On Time, Money and Health

https://todaypurpose.com/posts/time-money-health/

by clubdorothe • 5 years ago

98 69 5 years ago

ZephyrBlu3• 5 years ago

I'm 23 and have been thinking about this a lot lately. It forced me to consider what I value. Do I want to spend my money on a nice flat? Clothes? Food? Etc.

I found it very difficult when you try to factor in compensation growth and the time value of money.

If I choose to save more money now, that benefits me more in the future because it has more time to grow. On the flip side, saving more money now means less money to spend on enjoying myself and I can't get my youth back.

For compensation growth, if I knew that my compensation would grow by x times in say, 10 years then I could plan accordingly and save less money now because I know that I will be making a lot more money in the future. However, I can't know that so how do I take this into account?

The result of this was me coming up with a very boring answer: save 30-40% of my net income (Equity comp makes this more like 50-60%) and make no assumptions about compensation growth. I'm naturally quite frugal so this isn't difficult, though I think that this is probably overkill and I should loosen up my spending a bit.

xxs• 5 years ago

Unless you overspend too much, saving currently it's likely a portion of what you'd be earning in several years. (Assuming some IT field, due to the nature of hacker news)

ZephyrBlu3• 5 years ago

Yes, I work for a tech company that pays me well with a lot of room for growth and I realize that this is very early days.

I've considered this before, but it feels very unnatural to bet on my compensation increasing drastically even though I can see that it's very possible if not likely.

m3nu• 5 years ago

Yeah, don't delay your dreams until retirement. Your health and energy will be limited.

At the same time, there is no need to spend money in a stupid way right now. Defaulting to a frugal mindset in most domains will buy more free time later.

alexpetralia• 5 years ago

One of my friends opined that if most people (limited to people on this forum, let's say) rationally priced in their future earnings, they'd be in debt more often, for longer and earlier in their life. The naive algorithm of "save as much as possible" might land high-earners with a huge nest egg they end up carrying to their grave. I think I agree with that.

ZephyrBlu3• 5 years ago

The problem is, how do you price your future earnings appropriately?

kamaal4• 5 years ago

This comment is gold. Debt phobia is real. But the facts here are big investments like buying a home, are not possible without debt, and earlier you go into a debt and earlier you can clear it. The earlier you will have that asset. The same logic continues for multiple properties too.

Another big factor in this is Change jobs often is not a workable strategy here. Anybody with regular focus on their health and investments will tell you. You just can't raise money for making big investments(like above) when you don't have a stable job. Same happens with health too. Unfortunately most people often equate rapid changes to a process with progress. Whereas big progress is often a result of consistent improvement to a single process over long periods of time.

In an economic system with Inflation, increasing responsibilities and biology making aging and being healthy hard. Hoping to save up to buy some thing later is strategy that just doesn't work.

Simple reasoning tells us you need to go into debt a lot, early and often.

WJW3• 5 years ago

a huge nest egg they end up carrying to their grave

Oh no! The tragedy of not spending everything you own!

Sarcasm aside though, almost everyone will mispredict how much they are likely to earn in their lifetime and the opinion of your friend falters a bit in the presence of significant randomness. Estimating your future earnings too low is not really a problem, estimating too high can lead to serious problems when faced with unexpected expenses. Since there is only limited downside to being conservative with debt and serious downsides to being too extravagant, I don't think that potential high-earners are being all that irrational by avoiding debt.

Of course, if you are psychologically a "maximizer" then you might want to skate closer to that edge and risk falling off in exchange for potentially squeezing every last dollar out of your life. If your psychological profile is closer to being a "satisficer" then avoiding risk to maintain your current lifestyle is probably better for you. In personal finance, no solution is correct for everyone.

andi9992• 5 years ago

I am shocked as well that intergenerational wealth building is not a thing. I mean do people really think 'I was poor/had to earn everything so my kids should have it the same way'?

maccard2• 5 years ago

Oh no! The tragedy of not spending everything you own!

