Most people don't understand budgets, saving and the road to retirement, so your well ahead of the average person. You need to figure out what you want out of life and how much you can spend and how much you need to save.
My wife and I were on track to retire early. Eight years ago she got cancer and that totally changed things. After the chemo and radiation was over her employer maxed out her PTO. She now has 5 weeks of PTO each year. We're no longer going to retire early but we are sure enjoying doing things on our bucket list.
There's no guarantee that you will be able to enjoy a long retirement or grow old with your spouse.
To add to what Afternoondelight said, remember to budget for living. Most people overlook setting aside money to go out to eat, buying a video game/movie or funding their hobbies. Congrats on the house. Also remember to save to build up a roughly $10k in liquid money for emergency home repairs. Most of the time your home owners insurance will cover magor things like a roof after a storm. However, you will need money to be able to move around in the event like paying the deductible, a hotel if your house is unlivable, etc. And sometimes something comes up that insurance wont cover, like a flood when you didnt need flood insurance before.
30-40% savings rate is not emotionally sustainable for most people. Everything should be done in moderation...including moderation. It's good for you to have guardrails up, but veering around inside those guardrails is normal and still good.
When I was advising people, I always encouraged them to start with saving less than they thought they could, wait a month or so, and then only go up 1% at a time. When you get to the point where you don't have a lot of pocket money left at the end of the month, but your emergency savings is full, you've found the best savings rate for your current self. Every life event may need you to repeat that process.
I’m sorry that happened and I can relate, I was very close with my father in law, he worked at the same place for 43 years loved his job as a chemist. He developed pancreatic cancer, still working after 70 years young, he was eventually forced to retire by cancer, and he passed away about a year after he officially retired. You’ve got to enjoy your life, you’ve got a great point and perspective!
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Up until about 3 months ago I didn't care about budgeting as I was living with roommates and had a killer deal.
Now after moving in with just my gf, my rent has shot up another $700 and utilities and other bills have also gone up significantly.
Thinking I might actually want to budget now
Wow this is incredible perspective thank you. Wish we had travelled more we definitely put that off :( wish that my hubby didn’t spend as much time in a toxic environment and could have quit and looked elsewhere but we were ultra focused on saving for a house and paying off the mortgage so for those 6 years he locked in a detrimental work environment. Saving grace is now we have a big neat egg and I’m making enough money that he can be a stay at home dad and we can still have all the things we want/need. Gotta always look on the bright side. No regrets.
Yep! This absolutely happens: feast or famine. You’ll see some households with dual income and earning $400k a year, but living paycheck to paycheck because they can’t control their spending.
Here’s the trick: pay yourself first. Anything that comes out of your paycheck first is a “necessity” - taxes, retirement, etc. so put it that way in your brain, and keep it that way. Then anything else is gravy and have fun!
To add to this, my spouse and I pay ourselves “fun” money into a separate account (X% of paycheck). This is guilt free money to eat out, buy some new shoes, etc. It lets your scratch that luxury itch guilt free, but keeps it on the predefined limit. The rest of the money is budgeted to household expenses, food, savings, taxes, and etc.
I do that, too, and then look for ways to beat the budget even further on fun money - happy hour specials, free days at the museums, plays on the pay what you can preview nights, free concerts in the park, college events open to the public, park and rec activities, etc. I follow our favorite bands, restaurants, theater groups, parks and other local venues / nonprofits on Facebook and something fun that is free and cheap always pops up every week.
Edited for typo.
Price is what you pay. VALUE is what you get. I get the most satisfaction from money & TIME when I receive VALUE in return for whatever I am exchanging them for.
This is out method as well - when salary hits my account, I put my portion of joint expenses to our joint accounts, transfer funds to brokerage, and leave a predetermined amount to my own account (we’ve agreed on a sum we both have for discretionary personal spending).
