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How can you spend and save in a way that lets you maximize your daily experience and keeps you on track with your money goals? Katie and Henah chat through balancing both short-term and delayed gratifications, how to optimize for your life dreams, and when extreme stints in saving or paying down debt are worth it.

Welcome back to #RichGirlRoundup, Money with Katie's weekly segment where Katie and MWK's Executive Producer Henah answer your burning money questions. Each month, we'll put out a call for questions on her Instagram (@moneywithkatie). New episodes every week.

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Our show is a production of Morning Brew and is produced by Henah Velez and Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is our Chief Content Officer and additional fact checking comes from Kate Brandt.

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Mentioned in the Episode

• Die with Zero by Bill Perkins

• All the Hacks with Chris Hutchins

• Type 1 and type 2 fun from Nat Eliason

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Katie:

The extreme effort that it might take to do that in the beginning is probably worthwhile because it kind of shows you that it's possible, but that is a tool to be wielded very carefully. It's like a scalpel. It's not something that you can, something to use in an ongoing fashion. I'm trying to make a surgery metaphor here and it's not working.

Welcome back Rich Girls and Boys to the Rich Girl Roundup weekly discussion of The Money with Katie Show. As always, I'm your host, Katie Gatti Tassin, and every Monday morning my executive producer Henah and I use this segment to talk through listener questions, interesting money stories, things in the news from the community, and just more casual financial topics. Here's a quick message from our sponsors.

Before we get into it, this week's upcoming main episode is about sustainable investing, and we've heard it a lot in recent years. You've probably heard the terms ESG or SRI thrown around, but are these just buzzwords or are they legit? Okay, onto the roundup Henah, what are we talking about today?

Henah:

This week's question came from an amalgamation of folks who essentially asked, how do I prioritize saving for the future at the “expense” of enjoying today? How do I make the messy middle more fun? Or what do I need to do when I need to shift my priorities for a bit? And so I think you and I have talked that there's kind of two ways to think about this, so I figured I'd let you start there.

Katie:

Yeah. Well, it's interesting because just this morning I was listening to a Bill Perkins interview on All the Hacks with Chris Hutchins, who's been a guest on the show before. And so this is a very “fresh in my mind” topic because I think it all kind of gets at that broader question of what are you optimizing for? But in a more specific sense, the short-term versus long-term question reminds me a little bit of something that I believe I've mentioned before. The type one fun versus type two fun framework from the writer, Nat Eliason.

So type one fun is stuff that is superficially satisfying in the moment. Things like watching Netflix or scrolling on TikTok or eating junk food, it doesn't really take any effort, whereas type two fun is stuff that is satisfying to you in the long term. So think planning and going for a strenuous hike with your friends or organizing a big group trip, hopefully not a bachelorette trip, if you caught our last episode about this…

Henah:

PTSD.

Katie:

It's definitely more effortful. It takes a lot of work to create that type of fun. So there's often resistance to that. Particularly I'll speak for myself if it's a Friday night and I'm tired from the week, I'm not really immediately in the mood to sit down and plan out some big crazy Saturday hike, but often those are the Saturdays that I actually remember. I don't typically remember the Saturdays where I just sat around and answered emails and watch tv.

So the larger takeaway is twofold, A, that the type two fund is more effortful, but ultimately more valuable experience. And then the idea overall is that we need a little bit of both. And so that is the abstract and metaphoric idea that when I hear short-term versus long-term planning, that's kind of what it brings to mind for me.

Henah:

So as usual, again, it depends. So let's maybe deep dive into each of 'em. I think short term feels fairly obvious. It's kind of swinging too far in that direction to you. Does this often look like when you're hearing from readers?

Katie:

I think what it sounds like to me often is not necessarily in the framing of the question that was asked, but ooh, I am overspending a lot. I spend compulsively. I'm spending in a way that might, the person might not characterize it as keeping up with the Joneses, but if you kind of look at the facts, that's basically what's happening. Or perhaps just completely ignoring the future entirely. So that would be one extreme of the spectrum.

