“Anything coming up in the next few weeks that you’re looking forward to, or excited about?”
A friend asked me this question earlier this week, when we got together to grab a coffee. She was about to head off to Rwanda for an entire month, so the big exciting adventure on her horizon was pretty obvious. But she was curious about me.
I thought for a moment, but nothing came to me. I shrugged and said, “I know there’s a lot going on. If I pull up my calendar I could rattle off a ton of things, big and small, that are happening over the next few weeks and the rest of the year that I’m really excited about!”
But in that moment? My mind was blank. I looked out over where we were sitting, on the Greenway in Boston, and wanted to gesture towards it as an explanation:
I was relaxing outside in the middle of a Wednesday morning with a friend, having a good and interesting conversation. Why would I be worried — or even excited — about the future, when this was now?
I was in the moment, and my brain struggled to shift out of it to start thinking about the future.
Being in the Moment Versus Future-Oriented Thinking
My friend asked me how often I thought about the future when I struggled to share my upcoming plans with her. Although I’ve actively been working on being present and living in the now for a long time now, I hadn’t realized the progress or shift I’d made from my past ways of thinking.
That included how I thought about the future and the past.
I used to ruminate over the past. I’d been so much time and energy replaying things that had happened — and more often than not I’d beat myself up for things I did wrong or things I regretted.
When I wasn’t brooding on something that already happened, I was hyperfocused on things that would happen. I spent the majority of my thinking time imagining the future or wishing something in the future was happening now.
Rarely did I find myself simply in the present moment.
And my future-oriented thinking kicked into overdrive when it came to money. I used to obsess over saving money: how to save money in new ways, how I could avoid spending at all, how I could use as little as my money as possible now because there was always something in the future that I’d need that money for.
How My Future-Focused Thinking Impacted My Money
In some cases, that financially future-oriented thinking served me well. It made saving up for big things, like a down payment on a house or a big international trip, much easier to do than had I simply yelled “YOLO!” and blew all my cash on shopping sprees and wine.
But from a bigger-picture perspective, it was pretty damaging. It caused me to miss experiences and opportunities I can’t go back and have again. It caused me to dig deep into a scarcity mindset around money; I wanted to hoard everything not because I was super motivated but because I was super afraid of not enough.
It lead me down a path of believing the solution to all life’s problems was to simply escape from them. So I saved over half my income and, when I was 22, made a plan to retire by the time I was 35. If I kept saving at that rate (over 50% of the money I made), I could stop working at 35 as long as I could keep my expenses to $30,000 per year.
I was so future-focused because I didn’t want to be in my present — because I didn’t like it. Emmersing myself in the world of extreme frugality in pursuit of “FIRE” (which stands for “financial independence/retire early”) sounded like a better solution at the time.
However, it seems insane to me now.
Not the financial independence part — that’s still a big goal of mine. But the fact that I no longer want to escape my present means I’m more relaxed about when that happens. I’d love to be financially independent by the time I’m 55, because I have a lot of life to live today.
Plus, there were a lot of big flaws in my initial “early retirement” plan. Here are just a few:
- My solution to the fact that I didn’t like being in the present was to basically withdraw from it; by setting such a big financial goal and obsessing over how to save money for it, I effectively gave myself a ticket out of real life until that point in the future when I achieved my goal.
- I didn’t stop to wonder about the root causes of my unhappiness with the present moment. I just blamed it on, “well, I don’t have enough money. If I did I would be happy, so I’m going to spend my time dreaming about the future point when I do have enough money.”
- I didn’t really have a plan for what I was going to do as a 35 year old with a $30,000 annual salary who didn’t work. I just figured I would be free to explore passion projects and hobbies and whatnot.
- Yes, you can live on $30,000 a year. Yes, in some areas this is a nice sum of money. Yes, this is a significant amount of cash to some people. But $30,000 is not much when you consider all the things that can and will go wrong — and if your whole plan is predicated on, “I’m only spending $30,000 per year to live and do all the things I want and to cover any unexpected costs,” then that is not exactly a foolproof plan.
Again, this idea that I was going to obsess over my savings and hoard everything I could, not spending a dime over what I had to spend, seems nuts now. My goals are much different today.
When “Just Save Money” Isn’t Enough
Yes, I want to be financially independent. But I also want to experience all the amazing things around me right now.
Two really big shifts in my life took place to allow this to happen:
- At some point, the first big thing clicked for me: I didn’t actually want to be forced to live off $30,000 per year. So I stopped obsessing over how to save money, and started asking questions about how to earn more money.
- I focused on being more present (instead of being highly future-oriented).
