasure, keep it all in balance!

  27. Oliver says:

    Consumption theory is a very interesting topic because there are so many different approaches to it. As long as you recognise there will be periods in your life where you will have little or no income, and that you must save some money to sustain yourself during these periods, your consumption patterns should be ok. The problem seems to be when people continue to borrow when their income is at its peak. This is the time when you should be paying off debt and saving for retirement. I guess it all comes down to when do you want to spend your money?

  28. Oskar says:

    Good post, my personal view on this is that it is not only about balance but about focus, spend less on the things that is not important to you and more on the stuff that matters. E.g. If you like cars buy a nice car, if you like to travel do that and spend less on the stuff that you don’t enjoy as much…

    A thought about balans is that you should also consider balance accross life, if you are at your peek expected income or close to it and you are spending every sent (never mind borowing money) you will probably have problems in the future…

  29. JonFrance says:

    I agree with Frugal Bachelor (comment 18)–I would just add that, mathematically and scientifically, we’re not completely in the dark about how long we’re going to live or how much money we’re going to make over the course of our lives:

    Although you can never know what any given *individual* has in store, there are statistics that tell you what the *odds* are that you will live to any given age–and these life expectancy figures *will* turn out to be accurate for the population as a whole. Both overspenders and oversavers need to take the odds into account: 9 in 10 of us will live to see 60, 8 in 10 will see 70, and 6 in 10 will live to see 80.

    So plan what you will, but be realistic about your chances: if you’re planning on having a comfortable retirement through age 102 (and have no kids and don’t care about charity), then realise that chances are 99 out of 100 you won’t live that long. Or if you’re planning on retiring at 40, blowing all your money on fun, and ending up dead broke at 50, you’d better realise how serious the odds are (96% chance) that you’ll have at least 10 years of living in abject poverty after that.

  30. Kevin says:

    Good post. My parents took us on vacations nearly every summer growing up and I think it was a good experience. Not all of them were fancy or even out of state, but it is important to travel and see new things. I hope to give my son the same type of experiences.

  31. getagrip says:

    It’s also about balance with your family as well and sometimes you have to make decisions and just recognize there are going to be financial repercussions. My spouse and I decided that the family should go to Europe one time while my mother was still healthy enough to travel, since she’s close to many of the relatives over there and it was important to her and to us to meet them. I would have prefered to wait for the kids to be a little bit older, and to give us more time to save instead of add to our debt. Yet had I delayed another year the trip would have likely never happenend and as it was it was the last time my mother has been well enough to venture out of country.

  32. Jen says:

    One of my rules for life:

    All things in moderation. Including moderation. :-D

  33. Terri says:

    Great article. Life is all about balance!!

  34. Rejjii says:

    I love traveling and I share the philosophy that travelling should be done when you are fit enough to enjoy. I know several people who didn’t travel earlier in life as they were saving up the travel experience for the later years, only to have a medical condition develop, or one of their spouses passing on before they could travel. I don’t want to bank on it all happening later in life, so I try and travel every year to all of the places I dreamt about when I was a kid. I’ve travelled to 24 countries so far, and plan on continuing with my adventure travels while I am still physically able to do so. Once I am finally retired, I do plan to continue travelling, only with less “adventure” and a few more creature comforts added to the mix.

    In order to accomplish this, I set aside money every month to a travel fund separate from my savings fund and emergency fund. I don’t even book a trip until I already have it all paid for, so that as I am travelling, I can truly enjoy the experience instead of worrying about how much everything costing or what my credit card statements are going to be like the following month.

  35. kz says:

    I’m probably going to get a little slammed for this, but I find it interesting how many people are talking about their love of travel. I always thought that I was someone who loved to travel, too, but I’ve discovered over the years, the last few in particular, that I’m so much happier at home, or visiting the homes of friends and family (who are almost all within driving distance). Would I like to visit Europe? Sure. Would I like to spend weeks on a cross-country road trip? Of course. Will I be really sad or feel unfulfilled if they don’t happen? I don’t think so. I’m starting to see that this must put me outside of the ‘norm.’ I would so much rather save the hundreds or thousands of dollars we could spend on vacations and put it toward the 80 acres of land we’d like to have someday, or use it to buy a spot “up north” that we visit over and over and over. That’s just where our priorities are, I guess, but I didn’t realize how ‘abnormal’ it was until I started reading some of these comments (though, granted, it’s not exactly a random sample!).

    Totally off-topic. Forgive me :)

  36. Cathy says:

    @kz: I don’t think you’re abnormal. This is just a very small sampling posting in reply to the original post.

    My parents didn’t travel when I was little. They were a bit of homebodies. Me…I’m a wanderer. I love exploring what’s around the next bend. I love backpacking, diving and a number of other things that aren’t other people’s cup of tea. I dated a guy once who would much rather spend his money on his house. Me – I’d rather be driving a Jeep through the Australian outback. I don’t think you’re unusual – just not those who have responded to this thread.

  37. Carrie says:

    @kz: You’re not alone. I don’t mind travel, but I don’t enjoy it as much as many other people seem to. Many of my vacations are spent near home. What I do try to do, though, is explore my hometown as if I were a tourist. I’m constantly surprised by the events and places that are right under my nose. I like spending my money on other things, like music lessons.

  38. Cambo says:

    Probably the best post I’ve read so far. I’ve been strugging with saving and do it to extreme because I feel guilty if I do spend but then end up busting out anyway.

    Time to revisit my budget and make it a bit more balanced.

  39. Rick says:

    One thing that wasn’t really mentioned in the article that is pretty improtant: Did Reggie have reasonable savings for retirement?

    If he does he should enjoy the travel now, if not the cost of taking the nice vacations now could be misery later.

    I agree balance is important, but I can’t really judge if Reggie’s action are balanced or not!

    -Rick Francis

  40. Shevy says:

    “Don’t be afraid to actively see that balance that works best for you, even if it’s not the balance that others might have.”

    Absolutely. Everybody has different values and different interests. You have to find what’s right for you.

    My father died of cancer at 52. My mother developed serious rheumatoid arthritis and could do very little travelling after his death. It was very sad that they (or she) couldn’t continue to travel together as they had planned to do in their retirement years, but it would have been truly tragic if they had put off all the travel we did as a family while I was growing up in the belief that they had to pay off their mortgage or build a huge retirement fund.

    As it was, the mortgage was paid off when my father passed away and my mother had enough money for the rest of her life, plus a paid for home.

  41. This is a very interesting subject. From my own personal experience in dealing with older couples….

    I have seen many older couples who tell me that they wish that they had saved their money, and that all of the so called “fun” they had was really in vain. They say that they didn’t really need to spend all of that money because what was important was time with family anyway, and now they are struggling and lacking in their golden years because of it.

    But, very seldom do I hear someone older say, “Well… I’m broke, I’m sick, I need to be taken care of, and I’m miserable… but … I SURE HAD A GOOD TIME BACK THEN!!!.

    For this reason, I would, if anything “error” on the side of sacrificing now. I wouldn’t want to put myself in a situation where I’m living in the past, or living off of memories.

    So, I realize that there has to be balance, but I feel that when it comes down to happiness, you should never have to look too far outside of yourself for it, because if so, then it is artificial.

    And all and all, if you are really smart with your money, you will be able to have a little bit of the best of both worlds.

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