Budget for Pleasure
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Budget for Pleasure
I was listening to one of Harry Browne's archived podcasts recently, and he elaborated a little bit on why one of his rules is "Enjoy Yourself With a Budget for Pleasure."
Whereas I previously hadn't thought much about that rule because it seemed so simple and obvious, HB's brief explanation on the podcast revealed that the "Budget for Pleasure" rule actually has the same philosophical rationale as PP investing: nobody knows the future.
HB's thinking was that it's important to budget some amount of money for pleasure now, and not entirely for the future, because the future is unknown and one's ability even to enjoy the future as one had planned can be severely altered or even eliminated by unforeseen events.
In other words, HB was referring to a type diversification. Not diversification of investments (he obviously addressed that elsewhere), but rather diversification of the enjoyment of life itself across time. He recognized that living purely in the moment with zero regard for the future is reckless, but that it is also "risky" (in a sense) for a person to painstakingly deny himself pleasure over an entire lifetime because of an absolute focus on some goal residing in the distant future. If the person dies earlier than planned, for example, that future will never arrive for him.
The philosophical concept of our inability to predict the future permeated more of HB's ideas than just the obvious ones relating to the futility of market timing. The consistency of thought in HB's ideas is rare and impressive.
Whereas I previously hadn't thought much about that rule because it seemed so simple and obvious, HB's brief explanation on the podcast revealed that the "Budget for Pleasure" rule actually has the same philosophical rationale as PP investing: nobody knows the future.
HB's thinking was that it's important to budget some amount of money for pleasure now, and not entirely for the future, because the future is unknown and one's ability even to enjoy the future as one had planned can be severely altered or even eliminated by unforeseen events.
In other words, HB was referring to a type diversification. Not diversification of investments (he obviously addressed that elsewhere), but rather diversification of the enjoyment of life itself across time. He recognized that living purely in the moment with zero regard for the future is reckless, but that it is also "risky" (in a sense) for a person to painstakingly deny himself pleasure over an entire lifetime because of an absolute focus on some goal residing in the distant future. If the person dies earlier than planned, for example, that future will never arrive for him.
The philosophical concept of our inability to predict the future permeated more of HB's ideas than just the obvious ones relating to the futility of market timing. The consistency of thought in HB's ideas is rare and impressive.
Re: Budget for Pleasure
Ironically, it was easier for me to budget for pleasure prior to discovering the PP. I'd just spend money on whatever I wanted, and save a small portion consistently to invest in my IRA or 401K.
Now, with the PP, I am inclined to save WAY more money, b/c I view every $1K saved in the PP as $80-100 a year (plus interest) going forward.
I didn't see it this way before b/c my investments were more a black box that I put 10 or 15% of my salary into, and then pulled out a small fortune 25 years later. The safety of the PP really has encouraged me to save money.
Now, with the PP, I am inclined to save WAY more money, b/c I view every $1K saved in the PP as $80-100 a year (plus interest) going forward.
I didn't see it this way before b/c my investments were more a black box that I put 10 or 15% of my salary into, and then pulled out a small fortune 25 years later. The safety of the PP really has encouraged me to save money.
"All men's miseries derive from not being able to sit in a quiet room alone."
Pascal
Pascal
Re: Budget for Pleasure
Adam,
I agree that the PP makes saving more fun or at least deliberate, moreso for me because I don't have to worry about buying in at a bottom or at the top of "the market." (The term "the market" just makes me sick now... like stocks are what you invest in, and everything else is just bs)
In fact, I take huge joy in plunking another $5k of cash I've accumulated out into the "badass" assets. It's really fun to have your own little gyroscope and see it work the way you hope for it too once you get past that initial shock.
I have taken some more deliberate attitudes towards my consumpion though... not so much that I spend more, but that I spend where my passions are, and not out of laziness, luxury or status.... at least that's what I'm trending towards.
I agree that the PP makes saving more fun or at least deliberate, moreso for me because I don't have to worry about buying in at a bottom or at the top of "the market." (The term "the market" just makes me sick now... like stocks are what you invest in, and everything else is just bs)
In fact, I take huge joy in plunking another $5k of cash I've accumulated out into the "badass" assets. It's really fun to have your own little gyroscope and see it work the way you hope for it too once you get past that initial shock.
I have taken some more deliberate attitudes towards my consumpion though... not so much that I spend more, but that I spend where my passions are, and not out of laziness, luxury or status.... at least that's what I'm trending towards.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
- Thomas Paine
- Thomas Paine
Re: Budget for Pleasure
Good observations. I agree. It's clear that over the years Browne built up an entire economic, political and philosophical framework around the idea that the future is profoundly hard to guess and that information, even about the present, is scarce. Browne's investment philosophy, his libertarianism, his view of how to find happiness, even his strategy on how to be a great salesman... all are strongly influenced by this idea of uncertainty.
A budget for pleasure is a great compromise because it allows you to enjoy the good things you want out of life while still meeting your savings goals. And at the same time, saving money itself is a pleasure because of the freedom and security it buys you in the present.
A budget for pleasure is a great compromise because it allows you to enjoy the good things you want out of life while still meeting your savings goals. And at the same time, saving money itself is a pleasure because of the freedom and security it buys you in the present.
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Re: Budget for Pleasure
There are several ways to budget for pleasure. Here are the spending priorities that have evolved for me over the years:
- #1. Pay myself first. Contribute the maximum amounts allowed to tax-advantaged accounts (e.g., 401K, IRA). Add an additional 15% of gross pay to taxable investment accounts.
- #2. Pay my bills. Part of my budget includes a line item for contingencies (e.g., car needs new battery, unplanned purchase made on impulse). At the end of the month, I do whatever I want with any amount left over in this account -- spend it on fun, pay down debts faster, "bank it" by putting it into a separate savings account, invest it in something.