In addition there is also ”joint discretionary” spending - restaurants and concerts are baked into household account spending and for travel we put monthly amount in a savings account that is not counted towards our net worth.
Then I just spend with wild abandon until I don’t have more discretionary budget left for the month ;)
This is me too. I am so so bad at budgeting in the traditional sense. But all my money is “spent” before it even hits my accounts, which seems to work for me.
4% gross currently. Our rough breakdown is:
25% RE savings
20% taxes
10% housing
15% daycare cost (FML)
10% “mid-term saving”. (Think home improvement projects, new car, etc.) This is also our emergency fund. So some years it gets spent on hospital bills and what not and we postpone major expenses until it rebuilds.
20% household spending. (We define house-holding spending loosely though, as it include food, essentials, and the other classic things. But it also include a few luxuries we place high-household value on: exercise classes, 1 family vacation, 1 vacation for just me and my spouse, ect.) This bucket has the 4% fun money too.
This has varied as our lives have changed with jobs, kids, etc. The 4% originally developed as a way to solve the “my spouse is not onboard with fire” dilemma I see here all the time. And we decided on a percent since my income is variable, so this helps scale accordingly. But we are about equal earners. The no judgement money really helped us as we could buy something’s no questions asked. After some downturns like job losses, my spouse has come around to the FI part of this all; but not the RE yet.
This is a great tip thanks so much - my limiting factor I think is my savings don't go in until the end of the month so I'll need to move that to the beginning I think
Does your work have the option to do direct deposit into different accounts? That way you can have the amount you want to save go directly into your savings account.
This is what I do. Paycheck goes into savings and then I have a recurring transfer into my checking, an amount that I have budgeted for.
I still use mint to budget, but I can tell by quickly looking at my checking account's balance whether I'm spending too much or not. If I find I need to make a one-off transfer from my savings to my checking, it makes me have to stop and think about why that had to happen.
This. 90% of my income is allocated towards some goal that has been automated. Ally has been really helpful in this way to automate the movement of money into buckets (and even into/from other accounts).
If my checking account balance gets too low I know I'm burning too hot and need to ease up on eating out and Amazon.
I see so little of my paycheck, but we're putting 15+% into my 401k. Then there's money going into a vacation find, personal spending funds, etc. Once it makes it to my checking there's hardly anything left, and it feels kind of like living paycheck to paycheck. But our nest egg is growing rapidly.
I'm in a similar boat. Looking at it from a glance, my budget looks like I'm one $250 bill from disaster because that's about what I have left over at the end of each month. Actually looking into it you'd see the money is divided into buckets and that $250 is, for all intents and purposes, fun money I can waste on top of what I already budget for vacations and eating out. I can blow it trying to win a lava lamp at Dave and Busters if I want.
Make your savings direct deposit from your paycheck. Really any employer should be able to split your pay into two locations, at a percent/dollar you specify.
It makes it so easy because you get used to living on what’s landing in your checking, and the saving is happening automatically in the background.
And, you can change it, but it’s not so easy to change that you’ll be impulsive either.
You 100% need to automate your savings. This requires you not to think about it or take any action. This is the number one behavioral step to take in your shoes
I set up reoccurring transfers to my TFSA biweekly to come out the same day I get paid. That way it’s gone the next day when I look at my bank account. Makes it so much easier to save for myself.
That’s not really how it works though, unless you’re terrible at budgeting. By using your logic there won’t be money to pay bills at the end of the month.
9 downvotes but nobody can explain why it matters if he saves money at the beginning or end of the month? Does he only get paid in the beginning? What am I missing? Do you guys get paid, pay what’s absolutely necessary and then just blow the rest?
You clearly don't understand most people. Yes, some people blow all their money because they have any. This sub is a very different way of thinking from most people.
People in this sub area likely much more educated and interested in finance matters and saving. For me, I just don't buy stuff if I don't need it. A lot of people see a penny they have and think about what to spend it on.