Henah:

I've been hearing a lot of the, “Well, the planet's not going to be around in 40 years anyway, so I might as well enjoy now” dialogue. And so I think that's part of the ignoring the future calculation for some people.

Katie:

Yeah, just the kind of nihilism which, here's the thing. I think the reason the Bill Perkins interview is so top of mind right now as I think about this question is that his philosophy, for those who have read or who have not read Die With Zero Rather, is basically that it makes rational sense to try to optimize your life for maximum fulfillment and satisfaction in the years that you do have on the planet. And when we get into financial frameworks and financial maximization with the most money possible being the ultimate goal that we're optimizing for, we often find ourselves in positions where we are sacrificing quite a bit of fulfillment or at the very least delaying it. And so his take is there is only so much time in your life to do certain things. And so if you have an entire scope of experiences that you want to have in your life that the goal of going wakeboarding and going on a trip to go surfing, well, that's probably not something that you can do in your 80th decade.

Maybe there's the long tail, tiny little top 1% of athleticism, and humans can do that in their eighties, but most regular people, there is a small window in your life where that is something that you can achieve because you have both the physical capacity to do so in this example, and you have the financial ability to swing it. So he says what you should do is basically look at the full scope of your ability and capacity and then decide is this an experience that I should be doing in my thirties, or does it make sense to delay this later in life? So that I think is a balance that we tend to just assume that optimizing for the long-term is always better, but that this rational model where you're optimizing for fulfillment would suggest that that actually doesn't make any sense.

Henah:

Well, that makes sense to me also in the context of the bachelorette party conversation that we had, which is that there is usually only a set amount of time in your life that you're doing these things or before you start a family doing a bucket list trip, those kinds of things. But I feel like you had a really good point about perception in spending.

Katie:

Well, yeah. I think that I struggled with this too, this kind of messy middle idea. I've written about this in the past where there's something that happens when you first discover personal finance education. It's very motivating, it's very energizing, particularly the extreme manifestation of it in the fire rhetoric, which is, oh my gosh, if I work really hard and save a lot of money, I can be financially free. And so the type A “Gold Star” kids among us go, okay, cool. Well, that's easy enough. I'll just completely strip back on everything and take this to the nth degree now.

And that first, I'll say the first year or two, is actually pretty easy because the deprivation almost feels fun. It's like a game and you're like, oh, I'm feeling very motivated. But then there comes a time where you've made progress and you kind of look out at the horizon and you go, oh my God, there's still so much time left. I actually can't keep this up for 10 more years. It was easy in the first 12 to 18 months, but I actually am realizing this isn't how I want to spend the entirety of my twenties and thirties. This doesn't really make any sense.

And in those moments, in that messy middle, I think there are a few things that can happen. One is you effectively ascertain a more sustainable approach, and one that doesn't involve sneaking into gyms to shower, to save money on body wash, which is what I was doing. That's certainly a necessary component of that transition. But that also, there is a good deal of perception loss that can happen, or rather perspective loss that happens when you've been at it for a while.

And I think perception is reality when it to money. So you might feel like, oh, I still have so long to go. I'm only spending X dollars per month. And you look around you and you're now in this maybe subset of people who are also really financially motivated or very career motivated, and you're comparing yourself to them and feeling like I'm nowhere close to them, even though in the broader scope of humanity, you are in the top 5%, but you're comparing yourself to people in the 1%. So now you feel like you're really behind. You feel like, oh my gosh, I'm not as far ahead as I should be, or I should be working harder. And it just kind of creates this sense of misery, I think.

And the messy middle is a time when you become really susceptible to that because the initial excitement has worn off. You realize how long the path is, but now you're among, perhaps you have a more awareness around you of how other people are doing typically. And so I do think that readjusting your perception to realize like, oh, no, actually I'm doing excellent and I can afford to take my foot off the gas a little bit. And my comparison set is actually very skewed.

