Saving or indulging: a false dilemma?

When we try to save, we often have the impression of facing a dilemma.

Save for later, or enjoy now?

It is even a return that I see frequently in the comments, is generally a bit in these waters:

“Why save, if it’s to deprive yourself of everything? Me, I want to enjoy life. Anyway, we’re not going to be buried with our money!”

… as if we only had the choice between one or the other, but never both .

Either save every penny, without ever buying anything, and constantly deprive yourself of what you love for fear of not saving enough.

Either enjoy life by slamming all your dough like there’s no tomorrow (#YOLO) .

But in reality, the goal? It is to do both. And it is completely possible to save without depriving yourself of everything.

Because putting money aside is not a matter of having good big numbers in your bank account. It’s carrying out the projects that are important to you , and preparing for your future. It is allowing your future you to spend.

So there is a balance to be found, and that’s exactly what I’m talking about in this article: how to secure your future financially… while enjoying life.

Control your expenses (instead of letting your expenses control us)

The first problem? Many of us confuse ” enjoying life ” with “spending our money anyhow “ .

Wasting is by no means synonymous with profit. And spending all your money every month without thinking, just to “enjoy life” without any emergency funds to help you in the event of a hard blow, or without ever setting aside for the life projects that matter to you, is rarely the solution.

Because if you don’t try to prepare for the future now, you will end up having to deprive yourself later . And the more time passes, the less easy it will be for you to manage to get back on your feet.

You also have to learn to make the difference between “depriving yourself” and “depriving yourself of everything “. If you define “depriving yourself” by having to say no to some of your cravings, bad news: you will always have to deprive yourself of something.

The amount of money you have at any given time is limited in any case. The question is what is most important to you.

Of course, having fun is key . To learn to find a balance between present and future.

The purpose of money management is not to tell you what you should or should not spend your money on today. Or worse, it’s not telling you not to spend.

It’s to teach you how to spend your money better .

And we often put in opposition setting aside and spending. In reality, of course, it is more complex than that.

Because the money you put aside now has several purposes:

• Ensure your financial security in order to protect yourself in the event of a problem (create an emergency fund, etc.)
• Gain freedom by having more room for maneuver – namely making money secondary in your decision-making (we detail this point a little later in the article)
• Set aside money for your future projects , that is, save money now to spend it later .

Ensure financial security

We often have a false vision of what it means to be “in a good financial situation”.

We imagine that this necessarily means being able to spend our money on what we want without thinking, and having an attractive salary.

In reality, this is not the case. Being in a good financial situation doesn’t even really have much to do with your salary (many people make more than a comfortable salary and drive a big car, yet end up in the red every month).

The central element of a good financial situation is above all security .

You can decide to spend your money without thinking, wanting to “profit”. But what impact will that have on your state of mind (and worse – on your life) the day a financial emergency comes to the fore?

And it’s not really a question of if : it’s a question of when .

Because you will always have to face the unexpected. Even if we often have the impression in France of being protected in the event of job loss or any other hard blow, the COVID-19 crisis has shown us otherwise (with, for example, record rates of RSA requests).

And it’s not just job loss: very expensive repairs, medical emergencies or family unforeseen events can quickly drain your finances.

Not having the funds to deal with this kind of emergency is to risk making an already difficult situation into a real nightmare .

Of course, you may have to make some sacrifices while building that cushion. But that should only be temporary. And the satisfaction of knowing that you are protected in the event of a mishap will allow you to enjoy life even more.

Gain freedom

Americans call it ” fuck you money” . And it’s a concept that I really like.

It’s kind of a way of illustrating the concept of financial freedom.

In summary, it’s about being in a financial situation that allows you to say “fuck you” to your boss (and therefore to quit), without fear of the consequences.

More broadly, this means that you no longer let money alone guide you in your decision-making – because you know that you are in a financial situation that allows you to do what you want. And without being dependent on your salary.

What would your life be like if you didn’t have to worry about money when you had to make a decision?

What if you could change careers, go live abroad, or decide to pursue any project you want without having to wonder if you will be able to make ends meet?

Being financially free is also a great way to “enjoy life”, and often even more fulfilling than buying a 30th pair of shoes.

Putting money aside (and making it work for us) is also about enjoying without having to worry about money rather than being stuck in a job to sustain a high pace of life.

And contrary to popular belief, it’s not just for wealthy heirs. But it will require you to prioritize your freedom vs. certain short-term pleasures.

Many people seeking financial freedom are also seeking geographic freedom.

Set aside for his projects

As much as we love looking at wealthiest rankings, your goal in saving probably isn’t to win the national contest for the biggest bank account.

Most of all, you want to set aside money for future projects . And some ask for considerable sums, such as a real estate purchase, or preparing for retirement.