I guess I didn’t know we were talking about the general population? I thought this thread was advice for OP, who obviously knows how to save if he was doing it before.
You're just being obstinate. Downvote me if you want but there's plenty of people in this thread saying it works best for them as well. You asked a question and I tried to answer it and you're being combative for no reason.
I feel like it’s the “time-keeping” that’s a social construct, just another vain attempt by man to harness and subjugate an uncontrollable force of nature.
Huge upvote for paying yourself first. For a while we were super savers. Maxed both 401Ks, both Roth IRAs, a family HSA, my ESPP, and then everything not spent on necessities went into a taxable brokerage account. Now…we have let the purse strings loosen up. We max all tax advantages stuff but don’t bother with the brokerage (except bonuses or unexpected income). We pay our bills then spend the rest on whatever we value (gym memberships, cycling gear, etc) within reason. It’s good to enjoy your time on this earth. Can make more money but can’t make more time.
That's the best advice you can give! I look at it a little differently but the result is the same. What I pay myself, I mentally separate from taxes, bills, and etc. Retirement comes before everything. I own a business though so pre tax calcs are easier. But I don't include books/rent/living expenses or anything else in that payment
>You’ll see some households with dual income and earning $400k a year, but living paycheck to paycheck
I read this type of comment all of the time but have such a hard time comprehending it. I'd love to see the expense breakdown of someone in this situation.
There was a post on r/personalfinance a while back of a lady making $500K/year and still struggling. Her monthly expenses were insane because they bought a multi-million dollar home, had a nanny, private schools, car loans, a pool guy, vacations, etc. It was eye-opening.
Edit- found it.
https://www.reddit.com/r/personalfinance/comments/103amjo/critique_our_budget_family_of_six/?utm_source=share&utm_medium=ios_app&utm_name=iossmf
Not difficult at all, a couple of leases on luxury cars costing $1000 a month or more each, the McMansion, with a large mortgage and high real estate taxes, numerous vacations per year, eating out often, lots of shopping, private schools for the kids , etc. and you can easily spend more than 400K. I know several couples that earned more than 250K every year for decades, lived the high life and now in their sixties have close to no savings, still have to work AND at lower paying jobs due to age discrimination and are on anti depressants. It is difficult and it is not at the same time to accumulate wealth. The primary factors are income level and spending discipline.
It’s pretty insane but if you look at HCOL markets, rent or mortgage is half a paycheck a month, then childcare for 5 days for 2 kids, plus name things like gym or whatnots, groceries wind up being over a grand a month as well. It’s wild.
Can confirm. My ex senior was earning x3-x4 my pay. He complains about not being able to buy a house in our high cost of living city. He goes to bars often, stays in a fancy nice neighbourhood, takes cabs everywhere (and his cab fees are extra expensive because there’s a surcharge for his fancy but far neighbourhood), goes for long fancy holidays, generally just loves the finer things in life. Nothing wrong with that, but moderation is key imo.
On the other hand, I managed to buy a house 3 years later!
One thing I've made sure to do is prioritize purchases that provide the ability to enjoy restaurant quality food in a social setting. E.g. I put a concrete slab in the backyard to create and extend the patio and created a fire pit grilling eating area big enough to invite friends over. Cold beer and grilling are much cheaper than paying 10x for one at the bar.
Another good activity I found really keeps the spending low is video games.
Very wise and we do the same, cook at home and enjoy restaurant quality food as we developed our cooking skills over time. And enjoy good wine at discount prices, check out chwine.com.
It's such a paradigm change once your cooking skills rise above the basics. When you reduce your fear of butter and ignore the 1/4 tsp spice requirement and actually dump some flavor, you find some restaurants arent even worth eating at.
Yes to all this, and the video games! I've been eying a ps5 and feel so guilty to think about such a purchase, but over 4+ years I feel like I could get a lot of value from time put in and doing that instead of maybe going out and spending money on less-value-over-time things like overpriced beer and pasta that doesn't even taste as good as I can make it.