Henah:

First, I feel attacked because I think that applies to me in the way that I feel. But it was interesting because I was talking to you about this recently and I said, I've been tracking my wealth since I started here almost two years now, and we doubled our net worth in basically 18 months. And so it was very easy before I had that realization to be like, oh, look how much further ahead. All these other people are people who email us and they say, oh, I have $1.5 million in the bank and I'm 32 the same age as me, and blah, blah, blah. And then I was like, why am I comparing myself to these people and look at how far I've personally come?

And I think part of this is that when you enter the real world, all kind of rules or trajectories disappear. So when you're in grade school, everybody's on the same playing field, but then after that, it's like you could graduate college and get a $200,000 job right out of the gate, or you could get $60,000. And that automatically also skews the people around you just by field of industry or experience or whatever. And I think that that's really fair. That I think also skews your short-term spending because you're trying to keep up with the Joneses in a way that is not sustainable.

So I was thinking about this too, in the sense of there might be certain things that you know want to do in the future. So have a house, buy a Porsche, your dream car. And so I think one thing is you can also start saving in small ways without downshifting your time and the way you enjoy yourself today. And so for an example, Jovanni and I are not having children yet, but we do put money in a childcare fund for the future just so that that's something we don't have to worry about as much when that time comes. So I feel like tactically speaking, there are a couple of things you can do if you find yourself trying to enjoy the now while also prioritizing the future. I feel like you had also talked about at one point, sometimes action, extreme action is necessary.

Katie:

And actually, can I ask a question about that? Because I think I can imagine someone listening to that and going, yeah, okay, start saving today for the future. That's what I'm doing, and I don't know how to balance. I think someone could go, oh, well, the money that you're saving for future children is money that you're not enjoying today. So how do you personally in your own life think about that balance? Is it because you're saving a relatively small amount, you're starting early in saving a relatively small amount that you're not really missing? Like, oh, well, if I spread it out a little bit, it'll be more manageable and I won't have to take such a steep drop off when the time comes, or is there something else at play for you psychologically?

Henah:

No, it's the former. We put $50 every two weeks. So to me, that's a small enough amount that that's one dinner that I skip perhaps, and I don't really think about it. And I know that later on when I have a couple grand sitting there and I'm going to have to pay 5, 6, $700, $800 a month, it's not going to feel like such a stretch, or at least I can prorate it as they say.

Katie:

Supplement. Yeah. Yeah. I got you. Okay. Yeah, no, that makes sense. Yeah.

And on the note of extreme action, this is the thing, I was watching a video the other day on YouTube about hustle culture, and if you've seen one of these videos, you've seen 'em all. But this guy said something in the video that I was like, ah, finally someone admits it.

He said, here's the thing that's really hard to admit about hustle culture. He's regaling us about the phase of his life where he was really into Gary Vee and was working 18 hours a day and was grind set and was obsessed with taking action and was constantly, constantly grinding. He goes, the problem is that it works. He said, you will get results if you do that. It's not that it doesn't work, it's just that it doesn't work for very long.

There is a benefit to having intense time boxed sprint periods in your life. And how I will define it is classifying it as such. So when I look back on my own journey and when I kind of observe the path that got me where I am now, which I feel great about, I am happy with where I am now, but when I look at how I got here, there was a solid 18 months probably where I was literally working from five or six in the morning until nine or 10 o'clock at night pretty much every day. And I had multiple full-time jobs, multiple part-time jobs.

I was building Money with Katie in the free time and in the moment, that was what I felt like I needed to do to reach escape velocity from a type of life that I was not happy in. I had a good job that was decent that I was satisfied enough with, but just that gnawing of something needs to change and I don't know what it is. There was that feeling of, well, I need to take extreme action to get extreme results and to catapult me into this other path.

Henah:

Can I ask a clarifying question? When you say that you had a good job, you just felt like something needed to change. Was it that you didn't want to be in the messy middle for 40 years? Were you like, oh, this is my life for 40 years?

