Save For Tomorrow or Live For Today?

in Financial Planning by

Within the span of only a month, my family lost two of its most treasured members. My cousin and aunt- a mother and daughter- both left this world early, much to the surprise of everyone who loved them.

Both funerals, just days part from one another, were tear-jerkers, the kind where everyone just sits quietly and sobs. But the words spoken at each service were just as beautiful as the events were tragic, and one story in particular has stuck with me.

Speaking of my beloved cousin Kathy, a family member told stories of her bravery, her philanthropy and her sincere love of life and living. He spoke of her contagious laugh, her love of travel, and her desire to squeeze every last ounce of pleasure out of this life, even to the very end.

But he also spoke of the fact that, in her final months, she set up a charitable foundation {Related: Your Guide to Make Charitable Giving Personal} aimed at helping others fight the terrible disease that took so much from her, pancreatic cancer.

Can you imagine? Sitting on your death bed- dying – yet taking the time to create a foundation to help others?

My family member continued with his story, “we will all die -each one of us,” he said.

“But not every one of us will really live.”

Truer words have never been spoken. And as I sat there and listened, I was reminded how fragile and short this life on Earth can be. But it also made me reflect on my own circumstances. If I were lying in that casket, would I feel content? Would I have any regrets? Would I feel as if I had left something meaningful- something tangible- behind?

Should You Leave Something Behind?

Almost everyone has probably wondered the same at least once in their life. Tragic events occur when we least expect them, and people die every day. Meanwhile, most of us plug away at our 9-5 jobs our entire lives, hoping to reach retirement so that we can finally live the life we truly want to live.

But others hope to leave behind a legacy of sorts- whether in the form of an inheritance for their children, or their children’s children, or in the form of an endowment of charitable endeavor.

And when it comes to deciding what kind of life we want to live while we’re here, and what kind of fortune we hope to leave behind, it’s not surprising that we all have different goals and dreams.

Giving It All Away

Obviously, the decision becomes almost a no-brainer when you are incredibly rich. The more money you have, the easier it becomes to dabble in nearly anything your heart desires, including philanthropy. The Chronicle of Philanthropy recently profiled the most generous people of 2013, and a few who made the cut might surprise you.

For example, Facebook’s Zuckerberg and Priscilla Chan held the #1 spot in 2013 after having donated over $992 million in stock to the Silicon County Community Foundation. Gas and oil tycoon George Mitchell scored the #2 spot by donating $775 million to his own foundation, which researches clean energy and natural-gas sustainability, among other scientific and environmental endeavors. Meanwhile, New York’s Michael Bloomberg made the top five after donating approximately $452 million to various charities that deal in the arts, public education, and environment.

The fact is, the richest of us often go to great lengths to leave something behind – to create something meaningful that will remain even after they are gone. But many would argue that they should since vast riches inevitably reach a point of diminishing returns. You can’t buy much of anything for a billion dollars that you can’t buy for $500 million, after all.

But, what about the rest of us?

The Middle Class Legacy: An Inheritance

Most middle class workers will likely never have the chance to create a multi-million dollar foundation or leave a significant amount of wealth to charity. Instead, they’ll opt to leave behind an inheritance for their children – a sum of money they can use to pay off debt, pay for their home, or provide for future generations. According to CNN Money, the value of the average inheritance in the United States was worth approximately $171,154 in 2013, or more than three times the median annual wage. And the average inheritance in other countries is higher than one might expect:

average-inheritance-amounts-by-country-FS

So, should you leave something behind? That is a question that continues to plague many of us who never expect to possess vast riches, but that doesn’t mean the answer should be cut and dry. We’re all living our own reality- we’re all writing our own story. We’re all trying to find meaning in our everyday lives and, hopefully, trying to be the best we can be.

But I would argue that the right financial plan could mean living for today and saving something for tomorrow. The choices we make now can, and often do, decide whether we barely get by or leave something behind for future generations.

But if we hope to impact the future in a significant way, we have to take the bull by the horns and take actionable steps that can help us reach our goals. Here are a few ways to do just that:

1) Reevaluate Your Monthly Budget

When you’re earning a good income, it’s pretty common for your budget to include a vast array of indulgences. But if you want to live for today and leave something behind, it might be wise to reevaluate your spending and determine if your dollars are going toward items and services that actually add value.

