Managing money is more of an art than a science. There is no right and wrong when it comes to managing money. It is simply a matter of finding the right balance. That means looking at the choices you have and the consequences of each so as to achieve a compromise between competing objectives. Everybody’s needs and preferences are different, so there is never a one-size-fits-all solution to a financial question or problem.

The balance between spending and saving is perhaps the most fundamental choice to be made. Saving is just deferred spending. So deciding the right balance for you between spending and saving is really nothing more than choosing the time frame in which you wish to spend your money. Savings are just money that will be spent later. The more money spent now, the less there is to spend later.

Another important balancing decision is how much money to put into lifestyle assets – such as your home, car, beach house – and how much to put into investments. Lifestyle assets are things which make life comfortable and pleasurable now. Investments grow in value and allow a much higher standard of living in the future.

Investments can be made into assets which produce income and little or no growth (such as bank deposits) or assets which produce a high level of growth and little or no income. A balance needs to be struck between income assets and growth assets so as to provide sufficient income and stability for the short term while taking advantage of the higher rate of return of growth assets for future benefit.

In retirement, balance is about making sure you have enough for each stage of retirement and making sure your own needs (which are paramount) are considered before the needs of the heirs of your estate.