Katie:

Yes, and it was the type of work I was doing. I could not see myself doing that type of work for 40 years. It wasn't, I think in retrospect that I didn't want to work at all. It was that the idea of doing the e-commerce AB testing and optimization made me, I enjoyed it enough to where I didn't dread going to work, and I actually really liked my team, but I didn't feel fulfilled and I didn't feel challenged and excited enough by the work to be like, yeah, I could do this forever. Okay, fair.

And so that was I think what I was trying to pivot out of, but I didn't really see a path forward. And that's where, in retrospect, I can look at that period of time, which was roughly early 2020 to mid to late 2021, and I can look at it and go, yeah, actually a lot of the effort in that time was wasted. I was doing things I would not have really had to have been doing. In retrospect, I can see which things were the needle movers and which weren't, but you don't know that when you're in the midst of it, you have no way of knowing what things you're pouring effort into are going to pan out and which aren't. So you kind of don't have a choice.

And so I tell that story and bring up that YouTube video because I do think that there is merit to extreme pushes in any sense. Whether you're talking about I'm going to go six months without shopping because I know I need to reset my reward system. I am too far down the rabbit hole of online shopping and one click purchases. So I'm going to do something extreme for a predetermined period of time to make a big change, or I'm going to pay off my debt as hard and as fast as I can for a full year, and then I'm going to take my foot off the gas because I want to make a lot of progress quickly, but I know it's not sustainable.

Or I'm sticking it out with this job for three more months because I would need to accrue as much kind of like, I'll call it escape velocity again, that capital in order to make the shift. And I'm not happy in this job, but I'm going to keep it for three more months because I need to see it through, and then I'll find something more balanced. So I do think that there are times in life where that is necessary, and I don't want to suggest that the investing, your time and energy and effort in your future happiness is never worth it, or that the long term is you're always probably going to be better off valuing your short term versus the long. It does feel like there is a little more nuance there that sometimes you're going to push really hard and it is going to be worth it, and then you're going to be happy with the results and you're going to be like, yeah, I'm glad I did that. I don't want to do it forever, but I'm glad it happened.

Henah:

And I think on the note of sustainability, your point about you can't do this forever, but there are ways in which you can build more sustainability into your day-to-day or times where you do prioritize the short term to effectively help your long-term.

So for example, your health. So for example, this year I am working with a nutritionist and that costs a lot of money. And so I've decided to pull back on some contributions to investment accounts so that I can focus on my health, because you're the one that told me, if you're not around in 40 years and you're dead, what was the point of saving for all of that? And so, not that I'm on the precipice of death now, I promise, but just that there's times where you do need to shift your priorities.

And so I feel like what I'm doing now is essentially building my sustainable runway for the next 40 years. And I think you had something really thoughtful about rigidity and perfectionism that you've talked about, or just taking it to the 11th level and realizing, oh, I can't do this forever.

Katie:

Yeah, I think that that's kind of the caveat on the idea that sometimes extreme pushes are necessary to make a big change and to get yourself onto the other path. I think human nature is weird in that way, in that we often use actually these health analogies and these analogies of exercise and dieting, and I think that someone could look at the analogy that I'm offering and be like, well, but doing a really extreme crash diet is not a good way to jumpstart a healthy lifestyle. I agree.

I think the difference here perhaps is that there is something about the momentum that is created and the specific parameters around, I am going to go really hard at this as hard as I can a sprint for a predefined window of time, and I know it's extreme and I'm not going to do it forever. Because I think that is sometimes our nature is to, I want this to change right now and I'm willing to do anything to change it. So you're kind of harnessing that in a positive way, but recognizing at the outset, this isn't sustainable.

And if I actually just kind of leaned into this and tried to make it quote my life and didn't try to put it in this specific window for this specific purpose, that type of rigidity and perfectionism and extreme approach can actually lead to bigger backslides later. So when I look at what has worked for and what I have learned from making a lot of these mistakes is mistake number one was that I assumed my energy and interest and devotion in working for a zillion hours a day was going to be able to be sustained over 10 years.

