Tuesday, July 18, 2006

Save for tomorrow or live for today?

Obviously the answer lies somewhere in the middle-- but where? We take pride in making responsible choices for the future instead of thinking only of today, but do you ever feel like you're going too far? Not appreciating the present enough?

I hear that suggestion a lot regarding how much money frugalites and penny-pinchers spend: that we're not enjoying life enough because we're not willing to spend much money. The thing is, I don't think that spending more money would make me noticeably more happy! I mean, certainly there are some things that I could spend more on and enjoy-- probably more expensive vacations, maybe going out to eat more and/or at fancier places-- but in general I'm very comfortable with the way things are. I find ways to enjoy myself that are free, cheap, or just good values for the money... and if there's something that comes up that's expensive but would be really wonderful, I weigh it carefully but am pretty good about letting myself go for it if it's worth it.

However, it's the flip side that concerns me. The amount you save is a combination of how much you make and how much you spend, so it follows that to save the most for tomorrow you need to make as much money as you can today. A lot of personal finance bloggers like to stress the importance of increasing your income as much as possible.

For me personally, while I'm not earning as much as I could if income was my only priority, at $47,000/year I'm above average for my age group and well above average for liberal arts majors. And I'm still doing a job I like and one I feel is good for society. The thing is, I've never really envisioned myself following a standard "career path." My top priority is helping to make positive change in society, and I've fully intended to experiment with a variety of non-profit organizations and jobs and evaluate which feels most right to me. While I like it well enough, I know that my current job isn't "the one." Yet most of the other options will likely pay substantially less, in some cases perhaps as little as half as much. So the question is, how long should I stay at a good-paying job that I'm fairly but not completely happy with? I definitely want to try other work, but don't I have plenty of time for that later on?

There are many arguments for doing higher-paying work first-- getting money into savings and taking advantage of compounding interest, paying off debt-- and putting off more satisfying but lower-paying work for later, maybe even until retirement or an early retirement. (For just one example, it's the classic recommendation for socially-minded lawyers: put in a few years at a big firm, rake in the dough, pay off your loans and save up, and then later you can give it up and go do your public interest law.) But the approach worries me in a lot of ways. What if I get too used to the benefits of making my current income? How do I decide when I'm financially "ready" to switch to a lower-paying job? And what if when that "ready" comes, it coincides with the time in my life when I'm looking to buy a home, get married, have children, etc, and suddenly the financial hit seems a lot less doable?

So maybe it's better to try different and more challenging options now, when I'm young and more flexible and I know I can pull it off. Besides, who knows what unforeseen things could happen in my life that might constrain my future decisions? I'm sure I'll regret it if I don't try working at other kinds of organizations; I would hate to look back and realize that I missed out on great opportunities only because I was too concerned about the size of my retirement account. There's a lot to be said for seizing the moment.

I have a personal goal to let concerns about money affect my choices as little as humanly possible. The hard part is finding the best way to do this. Working to save as much money as I can is one way to help free me from money concerns later in life, but it means putting money squarely in the center of my decision-making process today. If I try not to worry about money and income in the present, that will make things harder in the future. It's so hard to figure out where the right balance is.

Do you struggle with tradeoffs between earning money and being happy and fulfilled? While I doubt many people have precisely the same concerns as me, I feel like this dilemma is probably applicable using a lot of different measures of happiness and satisfaction: pleasant vs. unpleasant work environments, a more personally satisfying career vs. a higher-paying career, a job that has shorter hours and/or is more flexible vs. a job that eats into your personal life but pays well, even working vs. staying home with kids. How do you make these kinds of decisions in your life?


Tiredbuthappy said...

This a great post, and it reminds me why I like your blog so much.

I don't want to sound like your big sister or something, but you did ask if other folks struggle with the same conflict. I'm a few years older than you are (turning 30 in a few months) and still trying to figure out if I struck the right balance in my early 20s. I worked exhausting, low-paying, low-skill jobs right out of college, but I graduated early and wasn't mature enough to get a "real job". I regret those years but think that the real mistake was starting college at age 16. That's what caused me to waste a couple years after college. By age 22 I had realized I wasn't doing myself any good doing what I was doing. So I quit, put all my stuff in my dad's garden shed, and travelled for a year. During that year I also took the GRE and applied to grad school.