I really don't think this contributes at all to the conversation. We're not talking about going out and blowing your paycheck. If your total lifetime earning over 40 years of working is $1.2M, and you only spend $1M over your entire lifetime, you could have just worked for 16% less time and enjoyed the time. Otherwise what was the point, just trying to maximise the number??

coldtea4• 5 years ago

Oh no! The tragedy of not spending everything you own!

Well, the trafic part is the spending your precious time accumulating money you haven't spent - which turns into totally useless when dead.

pjc504• 5 years ago

rationally priced in their future earnings, they'd be in debt more often, for longer and earlier in their life

Future generations may not be offered a choice in this. After all, why should student debt start at age 18 and not age 5? Ouch.

kamaal4• 5 years ago

You have presented a good edge case. But consider this. If you wouldn't want to go into debt at age 5. Would you want do it at age 45/55?

roland35• 5 years ago

I think it is good to be conservative with your retirement savings though! It is much better to leave behind a large estate for your children/charities/whatever than risk spending the last years of your life pennyless due to a market crash or large medical expenses.

phgn• 5 years ago

Savings allow you freedom from having to earn money, the opposite of debt.

For example, you can temporarily "retire" for a few years and do what you want without pressure. Either directly or indirectly, I think having debt limits you to the path & earnings you've "forecasted" - the opposite of freedom.

At least that's the case for me.

maccard2• 5 years ago

you can temporarily "retire" for a few years and do what you want without pressure

Not everyone strives to min max their time to the extent that they _can't_ be working while doing what they want. Assuming you're a white collar worker in tech, there are plenty of opportunities for you to make oodles of money, while having a balance between a job and life. Given the choice between being mortgage free in my 30s with an apartment in a cheaper part of town, and being able to quit work to travel/work on my carpentry for 3-5 years, or having a balanced life over the next decade, spending time and having experiences with family & friends, I'll pick the balanced lifestyle every single time.

cryptica6• 5 years ago

My life is already wasted. I've seen too much and I know too much to ever be completely happy. The best I can do is try to leave behind some kind of positive legacy. Maybe with 20 more years I will achieve something.

cryptica6• 5 years ago

It's unbelievable that someone would downvote this. What kinds of freaks are hanging out here? That's not very nice.

testermelon• 5 years ago

Yes, this is where I feel a downvote is not appropriate.

I can see why one has the urge to downvote this though. It has to do with “ruining the positive atmosphere”. Instead of offering alternative view, heck, even just a simple encouragement, some people just default to knee jerk reaction of disapproval.

bluedevil2k2• 5 years ago

Cause you posted a nihilist, negative message with no details at all hoping someone would ask you “what’s wrong?” or “what happened?”. Just write want you want people to know without the attention seeking.

quickthrower22• 5 years ago

I upvoted, but I’d like to know more about your story, if you are ok to post it.

john_minsk2• 5 years ago

I kind of agree. When I was young and could not afford anything - I was dreaming about all luxury things I saw in the movies and travelling the globe.

Now I tried it and don't see the reason to. I mean there is no rush. Regular house/flat will give you 80% of value of multimillion dollar mansion will give. Cars are all +- the same given that you can drive only so fast. Travel when you need to work is too hectic but if you are retired it can be very inexpensive. In order to push past this middle level it is not clear what to do i.e. difference between 1M and 10M is not that big in terms of your lifestyle but ability to accumulate so much is completely different beast.

The true happiness comes from other things: friends, family, free time, the business you love, curiosity etc.

UPD: This is all of course if you were able to get into good career/small business path. If you are stuck with some low-pay job you still have some work to do to jump to another industry.

rheide• 5 years ago

I love cycling. Did my first solo touring cycling trip over ten years ago when I was in my twenties. I've done a cycling trip every couple of years since then, until I got a mortgage. Then I started focusing on my career and kept delaying the next trip, thinking "next year will be the year that I'll make time for it". Now I'm approaching my 40s, I have a medical condition that limits the enjoyment I get out of cycling, and due to covid travel restrictions I can't travel to the country I want to cycle in.

