In my experience, Financial discipline has proven to be a good thing. My sister my disagree. I am not good at predicting what she would comment on this tricky topic, but I feel her mortgage has induced a healthy financial discipline.
Looking around, most folks are not disciplined at saving for long term.
- When our income increases, our spending increases invisibly, unknowingly!
- When our income drops, we find it hard to cut spending initially, but most folks will manage to adjust and cope (unless required to cut to 1/3).
Income drop is less common than a new financial commitment like a new born or a mortgage. I have seen multiple examples where we decide to start saving substantially more every month, so as to pay down a heavy mortgage. Without a well defined purpose and motivation like this, financial discipline is rare. For most folks, It’s too “tiring” to be always conscious (“vigilant”) of what we spend on. So we end up spending on many things not worth spending on:
- buying “things” that we don’t use again
- throw-away toys
- too many enrichment programs for the kids
- “rent-like” spends like hotels, taxi
- more fast-worn-out, devaluing products. Car is the prime example. Gadgets are another.
- more short-term pleasure with a sizable total bill. Overseas vacation is the prime example. Staycation is not inferior in my view but many consumers somehow feel the novelty is worth the huge price difference.
How about saving for private uni? A double-edged sword.
- One one hand, I feel it’s unnecessary commitment and burden. 500k requires a lot of sacrifice. Not worth it.
- On the other hand, such a big commitment induces financial discipline.
- …. Overall, I feel it’s a question of degree. Discipline is healthy and constructive but too much peer pressure is not.
Compare to spare time utilization — Before UChicago MSFM, my spare time utilization rate was much lower, but I also had more family time.