One of the most common counter arguments I get when I discuss early retirement and the importance of the savings percentage with my friends, goes something like this:
“My father died at age 36. What good would it have done him to save such a large proportion of his income for some retirement that he never reached?”
This is a tough one to answer. First, because it’s inherently uncomfortable to think of one’s own mortality. And second, because it raises a damn good point: We are all going to die, so what sense does it make to trade today’s pleasure, for tomorrow’s security, when the only given is that at some point we will all be worm food?
I have thought about this a lot. And I think there are (at least) three answers to this question.
Answer number 1: when making decisions about the future, it probably makes sense to think like an actuary and not like a gambler. Sure there’s a small chance you will be hit by lightning tomorrow. But there’s a much better chance that you will live to be 85 and die of a heart attack. Doesn’t it make sense to plan for the more likely scenario? Life in many ways is a probability game. Better to put your nickel down on the likely scenario. And if you’re wrong? Who really cares, you’re dead, it will be impossible for you to express any regret at that point.
Answer number 2: The very question presupposes that saving is not pleasurable. I would argue that this is not the case. Saving a greater proportion of your take home income does not require that you spend less time with your loved ones. It usually does not require you to give up your favorite hobby. It certainly does not require you to go hungry. It simply asks you to be more mindful about the way you spend money, and to prioritize things that matter over things that don’t.
Furthermore, and this goes to the heart of yesterday’s post, once you start, I think that you will find that you enjoy saving and investing your money. Investing has a lot of the same serotonin releasing qualities, as gambling. It’s fun. An important distinction is that it’s not only fun but good for your financial Health. Probability is on your side. While you’re investing you’re probably getting a little bit richer. (And a lot richer over the long-haul.)
Answer number 3: It is totally unnecessary to increase your savings percentage. If you don’t want to do it, then don’t do it.
The only thing that is truly important, I would argue, is to realize that spending money is not simply spending money. It is spending time and spending freedom.
If cable TV is worth three years of retirement, keep on subscribing to it. If going out to eat for lunch every day (as I do) is worth seven years of retirement then keep on chowing. If buying the latest Mercedes will truly make you happier than 10 years of financial freedom, then by all means, buy it.
Better than Freedom or Truth
It’s about making choices and prioritizing. It’s about taking a clear eyed look at your future and separating the wheat from the chaff, the important from the unimportant.
In a way doesn’t this introspection increase our chances of living a happy and meaningful life?
Personally, since I got on this kick and started increasing my savings percentage by cutting spending on things that weren’t that important to me, I’ve been more happy, not less.
Saving has not been a deprivation, It’s been an opportunity. A chance to distill that which makes my life meaningful and to do away with that which just causes clutter.
If you don’t believe me, then here’s a challenge: divert $100 from each paycheck towards an investment account. See if you notice a decrease in your happiness. If not then kick up your savings percentage a bit more next month. Keep on going until your budget begins to feel a bit tight. It’s only at that point that you have to start asking yourself what’s worth cutting from your current lifestyle. By that time you’ll have some idea whether or not spending less money actually makes you less happy.