When the year was up, I went to grad school, where I met my current partner. So in one fell swoop I had a career, a life partner, and soon after a house and a kid. So yes, the freedom is now gone. Of course what I have is better than freedom (or I wouldn't be doing what I'm doing) but I do sometimes miss the feeling that anything is possible.

I don't regret making so little money in my early twenties. Compounding, schcompounding. I still started my career early enough (at age 24) to have a good jump on my long term goals. I DO regret not travelling more, not getting the impractical MFA degree, not trying harder to finish a novel, not living abroad for a while, all those things that it is next to impossible to do now.

So I would say quit that job while you can. Take the risks now. You're right. If you wait, you may have too many financial responsibilities to change your path, or you may have grown so used to your current finacial security that it will be hard to reduce your income dramatically. I think even more than the financial responsibilities that's what has me trapped--I'm not willing to reduce the amount I'm saving, etc, so I'm not willing to take as many financial risks.

So yeah, I have some regrets, but I do think I'm striking a pretty good balance now. As I've mentioned, my spouse and I take turns working full time. Whoever is not working full time works part time and stays home with our son a few days a week. We could probably find a way to survive on only one full time income and have a full-time parent home with our son, but I'm not willing to suspend our retirement savings, not own a car, save nothing for college, grocery shop with a calculator, never go on trips, etc. And if we had only one income we wouldn't be able to afford to send our son to preschool, and I want him to have the socialization school offers. So our lives are crazy but I think we're making the best choice for the time being.

Ay ay ay, look how long this comment is. I'll shut up now.

Keep up the thougthful blog posts.

Penny Nickel said...

Long, but great, and very much appreciated. This is exactly why I asked. Thanks. :-)

(It would be interesting to see you blog about this... your experiences and advice are too worthwhile to keep just for me!)

Ms. MiniDucky said...


This is a huge question I've been grappling with as well, and have yet to come to a better conclusion than "well, we'll see what next month brings" or "Ok, at least stick it out until the end of the year and reevaluate then." It's very difficult to contemplate leaving a fulltime position (congratulations on that btw, you are doing MUCH better than most salary-wise, I'm also from the liberal arts field) especially after being financially independent for so long. The hours are exhausting, the work environment is less than ideal, and honestly, I'm not sure I'll be able to parlay the networking I'm doing now into a higher, better job in the industry. Personally, despite my boss's assertion that I'll take away huge benefits when I leave, the best I'm expecting is an *impressive, I hope* 2 lines on my resume.

My natural affinity is to say now's the time to do the sowing of oats, to do the good deed and all while the financially cautious part of me says build those buffers first! The struggle feels like it's the Life version of trying to navigate levels of frugality in deferring those more fulfilling moments and jobs for an unknown future time when you're stable enough: you're risking not being able to do it at all because of any number of reasons, like Claire's already described much better than I can.

Then again it's rather a mixed bag when you're weighing the one job against the other.

I suppose it doesn't do any practical good to wish I were simply talented like Neil Gaiman and call it a day, hm?

collegesaver said...

I agree, this is a great post. I can't help much because I'm having the same decision to make myself:
Peace Corps, graduate school, or become a wealthy engineer

Errr... At least I have a few months before I make the decision.

I think taking more risk now would be easier while I'm younger (and more optimistic), but I'd also be much further behind than others in my career and I really want to excel in it. I guess it's a battle between spiritual goals and financial goals.

Good luck on your decision!

prlinkbiz said...

Why does there have to be a trade off? If you learn to put aside money, which it sounds like you have, live below your means, then the next step is learning to invest. You can become financially free in a short amount of time- that will enable you to live the life you want- because money now and tomorrow won't be the deciding factor.
So, what kind of life do you want? Now make it happen! (smile)