Frugal but Regret It?

Chocolate coffee pie
Everyone has some guilty pleasures, good chocolate, a fine wine, new shoes, or a little vacation trip here and there, but for many it appears that our day to day spending decisions are tempered by a deep seated feeling that we would be better off in the long run without those little indulgences. We tend to think, “I’d really shouldn’t buy this,” or “Could I invest this money and have $10,000 more at retirement?” and we have that nagging sense that we should choose needs over wants, work over leisure, and saving money over impulsively spending it.

But are we happier?

Recent research seems to indicate that forgoing little indulgences today can cause strong resentments later and, according to researchers in a recent Harvard Business Review article, near-term regrets about self-indulgence dramatically fade over time. Conversely, those who dutifully work, build a career, pinch, and save seem to experience a growing sense of “having missed out” on life. Guilt fades but regret intensifies.

Perhaps that’s why Consumer Credit Counseling Services insists that you have a budget category called “fun” in addition to one for savings, debt, food, utilities, mortgage, etc.

According to the article, people who consistently resist any self-indulgences suffer from a financial farsightedness or hyperopia. They have incredible self control and an intense focus on acting responsibly. Indulgences are wasteful, irresponsible, and in extreme cases, immoral. You and I have read about these people, commonly called ‘misers” in our society. You know, the little old lady who lived in squalor, yet left her church $50 million in her will. Or the highly “successful” business person who brags about putting in 70 hour work weeks, but has a family life in shambles.

Frugal to the extreme can result in regret.

What researchers uncovered was that, if we think we will regret our actions in the short term, we will be more virtuous today, but if we think regret won’t affect us until the distant future, we will be more extravagant today.

So what does this all mean? I think it means we need to find a balance between frugality and our enjoyment of life today. Self control is highly important, but if you have an extra $50,000 for retirement because you never took your children on a nice family vacation, is it really worth it? If you build a company into a multi-billion dollar corporation, but your wife and children hate you for it, what have you gained?

I think we should always remember the words of the late Massachusetts senator, Paul Tsongas: “Nobody on their deathbed ever said, ‘I wish I had spent more time at the office.’”

I believe we should be highly frugal with purchases of stuff, but be willing to indulge ourselves and our families with experiences. I’ll always have those memories, but things fade. Things break. Things lose value. But memories and experiences with those you love will only increase in value.

I’m not saying to lose your self control and revert back to old bad habits of spending and debt. No. I’m saying that if you’re experiencing that nagging sense that you’re missing out on enjoying life, you might need to loosen up a little and allow yourself a few simple pleasures. Save for the experiences and allow yourself to enjoy them. You won’t regret it.

Just remember: “No Fun” compounded over 30 years at 10 percent equals “Regret.”

This article was included in the Carnival of Personal Finance #167 at Broke Grad Student. Thanks!

[tags]frugality, regret, frugal, money, simple pleasures, family, budget, finance, introspection, heartache[/tags]

photo credit: jessicafm

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