Don't delay.

wmwmwm• 5 years ago

It used to make me sad that by the time my kids were old enough to cycle up big mountains, I might be too old/unfit to join them... but the massive growth in the last few years of electric bikes (mountain and road) makes me really excited that I actually might be able to keep up. I don't know if e-bikes would help given your condition, but if you haven't tried one, it might be worth a shot - they're amazing

baby2• 5 years ago

Oh gosh :/ I’ve been delaying my trip to Asia for 3 years. I can’t eat spicy food like I used to now (or even drink and party). I want to believe I’ll be doing it next year but…

pjerem2• 5 years ago

Nothing revolutionary in this article but it hit the nail pretty well.

As a 30 yo person with health issues (nothing really bad, but not cool either), I totally acknowledge with the idea that staying healthy is the best gift you could do to your kids and I’ll work hard to give that to my son.

As on money, I have the feeling that the thing you must solve is finding not only your house, but the house you’ll love, so you can invest all of your « useless » extra money in it (extending it, renovating it, decorating it…)… It’ll only increase your house value while making you happier.

baobabKoodaa2• 5 years ago

it'll only increase your house value

This is very misleading. Yes, if you spend $1 renovating your house, perhaps your house value has increased by $0.50, but you've also lost $1, so financially speaking, you've made a loss. So in the context of investing, it's misleading to state that renovations increase your house value.

It may be theoretically possible to make a profit with renovations, in some very specific conditions and with extraordinary skill, but the vast majority of renovations are not profitable.

bluedevil2k2• 5 years ago

I blame the HGTV shows for this misconception that a house renovation has a positive investment return. They show things like “a $100,000 kitchen remodel leads to an increase in house value of $80,000, an 80% return!”, when of course the real return is -20%. That’s not even counting time-value, which may lower it to -40% or -50% depending how long you hold the house. When you factor in opportunity cost...even worse. The best home “renovation”, when it comes to investment, is to do nothing.

pjerem2• 5 years ago

Ok, maybe I didn't make my point clear.

I'm just saying investing in your house does make your house value increase, not that it's financially interesting. And in an ideal situation, I would anyway never sell this "house I love".

The point i'm trying to make is : if you put your extra money on your house, it's never going to be a total loss and if you do it well it can increase your happiness by a lot. It's a personal thing but I think that feeling well at home (not only materially, but that's another point) is the foundation of stable happiness.

Pansy3• 5 years ago

Exactly this. Am 23 (Ghanaian) and this is my final year in the university. I have been working as a software developer at small startups since I started schooling. As this is my final semester, I have decided to quit work and have more free time for myself.

kamaal4• 5 years ago

FIRE definitely makes lots of sense. Even if you don't believe in retiring early. You are in some way already retired by the time you hit 40. This is really for most ordinary folks out there, not the exceptional one's that are chasing law degrees and PhDs in 50s.

Simple way to understand this is, 50s is your retirement decade. Therefore:

1. When you are 40, your resume has just 10 years worth value.

2. When you are 30, your resume has just 20 years worth value.

Sometime back, a manager advised me the surest way to get promoted is do the job of the level your are aiming for. Same applies to retirement as well. You can't retire unless you are already retired in some way. Else you will just continue far into your 50s without retiring. Then you will be forced to.

Given all this FIRE is definitely a great strategy. The other point on health is very good advice as well. In fact every hour post age 35 spent on things on Leetcode instead of swinging a Kettlebell in many way is wasted time. More importantly in many cases might even give negative returns(Obesity, Diabetes etc).

None of this applies to the outliers of human race of course. But for most folks out there with ordinary lives. Retirement planning and health care should be the single biggest priority of your life through your 20s and 30s.

pjc504• 5 years ago

You are in some way already retired by the time you hit 40

Wish somebody had told me this before I came into work this morning. I didn't realise I was already retired.

kamaal4• 5 years ago

Retirement is a part of moving ahead. If you are moving into late 40's and haven't retired yet, or at least on a path, you are stagnating.

Whether you like it or not. You can't stop age, you can't stop biology.