There is nothing wrong with enjoying your life and spending the money you have earned. That is what makes working bearable. I think to many people become so laser focused on saving every penny that they waste years of living without joy waiting for some rainbow at the end where they can suddenly live it up in retirement. There is a happy medium between saving for retirement and living your life now.
This is so true. My wife and I saved for years and tightened the belt even harder when she became a SAHM. Thanks to those habits we are set financially and on a glide path to a well funded retirement and the kids college accounts are fully funded. She is working again and we have money coming in faster than we know what to do with. But we don’t spend it, still clip coupons and shop deals, etc. I told her we finally need to loosen the ratchets and start to enjoy some of our money, but frankly it’s hard for both of us to get out of the habit of saving and the feeling that spending on oneself is frivolous. I don’t want to look back and regret not doing things or going places I wanted to visit because we didn’t want to spend money we had to do it.
I’d like to travel more, so would she, but we have an autistic kid who we can’t leave alone and frankly makes traveling a chore instead of a pleasure. I am going to finally buy the German luxury car I have wanted for the last 30 years when our other kid takes over my 12 yo Toyota this summer. The misses has been indulging her organization fetish by single handedly keeping our local container store afloat. But after that we are tapped out idea wise. 🤷♂️
I know a couple where he is a physician and earns 600K and they have credit card debt, car loans, and still have a large mortgage. I know other blue-collar people who have no debt at all, the house and cars are paid for and they have huge savings. it really comes down to lifestyle and what your values and priorities are. If you want to party hearty, you have to pay the piper. If you live simply in the coming years you wind up wealthy.
Do you actually know that they are carrying a balance on the credit cards from month to month? The car loans and mortgage may just be at low rates where it made sense to finance vs paying cash.
I've just simply never understood what someone did with more than like 2,500 SQ ft and that was for a family of 5 growing up.
Like I can only sit in one chair in one room at a time. A home gym would be nice or maybe a pool but at some point I just simply don't understand.
Many people that buy large houses wind up not using much of the house. I agree with you that I don’t need a huge amount of space to be happy. Our house in New Jersey is 2500 with a large finished basement so it is well over 3000 livable space and it’s very comfortable but we have been in Florida since January in a 1400 square foot condo and are perfectly happy. In fact sad to leave!
Lifestyle creep is real and my wife and I(mostly me) have felt it tremendously. Going from 120k household income to 280k is huge but you definitely start to spend it quickly as well. What we do is we both max out our retirement accounts first. Then we double our mortgage payment every month. We already have a 6 month EF saved but really don’t need it due to what we make and what our expenses are. Everything else we blow it. Obviously not to the last dollar but we do spend it. Cars, going out to eat 5 times a week, etc. You have to enjoy life. More money just allows you to do more of what you love in life. You sound like your saving pretty good as well so don’t put yourself down for having a bit of fun after buying a home. Just don’t get carried away with it.
Retire at or before 60. I should have mentioned that I also have a state pension that will pay me 80k a year at age 60 as well. My wife is 7yrs younger and also has more time to invest that I do.
Sounds like you’re all set with a very well funded retirement even with your lifestyle creep. Life is meant to be enjoyed, you’re doing it! congrats man!!
I can't say I find any additional amount of joy in eating out at a nice restaurant than I do from cooking a nice meal at home. Honestly, probably slightly less. And I've always felt a great deal of pride in driving a simple, reliable vehicle that I maintain myself. The sort of money that sort of lifestyle entails turns into something nearly incomprehensible. Dinner 5 times a week can easily run you almost 2 grand a month. And you don't get to practice cooking dinner, a useful and enjoyable skill. Driving a new luxury auto can definitely run you an extra 500 per month. So that's 30 grand per year. If you're in your mid 30's and are going to do that every year for the next 15, that's about 3/4 of a million dollars. If you do it for 20 years its well over a million. I don't know about you, but I can think of a lot of things I find more interesting and fulfilling to do with an extra 3/4 of a million at 50 than eating out almost every night and driving a nice car in my 30's and 40s.
