Using Time Buckets to Live a Better Life
Over the weekend I read Die With Zero by Bill Perkins. As a Financial Planner, it's a complicated book – there's a lot of really meaningful ideas, but there's also some things I don't 100% agree with. Usually I find that I either fully agree with a book, or not at all, Die With Zero falls somewhere in between – it's definitely a book that has me doing some thinking.
I'll make a full review for a later date, but essentially Perkins' takes the view that most people wait too long to spend their money in retirement. As we age, we lose our health and physical ability to not only do, but enjoy experiences. A lot of people hold onto too much money, too late in life, to the point where they can't spend it on meaningful experiences. Making the months or years or decades that they worked for that money, wasted time. Although it's an impossible goal, we should each plan to die with as little money remaining as possible, but never blow through our money while we're alive.
Instead of waiting until retirement to do the things that we enjoy, we should start earlier, knowing that if we put things off for two long, we might not be able to do them at all, and if we are able to do them, it likely won't be anywhere near the capacity needed to get the full experience out of it. For example, skiing. The longer you put off planning an epic ski trip, especially into your later years, the more likely you won't be able to physically handle the full day of skiing. You'll spend a lot more time recovering between runs than you would if you did the trip when you were younger. It could still be an epic trip, but you'll feel like you missed out on it fully.
This is a point I can 100% get behind. I believe that good planning allows the money that remain in your bank account to be spent with freedom. If you've already paid your bills, and allocated funds to your future self, then spend the rest on whatever matters most to you. Good planning is finding balance between your present and future self, and ensuring that both selves are living their best life.
Bucket Lists are typically only started once someone has a countdown on their remaining time. Maybe they've come into bad health, or realized they don't have that much time left. It's a reactive measure to a situation. Instead, Perkins' suggests using Time Buckets. A proactive way to identify what you want to accomplish and do in your life, and when the optimal time for it is.
Key Takeaways:
Bucket Lists are typically reactive, Time Buckets are proactive by identifying what matters most and when the optimal time for it is.
All experiences require some amount of health, wealth and time, but each experience has its own unique blend of the three.
Instead of waiting until retirement to do what we want most, we can optimize those experience over our lives, making the most out of each one.
Start by thinking about and writing down, what you'd like to do in your lifetime. There's really no rules here, it can be anything. And at this point, forget about the cost, this part of the process is all about dreaming big, being creative, and to get an idea of what your dreams are. Anything goes.
This list will likely change in the future, just as it would have changed if you did it five years ago. But it might be things like: starting a family, running a marathon, hiking the Himalayas, building a house, starting a business, volunteering, eating at a Michelin-star restaurant, attending a Film Festival, going skiing 50 times, going to the opera, taking a cruise, attending the Super Bowl, visiting a National Park, taking your kids to Disneyland, and so on. You get the idea.
Once you have your list, draw a long horizontal line and break it up into five or ten year buckets. If this is your first time doing an exercise like this, start with ten year buckets, it's easier to break them up later. The idea here is to take your list and match them up with the bucket that makes the most sense for that activity to occur. Once you're done, it should look something like this:
When you start to think about what experiences should go into what buckets, you'll realize that each experience will need some amount of health, wealth and time. Because of that, some experiences will fit into some buckets better than others, and other experiences are much more flexible to where they can go.
For example, taking your kids to Disneyland makes more sense when they are younger than when they are adults. Eating at a Michelin-star restaurant is likely to be expensive and not dependent so much on health, so maybe your later years is a better one for that. The items that make up your list will give you a similar insight into when might be the optimal time for them to happen.
I like this exercise because it can help us put things into perspective, and ensure that we get the most out of life. We don't want to be in a position of waiting until we retire to do all of the things that we want to do during our time. It might be a very long list by that time, and there's a good chance we won't have the health to enjoy them as much as we would have if we did them when we were younger.
As I said earlier, good planning is all about finding balance and living your best life all of the time. It's something that requires some sacrifice (saving instead of spending everything today), but it shouldn't be all sacrifice. Life is meant to be enjoyed, and to do so, it requires us to the things that we enjoy most along the way.
If you're not saving or investing at all, there's no better time to start. With compound interest, finding balance between your present and future self doesn't mean 50/50, but more like 90/10. With a long time horizon, we can contribute less knowing that those contributions will work for us, allowing us to get more with less.
And if you are saving and investing, it's important to ensure that your strategy is optimized. The better your plan is, and the better your investments are optimized for your goals, the more freely you can spend the money that stays in your bank account. Giving you the freedom to allocate those funds for the experiences that matter most from your buckets along the way.
Keep doing things your future self will thank you for.
