Investing for the future vs. enjoying the present: What’s the right balance?

We can lump many people into two categories when it comes to personal finances. There are those who find investing for the future as a natural occurrence. It’s something they do without thinking much about it. They may even have their bank transfer money automatically into investments they chose. These goody-two-shoes, Ned Flanders wannabes seem to have it all figured out. Are they actually enjoying life?

Then there are those walking among us whose focus is on enjoying the present. They aren’t thinking about retirement. Their carefree way of life is more Homer Simpson. Consequences don’t seem to factor into a lot of their daily decisions. So what if they eat another donut? They’ll lose the weight when they have their jaw wired shut after an accident involving an icy roof. Those people want to feel good now. They’ll deal with the problem tomorrow or the day after that or if they’re especially lucky, another day after.

Why not now? Because I can always do it later.

A third category can be created. This is the sweetest spot to be in. It’s finding the right combination of investing for the future and enjoying today. What is the right balance of both? Is there a certain number to put away for the future while still enjoying the now?

Why investing for the future is important

Delayed satisfaction isn’t too appealing. Future You might be grateful to Today You for saving up some money for later. The trouble is, until we actually invent time machines, Future You has nothing to offer Today You. Because of things like cell regeneration, are they really even you or just someone who has the same driver’s license and acne scars?

Even tougher, none of us know exactly how much we’ll need for the future. The plan is to have enough to retire on and live comfortably. What number would that even be? A million? Two million? Dare I say, more?

Those who are actively investing for the future in whatever way they choose definitely have a head start on people who think it’s too hard or not for them. But it does come with the risk of enjoying the present a little less. If part of your paycheck is always getting invested into a retirement fund, it means you have less for the weekend.

This is how people who don’t think about the future spend their weekend: packed into a venue around sweaty strangers.

Why you still need to enjoy the present

Putting all of your money into the stock market, a high-yield savings account, and paying off your mortgage as quickly as possible sounds nice. It also takes a ton of work. Where are those moments of enjoyment along the way? Unless you’re making high six-figures, it’s not such a practical thing. You can’t do them both to an extreme without your income being exceptionally high. We need to find the balance.

When many people first start down a path of financial awareness, they’ll get a little too caught up in the future. Their weekend plans include staying in and finding the next side hustle. Passive income is a way of life. Selling used things they bought years ago is now a hobby.

You can end up missing out on the things you used to enjoy if all of your attention goes toward focusing on your future. The same way we don’t know how much time we’ll have in retirement, we also don’t know how much time we’ll have to enjoy life whatsoever. There is, unfortunately, no guarantee we’ll reach retirement age. Sorry to break the news. We’re lucky if we end up having a golden year after work is over with.

The “golden years” refers more to old people and less about this well-behaved species.

What is the right balance between investing for the future and enjoying the present?

Ranges for how much you should invest seem to fall between 15-25%. This is just extra money going into a 401K, ROTH IRA, or brokerage account. Another 25%+ is going into your rent or mortgage. My guess is it’s even more. We can round it to about 50% of your money already gone before life has been enjoyed.

Groceries, transportation, medical bills, etc. also contribute to depleting the bank account. What’s left at the end of the day?

What Jenny and I do to make sure we get to enjoy life along this journey is do things in reverse. We don’t budget. Instead, we look at our savings and invest from there. This might not be for everyone. For us, it works.

At the end of the month, we look at our savings and have places where we send any extra money. It may sound like an easy way to overspend, and it can be if you’re not paying attention along the way. One month of seeing your finances in the red will force you to rethink your spending habits in the next month.

The right balance between investing for the future and enjoying the present isn’t numerical. The recommended 15-25% is a reasonable expectation and the range we will usually end up at each year. The important thing is that you feel like you are enjoying the present first while setting something aside for the future. Call this a “feel good about yourself” tax.

Otherwise, what’s the point? A miserable life isn’t something we want to extend.

Find your balance, whatever it may be. Invest until you’re unhappy with how little money you have left. The number is likely to change often. Remain flexible and willing to change with it.

Below are affiliate links to products we use and recommend. By using those links, we may receive a small commission from your purchase. Using these links does not affect the price.

The book that convinced us to start investing and being more proactive with our money and lives: The Only Investment Guide You’ll Ever Need by Andrew Tobias

The gear we use to make our YouTube videos at the Practically Humans YouTube Channel

• Sony ZVE10 Camera
• Sony Retractable Zoom Lens
• MOVO Shotgun Microphone
• Audio Cable
• Memory Card
• RGB Lights
• Studio Light

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