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Money Needs Balance. Extremes Rarely Work.

It seems like everything in life benefits from balance. Even things that are inherently good can become negative when taken to an extreme.

Exercise is a good thing, and something most of us should do more. But without proper rest, it'll lead to exhaustion and injury.


Working hard is great, and generally leads to success. But too much, and you sacrifice important family time and lose the balance between work and life.

Money is no different. You need balance.

Here are some ways you can balance your money behavior.


Balance between the future vs the now.


Many people ignore the future for the experiences of the present. This leads to spending too much and not saving enough for when times are hard or for future plans like retirement.

But the opposite can be equally true. I have a number of clients who are so focused on the future that they sacrifice all the fulfillment they could be experiencing now. They significantly restrain their healthy years with young kids at home, just so they can achieve a "no responsibility" financial life at some point in the future (when they may be unhealthy with no kids at home).Neither is right. Saving and planning for the future is important. But so is enjoying today.


Balance between restriction and freedom


Many people see a budget as a restriction. And to some extent, that is the point. It's meant to restrict you to spend on your top priorities while putting guardrails around things that are not.


But if the focus becomes too much on restriction, you will miss the chance for a great opportunity or experience. Instead, the main point of a budget is to allow you the freedom to spend on things that are important, without the guilt of worrying about what will be left at the end of the month.


Balance between risk and reward


In finance, and especially investing, there is a direct link between risk and reward. The less risk you take, the lower the potential reward. The higher the desired reward, the more risk you will need to take to get it.


If you are too scared of risk, it'll lead to low returns and missed opportunities to benefit from powerful financial concepts like compounding. For example, it's near impossible to save for retirement successfully without taking some risk to generate some return.

But, if you are too focused on maximum return, you may ignore important risks. This is when you read stories of people losing it all due to bad investment bets.


Balance in life is key. Balance in money is equally important. Make sure you avoid focusing only on one aspect at the unintended cost of another.