Balancing Living in the Now With Planning for the Future

by Carlos Portocarrero on 30 May 2012 5 comments
Photo: kevin dooley

The latest buzz in retirement news is that most of us won't have enough money to retire. The recent market crisis has everyone feeling very pessimistic about pretty much everything:

  • "Stocks aren't what they used to be."
     
  • "You can't rely on the market growing over time like you used to."
     
  • "Computer trading has ruined long-term investing."

These sound like new ideas, but they happen every time after the market tanks (which has happened many times before, regardless of how alarmist the news is).

The current state of retirement is a perfect way to analyze how and why we do the things we do when we try to balance the present and the future. (See also: Why Saving Money Is a Gift to Your Future Self)

With all the panic and hoopla, everyday people like you and me who invest so that we can retire one day have decided to do one of two things:

  1. Give up investing altogether. If the experts are right and stocks aren't going to help us retire because the whole system is "broken," then we might as well put our money under a mattress where we know it'll be safe. Others are even more pessimistic and just say the hell with it — I'm spending it all and will worry about retirement when I'm old.
     
  2. Save even more. Stressing out about being old and not having money will do wonders for some people's motivation. Many investors have decided they're going to max out their 401(k)s, max out their Roth IRAs, and then try to invest some money in hand-picked stocks so they can have a shot at a decent retirement.

Both strategies, of course, are a little extreme. You need balance when you're saving for retirement, and the sweet spot is somewhere in the middle.

Live in the Now

We all have to remember that life happens in the present. Money comes and goes, but youth and time is something you can never get back. As poetic and mushy-gushy as that sounds, it's true.

If you save up the money to go on a trip to Greece when you're 30, it's going to be a very different trip than if you decide to wait and go when you're 65. You won't be bungee jumping or skydiving; I can guarantee you that much.

Finding the Right Balance

The right answer is to be so prepared for the future that you can enjoy the present without feeling guilty about the things you want to do or panicked about retirement.

That means following some basic rules:

  • Contribute at least up to the match for your 401(k).
     
  • Bump up your 401(k) contribution every time you get a raise.
     
  • Put a percentage of your bonus into your Roth IRA and try to max it out every year.
     
  • Invest for the long-term in your retirement accounts, ignoring the ups and downs.
     
  • Don't take money out your retirement account early.
     
  • Run the numbers once a year and adjusting as necessary to ensure you're on the right track.
     
  • Minimize your expenses so you have more money to work with.

And if you want to enjoy spending your money today without feeling guilty, here are some tips:

  • Targeted savings — if you save ahead of time for a trip or a $200 pair of jeans, it'll be easier to spend the money because you "earned it."
     
  • Enjoy the present, so you'll have no regrets in the future.
     
  • If you get a bonus, take a percentage to treat yourself to something you really want.
     
  • Reward yourself for hitting your goals (like making budget every month or contributing to your Roth IRA).
     
  • Create a bucket list to remind you of all the things you want to do in your life.
     
  • Don't forget you could die tomorrow and all your plans for the future would be for naught.
     
  • Write. Keeping a journal or writing letters to others is a great way to keep us grounded in the present and reminds us the things that are really important.

The secret to living a balanced life is to be organized and strict about how you prepare for the future, so you can cut loose and enjoy the present without feeling guilty about it.

How do you prepare for the future without becoming miserable in the present?

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Guest's picture

Rewarding yourself for completing your goals is definitely a smart move. We all get discouraged and sometimes lose sight of the bigger picture. It's definitely important to keep saving and investing for the future, no matter what the current market is doing. Although, that's easier said than done.

Carlos Portocarrero's picture

Totally agree. Sometimes we try to bite off more than we can chew and think we don't need "motivation," but we're human!

Guest's picture
Drew

Set up two savings pots; a true, never to be touched until retirement savings pot, and a splurge savings pot, where you get guilt free access to enjoy the here and now. That way you can still have both, albeit both will limit each other in the amounts deposited, but it will help to achieve that balance we all seem to be seeking.

Guest's picture
claire7676

Great article! I think alot of people struggle with this. Personally, I would love to have the money for a down payment for a bigger house. But my first priority is to save for retirement and enjoy the present. I've recently relaxed our budget some because it was all work and save and no play. NOT FUN. I'm not going to live my life in misery like that, but I don't want to spend too much on "play" either. It's an interesting (most would say frustrating) balancing act to juggle and different for everyone.

Carlos Portocarrero's picture

Again, we're humans and we try to do one extreme or the other because we've always been taught to "do our best." Not realizing that the extremes keep us from being balanced in our lives. Which usually makes us miserable...