That first point is really important, because anything that I’ve said or am about to say is pretty irrelevant if you don’t have money to save to begin with. So let’s begin there.
When I got out of college, I earned about $22,000. By the time I was 25, I earned about $40,000. That was a big leap, but even trying to live off a $45,000 salary did not afford me the opportunity to save at the level I wanted to and use my money to live well in the present moment.
I realized my obsession with savings was not getting me anywhere fast. But again, I had that scarcity mindset around money; I believed how much I made was out of my control.
Until I decided to challenge that belief.
What if I pushed myself? What if I had a day job and a side hustle? What if I started my own business?
It took a few years and some leapfrogging around, but eventually, I started earning more and more money every year. In 2015, I earned about $75,000. In 2016, I made over $90,000 — but had a full-time job and did freelance work on the side. I quit that full-time job to focus on growing my own business, and in 2017 made over 6 figures for the first time.
I say this to point out what a simple mindset shift can do. I didn’t become a different person. I didn’t go back to school. I did work to improve my skills and grow as a person — but I’m not special; I’m not uniquely gifted.
The biggest action I took was to simply stop obsessing over savings and scrimping and pinching pennies, and I started asking, “what’s really going to move the needle here?”
Any conversation about financial success or wealth or achieving your goals is meaningless if you never look at how you can earn more. Yes, you need to:
- Save a high percentage of your income (at least 20 percent)
- Align your spending with your values and don’t engage in wasteful spending
- Keep a budget
- Don’t waste your money on material stuff and status symbols
Everyone talks about this stuff. Few people acknowledge that for any of these tactics to be truly effective in growing wealth, you have to increase your income as you’re doing all these things.
That’s why I don’t obsess over how to save money anymore.
I Don’t Obsess Over How to Save Money: Here’s How I Manage My Finances Differently Now
That doesn’t mean I don’t save — but it means instead of pouring my time or energy into extremely frugal living, I dedicate that time and energy to activities that will move the needle on how much I earn.
Mine and Eric’s general process for money management looks something like this:
We prioritize earnings. Instead of spending hours and a lot of energy clipping coupons and going to 3 different stores to do all my grocery shopping to get the absolute lowest prices, I’ll go to Whole Foods when I’m short on time (because it’s the closest store to us), get what we need, make a simple meal — and spend a few hours writing pitches for freelance work, reaching out to prospects, and marketing my business.
The net effect = way more money coming even after accounting for the fact that, yes, I could have saved $50 on my grocery trip.
We save/invest 30 percent of our income. Once we close out our business numbers at the end of every month, we immediately look at:
- Gross earnings
- Net earnings — which, for us, means earnings after taxes, expenses, and contributing to our SEPs and HSAs
We treat those investments like they’re as mandatory and non-negotiable as taxes and bills. Once we have our net number, we then:
- Move a set amount to cash savings goals (right now, that includes a travel fund and new-car-in-the-next-few-years fund)
- Have an automated transfer from checking to our brokerage account
At this point, 30 percent of our gross earnings is already in a savings or investment account — before we’ve even spent a dime.
We look at our budget and see if we have “extra” in our cash flow. We use a set budget every month that breaks down our fixed expenses (like rent and other bills or payments) and creates a pool of available cash for discretionary spending.
We don’t try to list every single line item and budget for every conceivable thing we could spend on in this discretionary area. That would drive me insane.
Instead, I track every purchase and in my spreadsheet, there’s a cell that tells me how much available money is left in the month and how much I can spend per day (based on how many days are left in the month).
Some months, we make more than enough to cover the spending and expenses in our budget. When this happens, 9 times out of 10 we immediately take the “extra” and invest it, too.
But occasionally, we’ll choose to spend it instead. The fact that saving 30 percent of our income is an automatic, non-negotiable thing gives us the flexibility to save more if we want — or, to spend it without guilt if that’s our choice.
Our Goal: Use Money to Live Mindfully
We both want to live in the moment. We both want to be present — and we don’t want money to be something that takes away from that. We don’t want to put our heads down and spend minimally for the sake of throwing everything else in a savings account for “someday.”
This is what it means to balance saving for tomorrow and living well today. There’s no doubt that we have some kind of future ahead of us — but that future doesn’t have to come at the expense of being in the moment right now.
It’s easier to live in extremes sometimes. It would take less thoughtfulness and mindfulness to be future-oriented and to shut down in the present. At the same time, living in the moment doesn’t mean you have to ignore the reality that the future is out there.
You can live for right now while still knowing what’s coming will come, and you want to be prepared to meet whatever it is when it becomes the present.