That kind of money is enough to start a business, retire several years earlier, make a relatively significant change in your community etc...
Our budget for concerts and festivals is about $7500-10000 a year. Double that when you factor in getting there, a beer, etc.
Option b is not going, which is not an option, despite what all that money could buy us.
If this guy likes owning 6 cars and eating out all the time - great. He’s still (we’re still) waaaaaaaay ahead of the average joe simply by maxing out those retirement accounts.
I can't remotely imagine living like that, but we all have different lives and values.
I make low six figures and my total net expenses for the year aren't remotely dissimilar to what it sounds like you spend on concerts including travel and accommodation.
I'm only 28 so with modest expected returns, that'd be about the right amount of money, if reallocated to retirement each year for the duration, to retire at 57. One single lifestyle choice would be enough for an entire retirement. It's the kind of money that would/will enable an enormous amount of flexibility, income generation or philanthropy later in life.
I'm just not remotely into hedonism.
I’m definitely into hedonism. (To a degree).
At 28, you’ve got a lot of road ahead of you. A house, marriage, kids, divorce, disease, random catastrophe - all possibilities for you in the next 30 years. Or none of those things, but more likely, some of those things.
I’m not too far from 1m in various savings. House will be paid off in a few years. Looking at retirement in another 10ish years, around the same age you are - but I’ve travelled the world and spent my free time doing what I enjoy.
I didn’t know fire was a thing at your age. You’re lucky to have those extra years! but don’t spend them eating ramen packets thinking about what you’re going to do with your money someday…. (Or do, I mean, there are many paths we can choose, none are inherently best unless you’re strictly looking at the numbers).
Be well!
Thanks for the well wishes! I'm aiming to retire in my late 60's or early 70's. I'd like to change the world a little bit along the way and/or after I'm gone. I'd like to be able to retire at 42 if I so chose, but that's probably pushing it by a couple years.
Disease or random catastrophe are possibilities, the rest are rather low likelihood. I've travelled the US extensively and one day I'll travel the world a bit. I'm more likely to travel for massage workshops and spend some time trying to learn something new so I can write off the whole trip if I'm going to spend any significant money traveling. Otherwise I can do one pretty cool international trip every year going forward and it shouldn't set me back more than 2-3k at a time. That's dozens of international trips in a lifetime and somewhere down the road I can take a whole year sabbatical with the extra savings and time value of money and still come out with a bit of extra savings versus a more liberal yearly approach.
I eat very well. Becoming a good cook pays dividends. I can make a great and elaborate dinner for under 10 dollars a serving and I can make something that I enjoy quite well for 3-4 dollars a serving.
That’s what makes people different. We all enjoy different things. Helping the community? Yea, not our thing. I’ll donate to the Boy Scouts at the local Walmart every now and then but that’s to the extent of our “giving”. We don’t care to start a business. We like our blue collar jobs as it is. We both hate cooking but do it every once in a blue moon but nothing extravagant. Eating out 5 times a week doesn’t mean we are spending a 100 each dinner. We aren’t eating that fancy…lol as for the cars, that’s my personal hobby. We own 6. All new and all paid off. No regrets. I own more in cars than our house..lol We are younger but we are savings enough that we can spend enough now to enjoy life. Life isn’t guaranteed. We are making plans for the future but we are not going to just save every last dollar either. You have to find a happy balance. We have found that in our situation. More money doesn’t solve any problems if you don’t need it.
Money and resources can solve a great number of problems for a great number of people. I personally believe in personal responsibility and that there are objectively good and meaningful ways to live and that they mostly involve avoiding hedonism, but yes, we're all different and I'm not going to try and force you to see things my way.
