\n<\/p>\n
A couple of weeks ago, my friend K. hosted a housewarming at the new home she\u2019d bought with her partner \u2013 and father of her lovely one-year-old. I recalled the discussion we\u2019d had about how money is power back in 2018, which I\u2019ve reposted below. For her part, K. regrets nothing, though she does miss being able to drop everything for a cheap flight. Which is great \u2013 but I\u2019d add they weren\u2019t able to buy a house in the areas they first targeted, and there wasn\u2019t much in it. As in so many aspects of personal finance, I think we\u2019re both right\u2026<\/em><\/p>\n T<\/span>he look on my friend\u2019s face was one you might deploy if you were presented with a charge for service at a McDonalds. Total incredulity.<\/p>\n \u201cSo let me get this straight \u2013 you\u2019re putting a money value on your memories?\u201d<\/em><\/p>\n \u201cWell I wouldn\u2019t state it so precisely,\u201d<\/em> I said. \u201cBut basically\u2026 yes.\u201d<\/em><\/p>\n \u201cWow! That\u2019s so sad! Experiences are worth more than money.\u201d<\/em><\/p>\n \u201cI agree,\u201d<\/em> I admitted. That puzzled look again. \u201cBut you\u2019re experiencing something every moment of the day anyway. The question is whether the extra enhanced experience is worth the extra cost. Also \u2013 remember that when you spent all that money for those particular memories, you also bought a certain kind of experience you\u2019ll have to live in the future, too.\u201d<\/em><\/p>\n \u201cHuh? I don\u2019t get it.\u201d<\/em><\/p>\n I topped up her wine.<\/p>\n \u201cLook, neither of us are gazillionaires with infinite money. In particular, you don\u2019t even have a job anymore, depending on whether they\u2019ll take you back \u2013 and besides we spent the first half of this evening talking about how the reason you went away for three months was because you hated your work so much.\u201d<\/em><\/p>\n \u201cRight\u2026\u201d<\/em><\/p>\n \u201cOkay, so you told me you spent half your savings on those three months of traveling. Which now the holiday is over exist only in your head \u2013 in as much as you can remember them. Which seems to be to a limited extent, possibly because so much of your holiday took place in various bars.\u201d<\/em><\/p>\n \u201cAlright, get on with it\u2026\u201d<\/em><\/p>\n \u201cSo that\u2019s where we can start. Half your savings bought those memories. I\u2019m not knocking that spending decision specifically \u2013 perhaps for you it was worthwhile. My point is you spent the money to buy them. Money that you can\u2019t spend twice. So they certainly have a monetary value.\u201d<\/em><\/p>\n \u201cBut there\u2019s more,\u201d<\/em> I added in my winning way that makes me so popular at parties. \u201cYou\u2019re in your early 30s \u2013 it\u2019s possible you could have quadrupled that same money by age 65 if you\u2019d invested it instead. So we know 65-year old you is going to have massively less money to spend because of those memories you bought and are already forgetting that you don\u2019t think we should think about financially\u2013\u201d<\/em><\/p>\n \u201cYeah bu\u2013\u201d<\/em><\/p>\n \u201c\u2013you\u2019re right! Let\u2019s get back to experiences. You usually earn \u2013 what \u2013 \u00a340,000 a year? After tax and National Insurance that\u2019s going to be something like \u00a330,000 in take home pay. Let\u2019s divide that by 240 working days for easy maths, and say you take home \u00a3125 for every day of your life you sacrifice to work. Except since you have to go into the office, you spend more \u2013 we\u2019ll call it \u00a36 a day for travel, then add a let\u2019s be honest low-ball \u00a35 for lunch and coffees, and say \u00a34 a day to cover the fact that you buy a certain amount of tidier clothes for work.\u201d<\/em><\/p>\n \u201c\u2026\u201d<\/em><\/p>\n \u201cKnock that spending off the \u00a3125 and we\u2019re at \u00a3110 a day or so take home. Really I\u2019d like to take it down to \u00a3100 a day to cover stuff like ibuprofen, your inability to take off-peak mini-breaks, and all those late-night Ubers you order to have a mid-week social life while working. But we won\u2019t. Let\u2019s just say you spent \u00a35,000 on your three month travels, which seems about right from what you\u2019ve said.\u201d<\/em><\/p>\n \u201cI don\u2019t know \u2013 something like that?\u201d <\/em>my friend allowed.<\/p>\n \u201cWell, that\u2019s about 45 days of your take home pay \u2013 equal to nine additional weeks of your life where you\u2019re going to have to go into the job you hate to sit in an office you hate because you went on your three-month holiday.