It was not. I would've had better results had I said, I'm going to go full force at all of this for six months, then I'm going to make a decision at the end, and I'm going to pick one and go full force. I'm going to do that. And instead it was just, I just went until the wheels fell off and then had a big backslide because I was so burnt out that I didn't want to do anything anymore. And so that was ineffectual.

So all that to say, I think that that same mentality can apply in these financial contexts because sometimes I think when you're in a period where it feels like nothing is going right, like, oh man, I can't get a raise, or like, oh, man, my debt just feels like it keeps getting worse and worse, or man, I can't stop compulsively shopping. You have perhaps an extreme manifestation of a negative financial problem happening in your life.

And I think there's something to be said about seeing is believing. If you can show yourself that you can affect change in that area, then the extreme effort that it might take to do that in the beginning is probably worthwhile because it kind of shows you that it's possible, but that is a tool to be wielded very carefully. It's like a scalpel. It's not that you can, it's not something to use in an ongoing fashion. I'm trying to make a surgery metaphor here and it's not working.

Henah:

She said, have you ever heard of the game operation?

Katie:

That's kind of how I feel about it.

Henah:

I hear you. I think what might be most helpful then is for those folks who are in the messy middle, we'll say are some tactics to kind of help them figure out the short versus long-term gratification, the delayed gratification of it all.

So I know for me, goal-based milestones work a lot. So if it's I hit X, Y, Z goal, then I can loosen the purse strings on whatever the thing is that I want. And we talked about this kind of long-term wishlist that you and I both keep and we'll check back in with. And I feel like that has helped me to decide, is this a fleeting desire that I just want in the moment, or is this something that's going to actually enrich my life and I can build this goal around it? And so obviously my Chanel bag was an example of that, but we've actually gotten a few emails lately from people who are also debating this for themselves.

So one person reached out and they said they're retiring and they purchased an $11,000 Rolex watch, and it was after our luxury episode, and they said, I'm retiring and this is the way that I'm going to celebrate this moment, and I'm going to wear the heck out of this watch. And I just loved that they were so excited about it. They weren't doubting what they wanted to do.

And then someone else emailed yesterday actually and said, I'm graduating with my master's. I'm getting a 4.0 from Georgetown, and that's amazing. My husband and I decided we're going to go get a Cartier watch from you, my first big girl watch, but I'm 26 years old and I don't know if this is the time that I deserve it. And I thought that was really interesting because she wrote a whole long email and said, well, I don't know if it seems too flashy, but I also did the framework that Nick Maggiulli said, if my net worth is this, then I don't want to think about this. But I also don't.

And I said, I think when you have these big milestones that you've worked really hard for and you're really excited about the purchase, I think it's okay. And it's something if you budgeted for over the long term and you thought about it and it's not, again, taking a huge hit on your net worth, I think that's the whole point is to enjoy the life that you have right now. And so I'm curious what you think also, because I've talked to you about Jovanni and I's “Fun Fund”, which is we use income that we weren't expecting in ways that we want to have fun with as long as we're hitting the rest of our goals. And so I'm curious what you think about that.

Katie:

The Fun Fund. That's great. For some reason, I'm picturing it's bringing to mind, fondue a brand of cheese. When I hear Fun Fund, I'm like, oh, the “fun, fun,” “fun, fun.” Yeah. I think my car was kind of an example of that. I actually saw a video the other day where this woman was like, she goes, people always say you should spend your money on experiences and not things. But for me, driving a nice car is an experience. And I was like, here, sister. It rings true.

I guess that also, I loved that email from that guy that was like, I'm buying myself a Rolex. I just finished, I think it was like 30 years in the military. So he has his investments, he has his pension. I'm like, yeah, dude, when else to do this? That is a great time to buy yourself a Rolex is a capstone to your career.