That’s why separating enjoying life and putting away is a problem. Both are very important .

The movement of financial independence sometimes has this negative side: for some, it is a question of depriving yourself as much as possible now, to enjoy even more later.

In my opinion, this is not necessarily the solution either. It’s all about finding a balance . Saving for the future is good. But you also need to make sure that you enjoy the present as well.

And we must also keep in mind that the goal is not just to save to put everything in a Livret A at 0.50%.

The goal in saving is to grow your capital by making your money work for you . Which will necessarily require you to learn how to invest ( spoiler alert : it’s usually easier than you think).

Because the money you invest now will ultimately earn you even more money in the future , thanks in particular to the magic of compound interest.

This is also to be taken into account in your thinking: the money you invest now will ultimately be worth more later – and therefore may also allow you to “benefit” more.

Spend extravagantly on the things you love and ruthlessly cut back on the rest.

The budget dilemma

Budgeting is like going to the dentist. We often don’t want to do it, but we know it’s important.

But unlike the dentist, budgeting often gets a bad rap, largely because you don’t really know what it is.

A budget is essentially a spending plan . That is to say, it’s a way to define in advance your priorities for the next month (and by extension, the years to come).

But the budget also has many advantages, namely planning in advance for expenses that are often forgotten (“damn, you have to drain the car…”) while closely monitoring the progress of your future projects.

There are several different types of budgets, from paper kakebos to software.

More generally, we can dissociate two types of budgets:

• Monitoring budgets . This is what applications like Bankin’ and Linxo allow you to do: track your expenses and analyze them afterwards . While that’s a good starting point, it’s rarely enough. You want to be involved in your finances, not a spectator, and manage your priorities on a day-to-day basis.
• Zero-based budgets . It’s in my opinion the most comprehensive method of budgeting that exists – but the concept is a bit more complicated to understand. It is a question of giving a mission to each of your euros, by distributing them in different categories. You then set a budget in each of these categories (i.e. how much you can spend). If you want to spend more in one category, you will have to take money from another . Which teaches you extremely well to prioritize your spending – and to realize that you will have to make sacrifices either way. The best-known zero-based budgeting software to date is YNAB.

The purpose of the budget is therefore not to set an amount never to be exceeded, but to learn how to prioritize and adjust over the month .

Just as acting as if you can spend your money anyhow without thinking is never a good solution, pretending that you can meet 100% of the amounts to be spent up front is also not realistic.

In your budget, keep a place for unexpected and impulsive expenses (it’s a separate category in mine).

Other techniques to put aside without depriving yourself

In my opinion, the budget is the best solution to take control of your money .

This does not mean that you will necessarily have to keep a budget all your life, but it is an essential step until you find yourself in a comfortable situation. And the advantage is that the way of thinking that you gain by budgeting can then serve you for the rest of your life.

But if you’re looking for other, easier ways to get started, here are two more recommendations.

Automatic savings apps

Auto-saving apps are mobile apps that allow you to save money automatically, painlessly.

The money saved is placed in a virtual bank account – and some apps even let you invest that money to make it work for you.

Most (but not all) of them allow you to:

• Round up your purchases . If you wish, you can round all your purchases up to the next euro, and set rounding aside. For example, if you buy a coffee for €4.30, €0.70 will be set aside.
• Schedule recurring or one-time transfers . So that you don’t forget to put some money aside every month, or as soon as your situation allows it.
• Create goals . You have the option of creating sub-accounts by objective to put money aside for each of your projects, and follow their progress.

Of the apps available today, I recommend Cashbee, Yeeld, and Moka.

The-anti budget

Contrary to what its name suggests, it is indeed a method of budgeting, but hyper-simplified.

It is simply:

• Set a percentage of your income to set aside each month (ideally between 15 and 20% – but the key is to start somewhere, even if it’s only 2%).
• Schedule an automatic transfer of the corresponding amount every month, a few days after receiving your pay, to a savings account.
• Spend what’s left as you wish , no questions asked!

This is not the optimal method for me, and for several reasons:

• You risk continuing to spend money unnecessarily that you might be able to put to better use, just because you can spend it.
• You are not aware of your expenses , nor of what is really important to you.
• You will be less likely to put aside the months when your income would be higher (such as a bonus, etc.).

But it’s still a good compromise for those who struggle with traditional budgets (provided you’ve really tried budgeting before).

Note that it is very important to schedule an automatic transfer , and not simply to tell yourself that we will transfer money by hand every month (otherwise, there is a good chance that you will not do it).

To define the percentage you want to set aside each month, you will of course have to think about your various projects, the creation of your emergency fund, etc. – and how much you would need to set aside each month to reach them by a given date.