You are stagnating in your job, when you should have retired.

laurieg• 5 years ago

I'm in my thirties and I've definitely maximizing time and health. This wasn't a conscious choice, but I've almost always worked significantly less than 40 hours a week. On the flip side, I don't have a huge amount of money. If I had been more dedicated to my career maybe I would have more money in the bank. Would that make a huge difference to my life? It's hard to know.

arez• 5 years ago

Oh well, yes it's good to have balance and think about your present and future. What do you want to sacrifice today, to have more in the future. Apparently the author just wants to make sure that we not fall to deep into the FIRE mindset and sacrifice too many good memories today.

But

F** all that. Somehow we're obsessed with optimizing our lives with ever new ideas how we can have the best life, with the best health, the most money, most free time. We all work with computers and optimizing algorithms, or click-through-rates so we apply these techniques now to our lives and compare ourselves to others. Does someone online has better weights, should I still eat fruits or does this spike my insulin too much. Good god, just live your life without constantly checking on others, it's perfectly fine to live a basic life, it's perfectly fine to waste your time. Yes you don't have unlimited time, but you will be relieved and relaxed without having to self optimize. That doesn't mean you have to be unhealthy and miserable, if you want to change that it's fine, but do it on your terms (The author says, "just stop eating much", which is just arrogant, some things are hard to change and take years of willpower). Will you regret something at the end of your life? Maybe, but you lived your life on your terms and didn't ran from guru to guru. Kierkegaard said the following

``` Marry, and you will regret it; don’t marry, you will also regret it; marry or don’t marry, you will regret it either way. Laugh at the world’s foolishness, you will regret it; weep over it, you will regret that too; laugh at the world’s foolishness or weep over it, you will regret both.```

TeMPOraL2• 5 years ago

I've been recently thinking a lot along the lines of this article, which is why I was surprised to see this being given, as positive advice:

Make that extra money work for you. Invest into diversified index funds so you can use the power of compound interest, and use that “free money” in the later stage of your life. The earlier you invest, the better it is.

It surprised me because what prompted me to think about the other points the article makes was realization that compound interest is a lie.

I've written about it previously here[0][1]. It's not that the math of compounding is wrong - it's that, in terms of saving money in our economy, a typical person is unlikely to gain any meaningful amount of money through compounding. The rates are too low. If you're lucky enough to front-load your savings early then maybe you'll get something useful out of them... around retirement age. Which is, like the article points out, not exactly the best time to enjoy your wealth.

This isn't to say you shouldn't save or invest your money - just that you shouldn't rely on interest rates to do anything for you. There are opportunities to multiply your wealth faster - if you're willing to shoulder the high risk of losing it. But low-risk options available are so bad that mentioning compound interest is just... noise. Distraction.

[0] https://news.ycombinator.com/item?id=26637164

[1] https://news.ycombinator.com/item?id=27838926

baobabKoodaa2• 5 years ago

"Compound interest" is a generic term; it does not refer specifically to low-risk investments. You can invest in a stock index fund and still refer to "compound interest" in that context.

namdnay2• 5 years ago

The average return of the MSCI World index since creation is more than 10% I believe… And for a long term investment the risk is minimal (there has never been a negative period of more than 8 years)

andi9992• 5 years ago

Housing market also never went down (I stopped reading news early 2008 though).

pjc504• 5 years ago

Bank interest rates are near zero. Return rates on assets are much larger. Many Londoners are out-earned by their houses, especially once you take tax into account.

JackPoach• 5 years ago

I think claiming that 25-40 is your best years is gross oversimplification. I am 42 and consider it to be the best time of my life. And considering that I will probably be financially independent before my 50s, I think that might be might best decade. Especially after my kids grow up and me and my wife will no longer need to make plans around them.

wombatmobile• 5 years ago

"I'm not afraid of death because I don't believe in it. It's just getting out of one car, and into another."

-- John Lennon

geswit2x• 5 years ago

Yeah, but maybe you aren't not that much aware of that.

toshk• 5 years ago

I agree mostly with the article and that one should focus on freedom in the moment, while at the same time creating stability for the future.

