Someone said, living a fun life and good financial management are like water and oil they do not mix.
I think about this quite often, especially when I meet people who from reading my articles online seem to think certain things about my attitude and approach to personal finance.
“It must be nice to be in control of your money”
“You must save a lot!”
“Do you have any fun at all?”
The above are comments and questions I hear often and they both fascinate and make me smile. Yes, money is never far from my mind; a part of me deeply desires to be fully in control of my money. I have the concerns around money and the long-term questions just like most people. Will I be comfortable in retirement? Will I afford university for my daughter? I read personal finance blogs of people who managed to retire at 30 years old or 35 and wonder how they did it, and wish I also could. Secret: It involves a lot of frugality and simplifying your life.
Then I have the freedom loving side of me that wants to travel the world, buy shoes and not really have to think about money. This side conflicts heavily with the controlled side of me. I am a YOLO (You Live Once) kind of a person. I have quit my job 3 times without a back-up plan, the last time I did, I stayed without a regular income for close to 2 years, relocated to another town and liquidated most of my investments. Did I worry about money? Yes, I worried some, I had some close calls to total brokenness, but I loved the freedom.
So how do we balance the two? If we lean too much on the control side, we end up with boring lives that are financially secure but lacking in adventure. If we are YOLO every day, we end up broke, or worried about being broke. Can we really be in control of our money, while at the same time living adventurous, passion-filled lives, enjoying it as much as adulthood will allow us?
How do we create wiggle room in our lives?
I want to go on a cruise and a family holiday every year, and at the same time save for both my retirement and my child’s education, WHILE working just enough to be home every day by 6pm.
I guess what I am asking is;
Can we really have it all financially?
While I cannot claim to have mastered it, I have some ideas on what we can do, to achieve balance between our finances and fun.
- Make Planning An Event
One of the reasons we are unable to enjoy life is the worrying about the long term. See the future is inevitable, and no matter how much we ignore it. To avoid this, make long term planning something you do once or twice a year. You want a house in 10 years? Make a plan, establish how much you need to set aside every month and factor that into your budget. Figure out your X Figure – what you need to have saved to be able to retire, then divide it by the number of years, then months to retirement. Then do the next thing which is…
- Automate your savings
When you have a plan in place, you then want to get it out of your mind on a daily or monthly basis, by automating the money you need to set aside. There are many ways to invest your saving and on this series we will discuss these. I find it helpful to have a bank account that allows me to automatically transfer funds every month. So every time my pay checks in, I pay myself. The long term money checks out of the account. Investments require a bit more thought and knowledge than saving and we will discuss that.
- Live a little, don’t budget to the last coin
Whenever I speak about budgeting, people ask if they should budget to the last coin. While some people enjoy this, for most of us, it robs life of the fun. An approach that had worked for me is to approach budgeting as follows:
- Savings and investments – this comes first
- Bills that must be paid – both the monthly bills and the annual stuff such as insurance
- Vacation savings
- Pocket money – Whatever that remains is my spending money. I can splurge or save, depending on how I feel.That last amount is the most fun but, because I then get to be spontaneous. We can call it planned spontaneity.
- Celebrate the milestones
This is my favorite part about being an adult. When I accomplish a plan I had, and then get to take a break and celebrate. If you had a one year plan and stuck to it to the end, reward yourself by going out of town for a night, or buying that phone you’ve wanted all year.
Rinse and repeat.
By Kellie Murungi