New year, new resolutions.
This time, I decided to ask myself a real question: am I actually enjoying my money?
Not just spending or saving it, but using it for what really matters.
Here are the principles I’ve taken away and plan to apply.
Before you enjoy it
Before thinking about enjoying your money, I believe there are a few essential principles to follow.
First, more money should come in than goes out.
In other words, spend less than you earn.
I’ve been surprised by how often this basic rule gets ignored...
Even with high incomes, some people end every month overdrawn.
Next, you need an emergency fund. Ideally, it should cover six to twelve months of expenses.
The aim is to handle the unexpected. And the unexpected always happens.
Finally, you need an investment plan to provide for your future.
But how much should go towards investing, and how much towards spending?
How much to invest, how much to spend?
When it comes to money, I see three approaches to life with very different goals.
Carpe diem
Carpe diem means enjoying life here and now without thinking too much about the future.
Taking a spontaneous holiday, buying what you want and not worrying about the financial consequences.
But if you put everything into the present, what happens when something unexpected comes up, or you want more stability?
For us traders, living like that is unthinkable.
Periods without profits are as common as profitable ones. That’s why we always need to watch our cash flow.
Delaying gratification
Some people take a radical approach: live extremely frugally, save as much as possible and leave the enjoyment for later.
That’s exactly what the FIRE movement, Financial Independence, Retire Early, proposes.
But how long can you live like that before the sacrifices start wearing you down?
Finding a balance
A balance between the two often works best for a trader.
But without clear guidelines, it’s easy to lean too far one way.
Personally, I tend to prioritise investing at the expense of spending.
Since balance doesn’t come naturally to me, I did some research into what might work best.
One of the most common budgeting rules is 50/30/20:
- 50% for essential needs
- 30% for wants
- 20% for investing
Does that mean we should spend 30% of our money satisfying every desire?
It’s not that simple. That’s why I want to dig into the principles I think are worth following.
Principles for enjoying your money
Lower your living standards
We quickly get used to our standard of living, however high it is.
Even a millionaire starts treating luxuries as normal and wanting more.
Where does it end?
One solution is to deliberately lower your standard of living.
By simplifying your needs, you learn to appreciate what you already have instead of endlessly chasing more.
Don’t spend to impress other people
There’s one big trap to avoid when enjoying your money: doing it to impress others.
Buying a nice car just to show off feels good for a moment. But does it really make you happy?
That’s the kind of question you need to ask, and give the answer some thought.
Consider the cost of regret
There’s a cost we often forget when talking about enjoying money: regret.
"If I don’t do this, will I regret it later?"
The purchase that could improve everyday life, the trip you keep postponing, the passion you keep setting aside.
Those things can weigh on you. Not because you didn’t do them immediately, but because you never did them at all.
That doesn’t mean buying or doing everything. It means being honest with yourself.
Does this really matter to me? Or can it wait without regret?
The idea is not to let meaningful moments and genuine wishes slip away.
Invest in memory dividends
"Memory dividends" means spending money on lasting memories instead of accumulating possessions.
Experiences such as travel and hobbies bring more happiness over the long term than material goods.
A memory stays with you. A possession often loses its value.
So the idea is to use money for things that leave a real mark, rather than things that only make you happy briefly.