Issue #006: Save Every Penny VS Enjoy Life ⚖️

^{Read Time: 4 minutes}

👋 I’m Back

I know, I know, it’s been 4 weeks since my last newsletter, not a great look.

But as an FYI, I’ve been off on my honeymoon in South Africa for the past 3 weeks, and as much as I’d love to spend this entire week’s issue talking about how fun that experience was, I thought I would try to keep this newsletter mildly money-related, and that’s exactly what I’m gonna do!

You see, being away on the other side of the world requires you to do something quite difficult for a frugal guy like myself… spend money. And not just a little bit of money, A LOT OF MONEY (reply to this email asking ‘how much,’ and I’ll let you know). And while I was spending my hard-earned cash, it got me thinking:

‘Isn’t this the whole point of life, just to enjoy yourself and create memories while you can? Why do I try so hard to save money at all?’

So let’s dive in and try to find out whether this savings and investing thing is all just one big SCAM ⚠️

P.S. or just scroll to the end to see a picture of me and an elephant on Safari.

📈1% Better Every Day

Save vs Spend…FIGHT 🥊

Let’s kick this off by taking a look at the argument for each side of this debate:

Save

Saving money comes with a huge amount of benefits:

• Increased financial security

• Reduced financial stress

• Ability to retire early or retire at all

However, one of the strongest arguments for saving and investing is the idea that your money can be worth so much more tomorrow if you save it today.

Take the Starbucks case, where you buy a coffee every single week between the age of 20 and 60 for £5 (I know that’s quite steep, but by the time I’m 60, it will probably be £10). Now let’s say instead of buying those weekly coffees, you decided to put the money away in an investment that returns you 10% annually. Time to do some math:

£5/week = £260/year. At the age of 60, you would have spent £10,400 on coffees. Had you invested that money, you would now be sitting on just over £115,000. I know that a lot of coffee addicts (like myself) are panicking at this point.

Spend

You might be thinking that the case to spend instead of save is dead in the water, surely nothing can fight back against that Starbucks analogy. Well, let me try at least!

Let me start by saying this: who says that current you should suffer at the expense of future you?

Bronnie Ware is an author who wrote a book called ‘Top 5 Regrets of the Dying,’ which was inspired by her time working with those on their deathbeds. Here are the first two:

• I wish I'd had the courage to live a life true to myself, not the life others expected of me.

• I wish I hadn't worked so hard.

Now I’m not saying a £5 weekly cappuccino constitutes as living a life true to yourself, but what it does signal is a piece of your daily happiness. Now let’s swap this out for the honeymoon of a lifetime that I just went on. Yes, investing that money would have produced incredible results in 40 years, but there quite literally isn’t a price that can be put on what I was able to experience over the past 3 weeks.

The Result

Hopefully, I haven’t confused you even more by this point because I’m hoping that the answer to all of this is quite simple.

COMPROMISE

That’s right, it’s all about finding the right balance between saving for your future and spending on your present…who would have thought it?

But how exactly am I meant to do that?

1. Set Financial Goals

Are you desperate to retire by 40? Do you want to buy a property in the next 10 years, or do you want to travel the world by the age of 30? Asking yourself what the big things you want to achieve in life are will help you start to plan financially toward them.

2. Create a Safety Net

Before you can do anything, you must create a financial safety net. Some refer to this as an emergency fund. Building this will give you more confidence with your finances than ever before.

3. Budget

Take a look at your current expenditures, see where you can cut costs, and know how much you have to put away as well as allocate toward 'fun' spending. It's a crucial step.

4. Allocate Money Toward Today

Once you understand your income and expenses, decide how much you want to set aside for frivolous spending. Unless you’re aggressively saving for a significant financial goal, it’s essential to have some budget set aside for guilt-free spending.

5. You Will Want to Retire One Day

Just a reminder that a pension is important, and saving toward it as early as possible will be one of the best decisions you ever make!

6. Review and Adjust

Your life is constantly changing, with new goals, different salaries, and changing perceptions about money. Make sure to regularly review your finances, at least every year, if not more often, to ensure you're making the best financial decisions for yourself possible.

Just 6 steps to live the life of your dreams…simple!

👋 Outro

See You Next Week

Thanks again for reading another issue. I really want to make these as good as possible for you, so as always:

PLEASE HIT "REPLY" TO THIS EMAIL WITH ANY QUESTIONS OR TOPICS YOU WOULD LIKE ME TO COVER - I WILL DO MY BEST!

Till next time!

DISCLAIMER: None of the above is financial advice. This newsletter is strictly education and should not be taken as investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and always do your own research.