- #3. Pay for fun. Fun includes whatever I want it to be. Spend it on stuff I don't really need. Use it to pay down my debts faster. Save it. Invest it anyway I want. Give it to charity.
- IF my checking account balance is greater than a certain amount, THEN apply an additional amount to my mortgage payment, ELSE apply a zero additional amount to my mortgage payment.
- IF my mortgage balance is zero, THEN add my old mortgage payment to the amount I invest in taxable accounts, ELSE don't increase the amount I invest in taxable accounts.
- Do I really have to have this thing right now?
- Or do I want financial freedom sooner?
Financial Freedom --> Time Freedom --> Lifestyle Freedom
Re: Budget for Pleasure
I really want a Porsche Cayman, guys... I'm not kidding.
But I live in MN (winters... though I hear porsche's equipped with snow tire's aren't bad since the engine's in the same spot as the drive wheels), I am 27, and I am ok with my '96 accord wagon.
Anybody have some input as a car-enthusiast and whether or not buying the car you're enthused about brings adequate happiness? I'm nervous that I'll buy it and the thrill will be gone soon after.
Keep in mind, this isn't as a form of luxury or status for me... basically pure personal driving pleasure. I could care less whether my friends are impressed, or about a luxurious interior or electronic doodads that made me say "oooooh." I'm not saying this is better or worse than buying cars for other reasons, but I have to think it's maybe different than wanting a new car because it's new and it turns heads.
But I live in MN (winters... though I hear porsche's equipped with snow tire's aren't bad since the engine's in the same spot as the drive wheels), I am 27, and I am ok with my '96 accord wagon.
Anybody have some input as a car-enthusiast and whether or not buying the car you're enthused about brings adequate happiness? I'm nervous that I'll buy it and the thrill will be gone soon after.
Keep in mind, this isn't as a form of luxury or status for me... basically pure personal driving pleasure. I could care less whether my friends are impressed, or about a luxurious interior or electronic doodads that made me say "oooooh." I'm not saying this is better or worse than buying cars for other reasons, but I have to think it's maybe different than wanting a new car because it's new and it turns heads.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
- Thomas Paine
- Thomas Paine
Re: Budget for Pleasure
Yeah, I know the feeling. When I first saw it at an auto show I loved it. Asked a sales person how much it was, and was surprised to hear it was "only" ~$60k. I've always had a soft spot in my heart for Porsche anyway...moda0306 wrote: I really want a Porsche Cayman, guys... I'm not kidding.
About three years ago I was shopping for a car. I tested the Cayman, and it's really cool to drive for sure. But... I went for the Nissan 350Z, because I couldn't really see that (1 Cayman) = (2 * Z). The Z is a lot of fun to drive too. Yeahhhhh, not as much fun as the Cayman, but way more than half the fun!!! And then there is insurance...moda0306 wrote: Anybody have some input as a car-enthusiast and whether or not buying the car you're enthused about brings adequate happiness? I'm nervous that I'll buy it and the thrill will be gone soon after.
Well, then it really comes down to the above equation. Is [fun driving Cayman] > 2 * [fun driving Z]. Or whatever other cheaper sports car of your choice. Not for me...moda0306 wrote: Keep in mind, this isn't as a form of luxury or status for me... basically pure personal driving pleasure.
"Well, if you're gonna sin you might as well be original" -- Mike "The Cool-Person"
"Yeah, well, that’s just, like, your opinion, man" -- The Dude
"Yeah, well, that’s just, like, your opinion, man" -- The Dude
Re: Budget for Pleasure
A couple problems:
Nissan is F/R, not M/R... winters would be a b*tch.
Not a big fan of Nissan interiors.
Not a big fan of Nissan manual transmissions.
The latter matters a lot to me, but don't get me wrong... the Z is a great car.
Nissan is F/R, not M/R... winters would be a b*tch.
Not a big fan of Nissan interiors.
Not a big fan of Nissan manual transmissions.
The latter matters a lot to me, but don't get me wrong... the Z is a great car.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
- Thomas Paine
- Thomas Paine
Re: Budget for Pleasure
Yeah, I was using the Z more as an example (from real life though). Substitute any other car for the Z. Unless you really don't have any alternatives for the Cayman of course :-)moda0306 wrote: A couple problems: ...
"Well, if you're gonna sin you might as well be original" -- Mike "The Cool-Person"
"Yeah, well, that’s just, like, your opinion, man" -- The Dude
"Yeah, well, that’s just, like, your opinion, man" -- The Dude
Re: Budget for Pleasure
HB's intellectual honesty and consistency made a huge impression on me as a college student after I began reading his books in 1974 and later his newsletter in 1980. I didn't always like where he came out on certain issues, but after reading his work for a short while I began to realize the shallowness of our public discourse and the limitations of my "higher education."Tortoise wrote: The philosophical concept of our inability to predict the future permeated more of HB's ideas than just the obvious ones relating to the futility of market timing. The consistency of thought in HB's ideas is rare and impressive.
Although his published works were mostly about investments, his real gift to readers was the sharing of his philosophical ideas and his clarity of thought.
Re: Budget for Pleasure
I wish that had been exposed to a lot of this at a younger age (not that I'm that old).HB Reader wrote: ...but after reading his work for a short while I began to realize the shallowness of our public discourse and the limitations of my "higher education."
I think one of the most important lessons you walk away from after reading a lot of HB's stuff is that one will likely be happier if one teaches him/herself to think and behave like a producer and not a consumer.
"All men's miseries derive from not being able to sit in a quiet room alone."
Pascal
Pascal