\u201d<\/em><\/p>\n \u201cYeah, okay \u2013 it does sound worse when you put it like that. But then again I got three months away from the office for another three month\u2019s or nine weeks or whatever spent at it. Seems a fair trade?\u201d<\/em><\/p>\n \u201cUm, well sadly I was being gentle on you. The reality is you\u2019re not going to save anything like all your take home pay. You know how much it costs to live in London. You\u2019ve also got to eat, go out now and then. Buy bottles of wine to bring to my house for these thrilling heart-to-hearts.\u201d<\/em><\/p>\n \u201cYeah, I\u2019m really glad about that decision\u2026\u201d<\/em><\/p>\n \u201cHah! Anyway, I\u2019d guess you save about 10% of your take home pay, which means it could take you two years more at the office to get back the money you spent on your three months away from it. But let\u2019s say you manage to save to save 20%. Still going to take the best part of a year more work to pay for it.\u201d<\/em><\/p>\n \u201cOkay, okay \u2013 at least I have the memories.\u201d<\/em><\/p>\n \u201cGood, because you\u2019re going to need them while you\u2019re sitting at work! That\u2019s my point \u2013 you\u2019re alive either way and still having experiences. When I said earlier [Editor\u2019s note: I did, different discussion!] that I\u2019m more and more trying to find regular moments of happiness in small things, this is what I meant \u2013 that I\u2019m trying to focus on sustainable mild contentment rather than the sort of high-cost roller-coaster you\u2019re on. Honestly, I\u2019m not saying you did the wrong thing \u2013 not at all, your trip sounds amazing \u2013 but I am saying I personally would totally put a cost on those memories, both in terms of the financial outlay and\/or the price to be paid in terms of extra work by your future self.\u201d<\/em><\/p>\n \u201cOkay, fine, I spent the money. But that\u2019s what money is for, right, to spend and have a good time? What\u2019s the point of just sitting on a big pile of money like a bloody nerd-dragon, counting it in your cave? Even you bought this flat<\/a>\u2026 eventually.\u201d<\/em><\/p>\n \u201cHa ha, nerd-dragon, I\u2019m stealing that! Yeah, I agree. Remember I think and write about this stuff a lot \u2013 I\u2019ll probably even turn our conversation into a blog post! So I know this might all sound a weird way of looking at things to someone who doesn\u2019t. But what I think it comes down to is how much do you value your future over your present \u2013 or in the case of memories, your past \u2013 and how do you strike a balance.\u201d<\/em><\/p>\n \u201cGo on\u2026\u201d<\/em><\/p>\n \u201cSo personally, I\u2019ve always found it very easy to value the future. I saved some paper round money 30 years ago that went into making up the deposit on this flat! I\u2019d always rather have most of my money invested, and to know I\u2019ll have more options in the future because of that. Whereas we both know you live for the present \u2013 you\u2019re a great party girl \u2013 and you\u2019ve never thought much about tomorrow. That\u2019s obvious. As for the Past You, I guess that\u2019s where the monetary value on memories come in? Also possibly feelings of life satisfaction, and not having regrets, which is what I have to guard against for with my approach<\/a>. Although thinking about it, I suppose that\u2019s really your Present You trying to anticipate and stop your Future You regretting what your Past You didn\u2019t do and\u2013\u201d<\/em><\/p>\n \u201c\u2013 stop stop I get it. But I still don\u2019t really see how this doesn\u2019t mean money is there to be spent? Whether you spend it now, or when you\u2019re 90 or whenever?\u201d<\/em><\/p>\n \u201cAbsolutely, ultimately that\u2019s what money is for. But I think it\u2019s helpful not to always think of it as money but sometimes as something else.\u201d<\/em><\/p>\n \u201cSomething else like what?\u201d<\/em><\/p>\n \u201cWell sometimes I like to think of money as stored power. You build up your power by working and saving, and hopefully your investments charge it up further, too. But sometimes you have to run the battery down \u2013 that\u2019s when you spend it. You can spend it on something now, but that means you\u2019re going to have to work more in the future to charge it back up. Or you can try to get to the point where you have enough power stored away that it sort of auto-re-charges. And then you have maximum flexibility to spend it how you like indefinitely.\u201d<\/em><\/p>\n \u201c\u2026\u201d<\/em><\/p>\n \u201cDid that make sense?\u201d<\/em> I concluded.<\/p>\n \u201cErr, sort of. You know this is why you\u2019re single again, don\u2019t you?\u201d<\/em><\/p>\n<\/p><\/div>\n