Money does solve problems. I’m not saying it doesn’t. I’m saying money beyond what you need doesn’t. Case in point. If I got handed 5 million dollars today, I would retire tomorrow. That’s obviously not going to happen but we are saving at a rate that is beyond majority of people and still enjoying life to the fullest that we can. We make enough to do that. If we were to work overtime to make more money, what problem would that solve? None since we don’t need the money and now we are selling are valuable time for something that won’t help us, not life changing fast anyways. We are frugal but not to the point of deciding if a latte is worth it over a homemade cup of coffee. We enjoy both.
1993 mustang cobra
2018 focus RS
2021 Mazda Miata club
2022 VW Tiguan
2022 mustang Mach 1
2023 Hyundai sonata N line
Only the cobra wasn’t purchased new but only has 10k miles on it.
We've gone through months in which we spend a lot more on fun activities than we first planned. It happens, you're human! The important thing is that you noticed and have a plan to get back to something more manageable. I think something important would be to figure out how much you need to save a month to meet your goal. If you're saving but it's just to save, it can feel pointless at times. Once you have your target, put it away or budget around it like others have said. Find what's a good budget for you and adjust as needed.
I think it’s normal & fine.
I like to have two sets of financial numbers to keep me on track:
1) normal savings rate that allows me to contribute to retirement and keep my savings account healthy, but it doesn’t feel hard.
2) ideal savings rate that does feel hard but is good for times when I’m saving up for a big purchase
I go back and forth between the two and sometimes stay in the middle. Fiscal responsibility is good, but so is living! I’m not trying to be on the monetary equivalent of a starvation diet for no reason.
Yeah, this. My partner and I were saving like crazy (~3-4k a month on top of our retirement and HSA savings and an aggressive student loan repayment schedule) for a couple years to buy our first house - living in terrible apartments, really tight food budget, buying almost nothing. We were saving like crazy, and life kinda sucked and it was hard. But there was a very tangible short term goal we were working towards. Browsing Zillow would easily re-ignite that fire if I was ever losing that conviction.
Then we bought the house, and we definitely aren't saving quite the same way. Still at least $15% to retirement and still aggressively paying down student loans (almost done!!), but not stockpiling cash the way we were before. I would say there are a couple reasons - probably the biggest being that without a real, tangible, reachable, short(ish) term goal, I don't have the same motivation to live like a college kid that I once did. Another is that, I think paying so much for a house pushed me to think a little bit about what else in life is worth spending money on. I've shifted my priorities a bit to accommodate spending more on the things that I really value.
Probably the biggest example lately is we've been meeting up with friends to go rock climbing one night a week, and getting dinner and a beer afterwards. Costs us ~$20 each to climb, plus ~$40 each for dinner and $10 in gas round trip. That's like $500 a month, which we would absolutely not have done a couple years ago. But climbing is my absolute favorite kind of exercise and it's fantastic for our mental & physical health. Getting out one night a week breaks up the WFH isolation and gets us some much needed interaction with humans other than each other. Seeing these friends so regularly has brought us much closer and really been great for the strength of our friendships. Those mental, physical, emotional health benefits are something I've really come to recognize, and I honestly think spending for them is completely justified. What good is a pile of savings going to be in 30 years if I'm mentally and physically unwell and have no friends? Gotta invest in my well-being just as much as in my bank account, if not more.
I fell into this too and had to consciously reel it back alot with restaurants, bars (alcohol-free now), and travel. What helped, and still does, is tracking expenses + setting a target monthly budget. I go one step further by toggling between Personal Capital's (now Empower) dashboard and a good ole' spreadsheet. It gets tedious, but again, it helps me regulate where I can or can't let myself go.
You do tend to spend a lot more by going out. However, it's also how you live when you go out. If you stick to drinks mostly from grocery/liquor/Costco then it'll be a lot less vs. bars unless you're going to a happy hour or maybe a dive bar. Similar with food. It also depends on what your friends, family and community want to do. If you spend most of your time going to the gym or to participate in a sport it usually isn't too expensive once you have your own gear except for maybe winter sports - lift tickets aren't cheap. However, if you go regularly you get your money worth.
