Die with Zero Chapter 6: Balance Your Life

This chapter is a bit refreshing after what we’ve been reading. Perkins acknowledges that, especially when we’re young, we can indeed overspend on present enjoyments. We should not be on auto-pilot saving mode, delaying all gratification, nor should we be on auto-pilot spending mode just because we’re young and free. His recommendation is to “Strike the right balance between spending on the present (and only on what you value) and saving smartly for the future.” While he would encourage taking a loan to fund a once-in-a-lifetime European trip in your 20s, he would only do so if it were reasonable that you’d be able to pay it off quickly and otherwise maintain an emergency fund and (delayed) retirement savings plan.

That said, Perkins does depart from the general advice to save a set percentage of your income throughout your working life. The most common rule of thumb is 15% (after you’ve accomplished a couple other steps: https://www.ramseysolutions.com/dave-ramsey-7-baby-steps). For Perkins, we should be saving a lower percentage at an earlier age, and a higher amount as we get closer to retirement. “A person’s ability to extract enjoyment from their money begins to decline with age.” I think Perkins has a valid point here - think about how much you could enjoy an extra $100 at 18 or 25 versus now (even adjusted for inflation).

It’s common that work 401ks now automatically increase your savings rate by 1% each year. Whether we want these things decided for us, this plan helps people ease into a much higher savings rate as the years go on.

For Perkins, we must properly allocate not only our money (saving vs spending), but also our time and our health. “People of all ages should be spending more time and money on their health.” The healthier we are, the more we can enjoy at older ages, and the more use we can make of our money later down the road. At any stage of life, we should use our surplus resources between these three to gain more of the other. If we’re still relatively young and healthy, but are short on time, we should look at tasks we do but don’t enjoy, and consider “buying back our time” by outsourcing them.

Perkins’ here has more (and more helpful) recommendations, so I’ll list a few

• Think about your current physical health: what life experiences can you have now that you might not be able to have later?

• Think of one way in which you can invest your time or your money to improve your health and thereby improve all your future life experiences.

• Do more of the physical activities that you already enjoy (such as dancing or hiking) that will also improve your enjoyment of future experiences.

• If your ability to enjoy experiences is more constrained by time than by money or by health, think of one or two ways you can spend some money now to free up more of your time.

Let us know

• What life experiences can you have now that you might not be able to have later, whether for health or other reasons?

• What is one thing you don’t enjoy doing that you can afford to pay someone else to do?

Until next time, happy reading!