I suspect this is a pretty niche area among personal finance content. After all, those afflicted with miserliness elicit little sympathy. Lots of personal finance content online focuses on improving our saving, investing and budgeting, and often recommends a disciplined approach to financial management.

So far so sensible, and I tend to agree. But an extreme side of this attitude is when we start to think more about what will help maximise saving and investing and this comes at the expense of enjoying our money, time and life generally.

I can identify with this attitude, I like to power through work until it’s done, and then often don’t take time to celebrate the wins. This means I can be pretty successful at achieving my goals, but occasionally I think I’ve lost sight of the bigger picture of why I’m even investing and saving in the first place, beyond the nebulous goal of having a big number at the end of it.

I suspect I’m not alone in having this mindset. I recently realised I might be in miser territory when I took several months to decide on a replacement for my two ten year old monitors, not satisfied until I was getting the best value possible, and despite the old monitors being vastly inferior to modern models I had the feeling that if it isn’t broken I shouldn’t try to fix it.

I also decided not to go on a foreign holiday because the cost of travel and accommodation seemed poor “value” just to achieve the bare minimum of enduring the journey to get there and avoid being homeless whilst there. Then I’d have to consider the costs of everything I actually wanted to do whilst there.

Clearly this mindset of scarcity and frugality (i.e. the penny-pinching miserliness and Scrooge-like extraction of maximum value from all of life’s transactions) are not productive habits and are actively hindering my enjoyment of life. So I wanted to explore some ways to tackle this.

The saving and investing obsession

Firstly, I should define my saving and investing habits and method of managing my money, so you can judge for yourself where on the miserliness distribution I am.

I use credit cards that give me cashback on purchases I was going to make anyway. I use vouchers or coupons when buying things if they’re readily available via Quidco or TopCashback. I also don’t like to buy cheap, poor quality, things. I buy quality and aim to keep it forever. So far so reasonable?

I track every transaction with personal accounting software so I can see how my cashflow looks each month, and track account and investment balances over time. I’m quite disciplined with my investments; I invest monthly into a stocks and shares ISA with a pre-determined portfolio of low-cost ETFs that give me my desired global diversification and make it simple to manage.

I invest for the long term and don’t check the performance regularly at all (or if I do check it I know there’s never a possibility I’ll be tempted to sell when markets are down, I’m only ever buying).

I’m saving and investing well over 50% of my gross income, and even more when I consider my employer’s pension contribution. This part appears to be unusual and the statistics suggest I’m in the minority here.

The problem with being a financial miser

The obvious problem is not enjoying our money in the moment, always thinking about the future and whether we’ll reach our financial goals. We miss out on experiences, particularly ones that we would otherwise do by ourselves like solo travelling.

This attitude may point to not knowing what we want to do outside of work or if we were to retire what we would actually do with the time. If all the effort and focus goes into saving and investing, it can be at the expense of the wider picture of why we’re doing it in the first place. Define your reason first, then define your number and aim for that rather than excessively saving just because you can.

The scarcity mindset can be stressful if we’re always thinking of ways to track progress and going over the same story that we know already, i.e. we’re probably on track to met our goals and should just forget about checking in so often.

Finding the balance

What constitutes a sensible or optimal level of saving and investing? The Money Guy podcast (examples of the miser question here and here), which I listen to regularly, has suggested 20-25% of gross salary is a good amount to aim to invest each month.

A good tip I’ve heard on several personal finance YouTube videos is having a budget for fun things that you have to spend each month just like it was one of the regular bills. Perhaps a good way to do this is to plan what a good level of spending on fun would be for you and calculate back from there to see if this amount fits in with your financial goals.

Spending money on experiences rather than possessions can also be a sensible way to enjoy your money and get more from it. This might include for example cinema / theatre trips or eating out once per week (even though it might not always seem good value, and I actually really enjoy cooking anyway).

Investing and saving is about financial freedom, but this should not come at the expense of enjoying the wealth that you’re accumulating. Adding to the pile should not be the alternative to having some fun with your extra cash every now and then.

Taking a much lighter-touch approach to tracking financial progress and investment performance would also be a good idea for people like me who can obsess over the details too much. Effectively trusting that the process will work on its own given time.

Conclusion

I’ll be giving a “fun budget” a go, and planning a few activities a week that I have to do to use up that mandatory budget. This probably won’t stop me from balking at the cost of travel for holidays, but it’s a start and will help me build up to larger purchases.

I’m fortunate to be in the position of prescribing the need to spend more in the name of having fun. This post was written sincerely, and I was intending to show the extremes of what is possible with a particular approach to saving and investment.

As with many things, the old advice seems to be the best. It’s hard to go wrong with the principle of “everything in moderation”, and that includes saving and investing.

I’m interested to know if you have a similar tendency towards over-saving and avoiding spending. Let me know in the comments how you maintain a good balance.

References and further reading

https://youtu.be/uFef2n39RW8?si=8MqwGi741anxUFAY

https://youtu.be/dg0pZkaTcoQ?si=bdssQ197j3V6c_s_