“A very good friend of mine died suddenly; she was only 38 years old. She had been saving for many years towards buying a home. She refused to spend on luxuries or even buy new clothes, and now I think all her sacrifice was in vain.

“I really feel it’s more important to enjoy my money now, because the present is all I have, and the future will take care of itself.”

Deciding how to spend our limited incomes is a delicate balancing act. It can be hard to figure out how much to spend right now and how much to put away for future needs. If your money scale is too heavily weighted on the side of spending, or if it’s concentrated on saving alone, you won’t be able to achieve a balance in your financial life.

Let’s look at two real-life case studies to demonstrate the necessity for achieving a money balance.

Twenty-nine year old Marcia has all the outward trappings of financial success; she drives an expensive car, is always dressed in the latest fashion, and attends all the ‘high society’ parties. She travels frequently and has had many wonderful life experiences.

However, Marcia is secretly terrified. She’s really just one step away from financial ruin due to hundreds of thousands of dollars in credit card debt and bank loans. She doesn’t have a cent saved and wonders what would happen to her if she lost her job.

Sandra, a thirty-three year old lawyer, has saved practically every dollar she has earned. She never has more than J$500 extra spending money in her purse, as she doesn’t want to spend on anything but the basic necessities. She lives a frugal lifestyle and hardly socializes.

After ten years of working, she has several million dollars in the bank, but inside she is lonely and frustrated. She feels that she has accomplished little in life except her big bank account.

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Both persons are dissatisfied with their situation because they have not found a way to achieve a healthy balance between spending and saving. If you are not happy with your own financial situation, perhaps your money balance needs to be adjusted.

So how do you achieve the right balance between saving and spending? Here are some steps that can make this task easier:

1.  Set Goals

Many of us just keep going day after day without taking the time to ask the question, “What do I really want out of life?” Is it really important for you to own a home? Would you like your children to go to college without the hassle of a loan? Would you like to travel before you got too old to really enjoy it? Would you like to have the satisfaction of being your own boss?

2.  Prioritize and Make Tradeoffs

Once you have listed your goals, the next step is to put them in the order of priority based on time and their importance to you. For example, if you really like to socialize and meet new people, but right now you can’t stand having to pay rent, then you have to focus more intently on saving towards a down payment than on spending money on entertainment. If you want to live a healthier and more vibrant lifestyle, it might mean sacrificing some savings to spend more on gym fees and vitamins.

3.  Make a Spending and Saving Plan

The next step is to use your budget planner to balance all your competing needs and goals. Work out the saving requirements to achieve your future goals with a financial advisor. If your priorities include more travel or exercise, put those costs in. You may need to cut back spending on other items, to achieve those things that are really important to you, or to find ways to earn more in order to have the lifestyle you desire.

You can also work with your own natural tendencies to spend or save, in order to balance the area in which you’re weaker. For example, if you’re like Marcia and you’re trapped in a spending and debt cycle, you can reward yourself with a special treat after you have stuck to your savings target and arrived at a milestone.

If like Sandra, you want to balance your life with more enjoyable pursuits, you can establish a ‘play’ account where you save towards a more pleasurable goal such as a spa trip or shopping spree.

“If this were to be the last day of my life would I be content with it? To live in a harmonious balance of commitments and pleasures is what I strive for.” – Jane Rule