For example, that $200 cable television bill might be more of a time-suck than a means of enjoyment, and your overpriced car and it’s corresponding monthly payment by be costing you much more than you ever realized. If you want to have money for the things that really matter today (and tomorrow), it might be time to make some serious budget tweaks- or else. {Related: A Better Way to Track Your Spending Each Month}

2) Make a Commitment to Save and Invest

CNN Money reports that, as of last summer, 76 percent of Americans were living paycheck-to-paycheck, and a full 27 percent of those surveyed had no savings at all. With those statistics, it’s pretty obvious that anyone reading this site is doing much better than the average American, but that doesn’t mean we don’t have room for improvement.

The good news is, the IRS raised the annual 401K contribution limit to $18,000 for 2015, up from $17,500. Meanwhile, there are more ways to save for retirement and the future than ever. But if you want to significantly increase the percentage of money you’re saving, you have to make a commitment to do just that. Don’t make excuses and don’t let life get in your way. Create a plan and budget that allows you to save as much as your income as you can get by with – then sock that money away as fast as you can.

3) Start Tracking Your Net Worth

It’s hard to get ahead when you’re saving and investing blindly, which is why it has become increasingly important to start tracking your net worth. Doing so will allow you to focus less on the daily and weekly ups and downs of your investment portfolio, and focus on the big picture of your financial health instead.

Fortunately, monitoring your net worth becomes an easy feat when you link all of your relevant accounts to a site like Personal Capital. All you need to do is sign up to get started, and you will instantly be rewarded with a true measure of your financial progress- where you’ve been and where you’ve going. And if you want 2015 to be the year when your financial fortunes change, you’ll need some help keeping track of it all.

4) Making Every Dollar Count

No one wants to talk about the fact that this life is only temporary. No one wants to imagine their loved ones alone, without them by their side.

But the fact is, death is inevitable. Like a wise man once said, “we will all die –each one of us.”

Losing my family members made me remember something that I once believed- that our time here on Earth matters. And it matters not just to us, but to our family members as well. It’s time that we all realize that we can live a meaningful, full life today while also planning to leave something behind. And with the right financial moves, anything is possible. We don’t have to choose one or the other.

Life is full of decisions, and there are consequences for each one. Regardless, it’s up to us to make every day- and every dollar- count.

We were all young once, and we may still be, but it’s possible that we have less time than we think.

Start Tracking Your Savings With Personal Capital Today

Picture Credit: commons.wikimedia.org

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Holly Johnson

Holly Johnson is a financial expert and award-winning writer whose obsession with frugality, budgeting, and travel plays a central role in her work. In addition to serving as Contributing Editor for The Simple Dollar, Holly writes for inspiring publications such as U.S. News and World Report Travel, Personal Capital, Lending Tree, and Frugal Travel Guy. Holly also owns two websites of her own - Club Thrifty and Travel Blue Book. You can follow her on Twitter or Pinterest @ClubThrifty.

8 comments

  1. Financial Samurai

    I’m trying as much as I can to LIVE FOR TODAY! So many people are dying at 50 years old, it’s only 12.5 years away from me, and that’s a jolt.

    The hardest thing I’ve found is to stop working so much. It’s addicting, and healthy!

    Sam

    Reply
    • Holly Johnson

      I totally understand why you want to live for today- so do I. But since I have kids, I also want to save for tomorrow. I want to help them prepare for the future- college, weddings, etc. All of the dreams I have for my kids require money.

      Reply
      • John

        I always believed that you save 20% of take home like you never had it. Someone in your neighborhood is living on that amount. As a youngster I was told, you don’t have a lot of money but you have a lot of time. Save a little every paycheck. All this advice has paid off. I was prepared for the college bill to a non-Ivy League private college… $54,360… for year 1.

        Reply
  2. Barbara Friedberg

    This is one of my biggest challenges. As someone who’s met her financial goals, I still wake up every day with a desire to help others learn to build wealth and invest. Sometimes I forget that life is not all about work. Thanks for a depthful take on the conversation.

    Reply
    • Holly Johnson

      I also forget that life is not all about work from time to time! It’s easy to do when you’re very motivated to succeed.

      Reply
  3. Eric M.

    I work for today so I can save for tomorrow so I can live on the following day.

    Reply
    • Holly Johnson

      Hey, you have to start somewhere! At least you are thinking of tomorrow. So many people are not.

      Reply
  4. Dawn

    This is a hard balance to come to terms with now that I am 41. I didn’t save or invest until this past year and I am working hard to change. But honestly I do feel sometimes I will die before retirement and then what was my point in life? Isn’t there more? Should I stop obsessing over 401s and share focus on leaving my family a legacy if I die before 67? How to balance debts,…I really think the best I can do if I were to die next year is make sure I leave my family with as little debt as possible. I don’t want them to inherit my bad decisions. Thank goodness for this app!

    Reply

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