Balancing the needs of today while pursuing financial freedom tomorrow is a tough juggle. It’s one of those things that requires intentional thinking; otherwise, we can drift too far in either direction. By the time you wake up, time might be gone, or you might be poorer than you are today.
This equation is not either-or. Balance is the key. Easy to speak about, but hard to execute. It’s like walking on one leg without hopping.
Ever bought a nice box of chocolates to enjoy over a week or so, only to end up munching through it in a single evening? And yes, by the time you get to bed it was uncomfortable with lots of burping and indigestion.
Saving and investing for your freedom feels the same without controls. That’s why the retirement two pot system is so brilliant: contributions to your pension fund or provident fund are deducted before you ever see the cash, effortlessly automating your long-term wealth building.
The two-pot system actually forces you to leave 2/3 of your money untouched, though you are allowed to put your hand in the savings pot cookie jar. At higher cost though this cookie is mostly not worth the tax you pay for it.
How to Avoid the “Keeping Up With the Joneses” Trap in South Africa
Both today’s needs and tomorrow’s needs are not exclusive; they are related. It’s a bit like sustainable development in the mind of a geographer: managing the needs of today’s generation without compromising the ability of future generations to meet their own needs. In the context of financial freedom, today’s generation and tomorrow’s generation are the same person.
That kind of reminds me of my primary school days. I would often eat my lunch on the way to school and then throw the empty lunch box into the bushes. I wasn’t naughty, by the way. I was embarrassed to eat my samp and beans while my friends were eating sandwiches. The moral of this story points directly to the “keeping up with the Joneses” mentality. Thank God I didn’t have access to a credit card in primary school.
Why Saving Money is the Price of Financial Freedom
To build wealth without sacrificing today’s happiness, reframing is the start. Today’s sacrifice should be articulated as the price of tomorrow’s freedom.
The price we pay for future freedom can be small or high. Here is the irony: most things of value cost more. There is no way around this sometimes-demoralising truth. If you need more freedom and more options, you need currency to buy that freedom.
Financial freedom, like most worthy projects, is built over decades, not months. The value of long-term thinking can never be overstated here.
How to Balance Enjoying Life Today With Long-Term Investing
The opposite is also true. One can’t become so fixed on tomorrow’s happiness that today’s happiness is neglected.
We all know that wine tastes better with age as it matures. However, today’s party with fresh wine is heavily tempting. This is one reason people fall for get-rich-quick schemes or crumble under the YOLO mindset.
Balancing today and tomorrow is difficult because tomorrow is not guaranteed. Today we are here, but who knows what strange catastrophe might take us out before tomorrow arrives?
Still, long-term thinking is a sign of maturity.
How to Set Short-Term and Long-Term Financial Goals
Here is the solution: define your goals for today, the near future, and the distant future. This could be this year’s, five years, and ultimately a decade away.
Allocate some money for today, but don’t neglect or negotiate away tomorrow’s money. A good practical way would be to utilise and maximise the R46 000 tax free contribution. In order to achieve this, one can open a tax-free savings account exchange traded fund (ETF). This allows you to invest up to R3 833.33 per month. The best part, all of your growth is tax-free with absolutely no capital gains or dividends tax. Since it is hard to envision the future, I think tomorrow’s freedom deserves even greater attention. Living life today and also building wealth for the future, can be explained by having an abundance mindset.
The scarcity thinking can cause you to either consume all your income today or postpone all your happiness to when you are fully retired. Simply speaking you don’t eat all your food in the fridge when heading to bed or do you? We have hope for tomorrow and next week and obviously next year and so on.
The future is built one day at a time. Today is the start of tomorrow. Both today and tomorrow are not at war but work in a rhythm. It is the sunset that brings upon the sunrise the next day. The future is hard to conceptualise but to live in the future is to learn to appreciate each day as it comes.
While at the same time anticipate the future, what does this mean for building wealth and fully living? Don’t over save and skimp every rand in the hope of tomorrow. Instead balance the scale by spending intentionally today while protecting tomorrow as if tomorrow is guaranteed.
Each and every day count your blessings; happiness can be found in everyday routines too if we are intentional. To most happiness always seems as the next holiday in the Drakensberg mountains or an overseas exotic trip but can also be a picnic in the nature reserve in your neighbourhood, or just taking a casual walk in the autumn sunshine. Failing to appreciate everyday simple moments and obsessing about saving and investments, reminds me of the tale of stale bread.
Why Saving Too Much Can Backfire: The Stale Bread Metaphor
I once read a story of a man who travelled in a luxury ship. When meals were being served, he never went to the dining room, instead he remained in his cabin. When the ship eventually arrived at their destination the captain asked this man why he never came to the dining hall?
The man replied, “I only ate my stale bread since I didn’t have money for the meals.” The captain’s response: “what a shame the meals on board were included in the price of the ticket.”
The Bottom Line: Build Wealth Without Putting Life on Hold
Hardcore savers like myself are likely to run out of time and the YOLO friend of mine is likely to run out of money.
Master the art of moderation. That’s the perfect way to enjoy today and save and invest diligently for the future.
Both today and the future are to be lived fully.
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