This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
On the weekend my dad came over and wanted to go shopping for golf clubs. He plays 2 or 3 times per week and hasn’t bought a new set of clubs in 40 years (and at almost 60 can still beat me). We went to a huge golf store and he tried out 10 different sets of clubs, finally buying a set for around $500. Prior to deciding on the purchase, we went for a walk around the store. The sales guy wasn’t on commission and didn’t really care if we purchased or not, but my dad’s main thought regarding this decision was whether or not these $500 clubs would actually help his game enough to warrant the purchase.
In the end, he decided to buy a very nice set of clubs. We’ll have to see if it will reduce his golf scores, but he was happy with his purchase.
What I got thinking about was the discussion that I had, prior to purchasing and how it pertains to personal finance (because that’s just how my head works). I’m not really sure how I got there, but I kind of look at a lot of personal finance “tips” as the new set of golf clubs. I’m not a super frugal person – I don’t clean out Ziploc bags, clip coupons or really anything that requires a significant amount of effort. My basic plan boils down to a simple budget that allocates money to things such as our house, cars, personal savings (for fun things), food, and bills. Once everything has been “paid”, the rest of the money is for spending.
Instead of a small change (new golf clubs) I would be more likely to attack the problem at the source and get lessons – changing my swing so that that clubs really don’t matter. In my personal finance plan, these sort of big wins come from minimizing waste in most of my life so that I have the money available to do everything I want to do, whether it’s maintaining my current path to early retirement, going on a trip to someplace warm, or spending too much money on beer and food at a bar (like I did last night).
For me, it’s easier and a lot less restrictive to know that I can do what I want to do because I have a strong financial foundation, instead of worrying about every penny I spend. Over the long-term, this would drive both me and my wife crazy and would probably cause some stress as we would have to monitor our activities (micro-managing) rather than enjoying what we’re doing. I have a feeling that we would end up in quite a few more battles over money, which really isn’t worth it.
I’m wondering how everyone else looks after their finances – do you micromanage your spending, or are you more of a big-picture budgeter?