Investing in Your Life Pays Off in the Long Term
Simple living is great. Avoiding shopping malls in favor of clothing swaps, cooking meals at home with your spouse, holding a music jam with friends instead of shelling out big bucks for a concert — all these activities not only save you money, but they also connect you more deeply with what you love.
In a sense, they make you more alive. Which is what getting rich is ultimately about: not simply achieving material wealth, but living a rich life.
Pay now, save later
Some things just shouldn't be scrimped on, though. There are expenses that save you money down the line. Some also save you time and improve your quality of life. It might be tempting to cut corners on this stuff, but the truly frugal person knows that laying out cash up front will pay off in savings later.
Consider these expenses an investment in your life. You'll reap material as well as personal rewards when you keep up with these areas of your life:
- Your health. Preventative health care saves thousands on major medical costs every year. In addition to keeping up with your annual physical, be sure to get your teeth cleaned regularly. Dental insurance typically offers only partial coverage of major dental work, and those crowns can add up to huge dollar amounts in a hurry. Taking care of your health also means eating well and getting enough exercise. These things can be done relatively cheaply: You don't have to spend a fortune at Whole Foods or join a trendy gym to keep fit. It's worth putting some money into eating well and keeping your body moving, though. Look for bargains at your grocery store, but don't eat Fruit Roll-Ups instead of fresh fruit just because you have a coupon. Over time, you'll save money by staying healthy.
- Your home. You don't need to live in a mansion. A smaller, cheaper home can often bring you more joy because it comes with fewer financial headaches and less labor to keep it clean. Whatever roof you choose to lay your head under, you'll need to maintain it. Unless you rent, or have a condo association managing it for you, it's important to stay on top of upkeep on your property. Like your health, preventative maintenance can go a long way towards saving you money and guarding against real harm in the future. Fixing your leaky roof promptly, replacing your water heater as needed, and cleaning your heating system each year will cost you in maintenance fees. But it's a small fraction of the cost you'll pay if you let those things slide until they become emergencies.
- Your marriage. Divorce isn't just painful, it's expensive. A divorce typically lowers each former spouse's net worth by 70%. (But it sure boosts the net worth of the lawyers!) Putting some resources into keeping things strong between you and your partner is a great investment, in financial terms as well as emotional. Set money aside for time together, for small thoughtful gifts to let your beloved know you're thinking of her. If you have kids, spring for a babysitter to create some much-needed time alone. If your marriage is in trouble, consider therapy. The therapist's fee may seem steep, but it's a fraction of the hourly rate a divorce attorney will charge, and the end result will likely be happier.
- Your career. Typically, your career is your greatest source of money. But it also creates expenses. These range from having the right clothes for your office environment to taking graduate courses. There's an art to knowing which expenses will pay off. Do you really need $200 shoes to fit in at work? Is that new laptop an essential business expense or a neat toy? While it's easy to overspend on your career, especially if you're self-employed, work is an area where some investment up front can bring you huge returns over time. If a graduate degree will help you step into a higher paying position, or even switch careers entirely, it's probably worth the cost of tuition bills in the here and now.
- Your happiness. You can't live entirely in the future. While you save for your long-term goals, be sure to put some energy into being happy in the present. That doesn't mean splurging on expensive whims to buy yourself a moment of happiness in a bleary day. Spending money you don't have won't make you happy. Debt is a major cause of stress and sadness in people's lives. But as you take control of your finances, be sure to also tend to the joy in your life. That's best done by fostering close relationships and engaging in activities you love. Unlike the other “life investments” I've talked about here, this one comes with a small price tag or none at all. A talk with a close friend, a trip to the library, or a free movie at your local university can all bring big doses of happiness for free.
Investing in these core areas pays off in a better quality of life and saves you money on emergencies. A healthier, happier life is also a cheaper one.
Budgeting for now and later
To get the long-term financial and personal gains of this approach, you'll need to do some careful budgeting. Make sure you leave room for “unexpected” expenses like home repairs and dental work. A review of your last few years' spending records should give you a pretty clear idea of what your family typically spends on these periodic maintenance items. By budgeting for them, you'll have the cash on hand when you need it.
You can also make your life easier by funding a three- to six-month emergency fund to tap into when life throws you a big curveball like a suddenly failed appliance You shouldn't rely on your emergency fund to cover your new running shoes or evening computer classes, though. Budget for these “life investments” and they'll fit more easily into your life.
As with any expense, it's important to make these choices with care. Yes, you're investing in your life. Keeping your health, your home, your marriage, and your career strong will bring you more happiness every day. But like any investment, take care not to overextend yourself. Sometimes last year's running shoe is just as good as this year's — and for half the price. Getting the most out of your money without shortchanging your quality of life is the truly frugal approach.