Each year I try to read several books that will not only teach me something I didn’t know but will also challenge my views on a variety of topics, especially money. One of the books I just finished reading is “Die with Zero” by Bill Perkins. I have to say, this book has made me reevaluate my entire life.
As many of you know, I’m a planner. I’m also a frugal person who tries not to spend too much money, especially on material things. One of my life goals is to amass a great deal of wealth that I can use to retire early, give to my friends and family, travel the world, and donate to companies and organizations that make the world a better place. In order to do that, my initial plan was to work a lot over the next 10 years, get paid a high salary, and invest a large percentage of that money to increase my net worth. To put it simply, I was going to work a lot, make a lot, and invest a lot so that I could build wealth as soon as possible.
Bill Perkins in his book “Die with Zero” made me rethink that entire plan.
I still plan to amass wealth but the way I do that has definitely changed.
One of my biggest takeaways from the book was that instead of structuring my life to maximize my wealth, I should instead structure my life to maximize fulfillment. That means discovering what makes me happy and creating a life that allows me to have more of the experiences I enjoy. It means realizing that some experiences like international travel, late-night outings, or active outdoor activities are better had at certain points in my life (ie. When I am young and healthy). While this may sound basic, it caused me to rethink my life plan. Through this book I learned that I shouldn’t use my youth delaying gratification and sacrificing for my older self (at last not as much as I had planned). Instead, I can be fiscally responsible, but I should also try to enjoy life more along the way. In other words, I need to make sure I’m not delaying gratification too much. Some experiences are best had when I am young and healthy so if I keep delaying, I may never get to have them (at least not in the way I desire).
Let me give you an example. One of the things I’ve wanted to do is go to China to climb the Great Wall. I keep telling myself I’ll go eventually, but I’m about to turn 32 and I still haven’t done it. This book has helped me see that if I keep delaying going to China, I may eventually be too busy to go (once I have kids) or too to enjoy the experience the way I imagined (if I delay the trip until late middle age or retirement). A trip to China wasn’t the only thing I was delaying. There were also experiences I kept putting off. One of them is going to Coachella with my friends. This book made me realize that If I keep delaying it then I may soon miss out on the ability to do this. Why? Because at some point I will get married and have children so leaving my newborn at home to spend all day at a festival in the desert won’t be as appealing. My point? Some experiences are better had when I’m young so delaying them may cause me to miss out on the experience entirely.
And this brings me to the balance question.
What is the right amount to work vs play? What is the right amount to spend vs save? Yes, we should all try to live in the moment and maximize happiness with incredible experiences but shouldn’t we also save for the future and for a rainy day and invest for retirement? What is the right amount to allocate to each side and how do you know when you’ve gone too far in one direction vs another?
I have friends who spend almost everything they get, fail to save anything, and rack up tons of debt that they may never be able to repay. I have other friends who save so much of what they earn that they deprive themselves of incredibly meaningful experiences they may never be able to have again.
One friend accrued over $10,000 in credit card by buying designer bags and living in fancy apartments she couldn’t afford. Another friend missed out on his best friend’s wedding because he was too busy at his job to take the time off work.
Neither is ideal.
So when I think about this phase of my life (and you think about this phase of your life), we are all left wondering about the right balance. We don’t want to squander our youth and good health working way too much to amass more money than we truly need. But we also don’t want to spend too much too soon and fail to have the money we need to take care of our families, pay our bills, and invest for the future. What should we do?
The optimal balance may vary from person to person. It may also differ for each of us during certain phases of our lives. Perhaps when I’m younger I can invest a little less to have more money to travel and enjoy life before kids. Maybe when I start having kids, I travel a little less and spend more time/money investing for their future and spend more quality time at home. Then when my kids get older, I cut back on investing once more to have more memorable family vacations and gatherings with friends.
My point? It’s quite possible that our savings/investing rate may fluctuate throughout our lives. It’s also likely that the balance of work life and personal life may change as well. Our job right now is to start thinking about what that optimal balance looks like during the next year or two. For me, this will probably mean working part-time and making a little less money than I could in order to travel more, spend quality time with my aging parents, and cross some things off my bucket list. It may also mean that instead of investing a large portion of my income, I instead invest a reasonable amount (15% to 20%) and give myself the freedom and flexibility to enjoy the rest of the money in ways that maximize my overall life fulfillment.
Tell me, what is your optimal balance of work and play? How do you determine what amount to spend vs save? Is there anything you’d like to change over the next year?