But the underlying assumption that having more experiences (outside of work) leads to more happiness I believe to be somewhat false. It of course depends on the person, type of experience and definition of hapiness.

TeMPOraL2• 5 years ago

the underlying assumption that having more experiences (outside of work) leads to more happiness I believe to be somewhat false.

I have this feeling too.

Or, should I say, maybe the concept is right in theory - the brain is better at remembering novelty, and events associated with strong emotions. But "buy experiences, not things" is something that has a meme status today, and I cynically suspect it's not accidental - that there is an ulterior motive to it.

"Buying things" is predominantly realized through buying products. "Buying experiences" is predominantly realized through buying services. You can derive value from a product you own indefinitely (at some point it'll wear down). But a service is a one-time deal, you have to spend again to get more. The mindset of "buying experiences" thus encourages a service economy and creates a recurring revenue stream for service providers.

mythz2• 5 years ago

Maybe it's different for others but my best years definitely started from high-school, Uni and backpacking (teens-early 20s) which we had to do on a shoe-string budget which I attribute to hanging out with friends and meeting new people which is much easier to do when you're young.

Strangely after Uni and backpacking my earning potential increased dramatically but my happiness definitely plateaued, so looking back I wouldn't tie happiness to money since I was happiest when getting by without much of it.

Now in my early 40s I rarely worry about money and my main sources of happiness is definitely my kids. I'm at a loss at what I could do to increase my happiness other than focusing on keeping a happy home and spending time watching my kids grow up.

One life observation I'd share was when I was young and earned little I used to think earning more would increase happiness and therefore couldn't wait to finish Uni and start working professionally, but money didn't end up being the main source of happiness, being young and being able to spend lots of time hanging out with friends was when I was happiest. So my advice to my young self would be: cherish your youth and focus on building and maintaining strong relationships.

zemvpferreira• 5 years ago

I don't have kids and I'm in my mid-30s but your comment definitely resonates with me.

I have plenty of money but what I do miss the most is hanging out with my friends all day like we did in our teens. Unfortunately that routine is almost impossible to recapture until we're... 70? If we're lucky not to have drifted apart by then.

Like the tide it's unsurprising but can still take you by surprise - your happiness is so tied to other people's choices. For instance, I don't know how old your children are but it's almost guaranteed that as they get older, they'll spend less and less time with you.

To me that suggests a playbook of sorts: Enjoy this present moment but invest a bit of your energy in preparing for the next phase. Cultivate a few relationships that are independent of your kids and your spouse. Make sure you can fill the voids as people fade out of your day to day.

coldtea4• 5 years ago

Strangely after Uni and backpacking my earning potential increased dramatically but my happiness definitely plateaued

Not really strange. Why would something like "earning potential" correlate possitively with happiness?

Especially if for it to increase you also needed to spent time doing stuff for other people, indoors, attend boring meetings, day-in, day-out, lose touch with friends, forego activities, and so on.

Earning only makes things better when lack of money was a real concern (e.g. if you didn't have shelter, food, etc). But I presume you those that during Uni/backpacking years.

mythz2• 5 years ago

Not really strange. Why would something like "earning potential" correlate possitively with happiness?

Many people (esp. if you're on min wage) think accumulating wealth increases happiness as TFA suggests and as I did when I was younger. But as I pointed out with the benefit of hindsight to my younger self: money isn't the main source of happiness, prioritize enjoying your youth and friendships instead.

baby2• 5 years ago

I think quitting your job and focusing on travelling or meeting people is the way.

john_minsk2• 5 years ago

What about children? This can turn your 20s-30s priorities around. Childfree is an option, but I'm super not sure about it.

kaycebasques2• 5 years ago

Thinking of my life as a tradeoff between time, energy, and money [1] was a key factor towards my decision to take a 1-year sabbatical as of June. Similar to that trope about working with contractors: "time, quality, cost: pick 2" (i.e. we can do the work fast and high-quality but it will cost you a lot; we can do it high-quality and cheap but it will take a long time; we can do it cheap and fast but the quality will be low).

[1] https://kayce.basqu.es/sabbatical/prologue#tradeoffs

anonyfox• 5 years ago

*up to two

kaycebasques2• 5 years ago

Fair point: getting 2 is the best case scenario!

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