Oh, the Bonus Money Dilemma

Was running around the lake with the Guy the other day when he brought up the subject of “what he was going to buy with his bonus money.” Oh, what luxury. Oh, what eye rolling. The Guy makes twice as much money as I do. He owns his place (where I also live, at a significantly subsidized rate), has a reasonable mortgage, and we live a modest lifestyle (thanks mostly to my influence).

Clearly, his question galled me, just a bit. But when I asked him all of the basic saving questions, he had decent answers, and it was clear that he felt pretty safe in his financial condition, despite the chaos around us. He has a four month emergency fund, he has some $60K in investments towards future goals of either starting a business and/or downpayment for a house. Basically he has a remote idea of those goals, and a remote idea of what they could cost, but those are not itemized and he’s not tracking his progress toward them, because: 1) he feels comfortable and 2) these goals are far off.

After reflecting – long after we completed our run – the whole episode just reinforced to me the importance and need for having a detailed financial plan and continually checking-in on where you are. Even though it can be frustrating and discouraging at times, it helps to guide your decision-making in almost every situation, from should I go out for dinner tonight to when should I retire… from where should I put my next $1 to where should I put my next $15,000.

Our whole discussion if of course, quite illustrative of lifestyle inflation as well. The Guy was in part distressed because everyone else around him was making a big purchase or at least saving towards a big purchase, and he has no need for any big purchases at the moment! What a world we live in!

It also made me realize how excited I will be to reset my financial goals post-B-school – when I actually have a higher income and more resources, and when the Guy and I will likely be combining our finances to work towards these things together!