My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned.

Wednesday, February 8, 2012

The Balance between Enjoying your Life and Frugality

As I discussed in my “Old and not Thrifty” post on Monday, I don’t care if I save two dollars shopping at Wal-Mart. That is not to say I do not think about what I spend my money on, but once I decide to spend, I am not frugal.

For those who are frugal, there is no debate from me that you definitely save a greater percentage of your earnings than The Blunt Bean Counter. However, my sermon for today is that your frugality must not be a means to itself, but that the monetary benefits you accumulate by being frugal should at least in part, be utilized to enhance your life experience.

The discussion in this blog post is only relevant to people who have savings and are not frugal out of necessity. For the purposes of this post I am lumping spending avoidance with frugality, although they are not necessarily one in the same. For example, many years ago, at a firm I used to work at, a client’s investment advisor believed in fully leveraging this client's portfolio's so that they had the maximum exposure to the equity markets. The client took this leverage philosophy to the extreme, such that he had no money to spend because his cash flow was restricted as result of his debt obligations. This was not frugality, it was actually stupidity; he was not enjoying his life because he was not spending money because he had to avoid spending.

Whether you are not spending money because of frugality or because you have choked off your cash flow as in the example above, be aware that you are postponing the time to enjoy your life. In the case above, the client’s marriage had tremendous tension as his spouse did not agree with the philosophy of leveraging when it impacted her desire for going out for dinners and travel and enjoyment of her life.

At this point, this blog requires a connector. My personal connector is having a father die in his early fifties. My view on life is always impacted by this event because whenever I say this purchase or that vacation can wait for another day, I stop and say to myself, that that day may not come. I am not being morose or by any means saying overspend today and disregard your future; I aggressively and continuously try to build my RSSP. I am just saying balance your today and your tomorrow. Don’t deprive yourself, because you may not have tomorrow to enjoy the financial benefits of your frugality and savings, whether because of health issues or worse.

As I suggested in the second part of my blog Sign That Will, you should consider creating a bucket list to give your frugality some purpose and balance. This year I crossed off one of my bucket list items, Pebble Beach. The cost was excessive, but I did not care, it was an awesome experience.

For what it is worth, my suggestion is that you create a bucket list of things you really want to do during your lifetime and try and build in actual time frames to cross the items off your list. Use your frugality or savings ability to specifically save for a bucket item and thus, leverage your behaviour and financial philosophy while gaining some personal life balance. Don't just save for tomorrow, save for today!

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

1 comment:

  1. If tomorrow never comes you can't take the money with you. However I do feel somewhat better knowing that those left behind will be better taken care off.

    What you say with respect to focusing on what is really important has a lot merit. To often people spend a lot off effort, time and money on something that is not so important to them.

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