Those types of purchases, and I guess I'll kind of categorize those as short-term indulgences or fun spending. Now, things that really don't meaningfully or you wouldn't intend for them to meaningfully bolster your long-term finances, but they enhance your experience of life today or celebrate it today. I feel like what I said about the extreme pushes and how sometimes that's necessary in the short term to change paths that I think is applicable for someone who is still in the beginning phases. And I want to make sure that I address that specific component of the question about the messy middle, because I think the question, what it really gets to at its hearts for those who have already, they're on the other side of the extreme push. They've done the extreme stuff, they're now in that slog in the middle, and they're going, well, now I don't really know what to do.

I don't know if I should be giving myself moral leeway or less. I think that the question ultimately has to come down to sustainability, long-term sustainability, which is something that I've been thinking about a lot recently, which is basically, this path is not a good path if I am rushing to get off of it as fast as possible.

So if I'm like, oh my God, how many more years until FI, how many more something has gone wrong? If that's the question that we're asking, I think where it makes sense to devote the effort is to figuring out how we can design. And by the way, I'm also still in this process. How can we design our lives in a way that the finish line kind of feels like collateral or yeah, that's just what's going to happen if I keep going down this path. Not like ah, okay, I got seven more years. How can I make this go faster? It's like, what can I be doing for work and how can I be working? What level of income does that produce? Where do I need to live and what kind of place do I need to live in? And what type of transportation do I need to have? And how should I structure my lifestyle wise? How do all those pieces fit together?

So I feel like, yeah, I'd be happy living this way forever for the rest of my life. I'm content with this. And I think that that takes a lot of practice and trial and error. And I also think it takes releasing the idea that to my initial point about Bill Perkins ideology, it requires releasing the idea that optimizing for the situation that creates the most money is the goal. And that's really hard to let go of.

If you have been steeped in that for a long time, the right solution for you between the short term and the long term might be one that actually leaves you with less money today and less money later. But it might be when you look at the full spectrum of the human experience, your psychological engagement, your health, your happiness, yes, your access to resources, that's included too. But it's just one piece.

The money might be lower, but overarching results might be better. And I think that sometimes it's just too easy because of how money quantifies things. It's so easy to focus on that and to make that the ultimate determinant. And I think that thinking about this question as a short-term versus long-term, ultimately the answer is in the middle. It's what makes the middle the most sustainable.

Henah:

Yeah. It's not about how do you build a life that you can cram your way out of and you're trying to escape. It's how do you build a life you don't want to escape every single day. So I think that's a beautiful note to end on. I have a quick money story. So when you can't sleep, Katie, what do you buy?

Katie:

A pharmaceutical? For insomnia? Is this a trick question?

Henah:

Okay. It's somewhat of a trick question. Someone wrote in with money tea, their name is Emma. They said they have a rich neighbor with insomnia who buys thousand dollars items when she can't sleep. So she said, big ticket shopping, think Restoration Hardware, furniture, rugs, new electronics, even vacations. And so I said, okay, are you saying she has sleep paralysis, and she just has to go online and shop? She said, no, no, no, no. She's awake. But that's just when she does her best shopping. She says her best shopping at night and that she suffers. No guilt about it. And so I was like, damn.

Katie:

Well, this woman should be the one hosting the podcast about how to balance. She clearly has it figured out.

Henah:

I mean, when I can't sleep, I read a book, so I need to take a page out of her book.

Katie:

I scroll Reddit when I can't sleep, which usually doesn't help.

Henah:

That seems like a deep hole you can't come out of.

Katie:

Also, Restoration Hardware, like the chokehold that mirrored furniture had on all of us thanks to Restoration Hardware. The damage will never be undone.

Henah:

I feel bad even walking into the store so scared to break something that they'd be like, yeah, you now owe $1,200 for this paperweight. And I'd be like, well, so kudos to her. But yeah, I thought that was a fun one.

Katie:

Amazing. Okay, well that is all for this week's Rich Girl Roundup, and we will see you on Wednesday to talk about sustainable investing.