Addressing the Ants as Well as the Grasshoppers

I'll never forget the father who wrote to me proudly detailing his progress at becoming financially independent. He and his wife were saving prodigiously for retirement, and they had a fat emergency fund. They decided that their next goal would be to retire their mortgage as early as possible. When he worked the numbers, though, he realized that accelerating the mortgage payments meant they'd have to cut way back on their vacation fund. They had long wanted to take a special trip with their daughter, who was 11. He asked me if I thought it wise to put off that journey until the mortgage was retired.

If you have teenagers, you will probably understand my response to him. Go on the trip now, I told him, while your daughter is still delighted to spend time in your company and you can really enjoy the trip as a family. Before you know it, she'll have all sorts of interests and friends that will make her reluctant to take a long trip with her folks, and then she'll be off to college. Seize the moment and go now. The mortgage will still be there when you get back.

That advice shocked a few folks, who presumed that it's always better to save than to spend. In reality, financial planning isn't about one or the other; it's about both. The hardest part of managing your money can be figuring out the balance between living fully today and preparing for the future.

Most debt advice is aimed at the grasshoppers—people with a “live for the moment” attitude. They wind up paying for every purchase two or three times over, because they put it on their credit cards, pay just the minimum balance, and rack up prodigious interest charges over time.

But we shouldn't forget the many ants out there—people who may be erring on the side of living too much for the future. After all, life is not a dress rehearsal—it's the only one you've got. Make sure you live it along the way.