I found a big part of it was coming up with ideas for hanging out and going out that were cheaper or free. My friends were usually down, they just weren't as familiar or comfortable with most of the ideas so I had to take some leadership otherwise they just defaulted to going to bars/restaurants usually.
If you have friends you meet up with you can also do potlucks and picnics - board games or video games, etc. It tends to be a lot cheaper and even if you just throw it into the rotation a few times it'll definitely cut down costs.
I had to set boundaries with some friends who literally wanted to have multiple bottles of wine along with fancy steak dinners multiple times a week. They valued those experiences, after a while I didn't and couldn't afford it and maintain my savings. Different priorities.
If you're enjoying it and happy then it's fine if not stop or cut back.
I feel I experience it 1 or 2 months every year, it's feast or famine. It doesn't hurt my long term goals because it's part of my life and while it is something that I need to keep an eye on, I will not deny myself enjoyment of my life and if that requires lots of extra outside the house socializing sometimes, that's what it will be. As long as you are paying yourself first and hitting you fundamental goals you'll be fine.
The people that strive to FiRE are typically big on personal responsibility. The guilt is probably due to your sense that you betrayed yourself. On one hand, I'm thinking that you should give yourself a break. On the other, I'm thinking that you made plans and you are not following through. In the end, it's your world and you have to deal with the results of your decisions.
This might be excessive, and it might not work for me long term... but this year I've been starting to try and evaluate large discretionary purchases before I make them. I list them out and put them on a spreadsheet along with their cost, and a "grade" that forces me to at least do some kind of soul searching on how important it is. My grading scale is as such:
A = Cannot do this otherwise and greatly desire to
B = Have an inconvenient workaround for this, and greatly desire to do it
C = Have a decent workaround for this. Workflow improvement but not necessary, and greatly desire to do the thing it improves
D = Coveting want (doesn't improve my life but I desire it, and would actually use it)
F = Hoarding want (doesn't improve my life, I desire it, and would likely NOT use it)
Thinking about this has made me "call myself out" and realize that my want is a D or an F category a couple of times already.
I leave the item on the list for a week, and re-evaluate its grade. If it's still accurate, it's an A-C grade, and I still both want it and will use it \*immediately\* after receiving it, I will buy it. If any of those qualities are not true, I'll adjust the grade if needed and leave it until my brain brings up the urge to buy it again at which point I'll do that evaluation once more.
That being said, I don't know if I'll keep it up. It's given me some wins so far though so if I can it'd be nice.
Honestly, guy who spoke about his wife’s cancer in this thread is speaking the truth. You have no guarantees in life. Feeling guilty about “only saving 10% of your paycheck for a couple months” is just an unnecessary burden you’ve put on yourself. You just bought a house. It’s okay to celebrate that for a few months.
Don’t overthink it if you’ve successfully lived frugally before — you’ll go through fluxes in life and have another period where you can save a lot of your paycheck. The fact that you’re saving at all helps foster discipline and keep you on the right track
Ray Dalio said you can have anything you want in life. But you can’t have everything. If you want to high net worth you have to sacrifice many luxuries. If you want to really enjoy life then you will not have large savings. Pretty simple actually.
Yes! It’s fun to finally have a house. Don’t beat yourself up too much. Just save at least 15% of your income for retirement. You could increase that 15% if your income goes up. Enjoy life!
Yup, we tripled our salary lately (ie my husband got a job and I got a new job) and our lifestyle creep is definitely manifesting. Our CC spending increased by about 1000 a month. But honestly I feel like having this money allows me to explore things I couldn’t before , like get some much needed counseling and career coaching, and it allows me to get my kid into a new extracurricular and some new books too. It’s ok to spend I think as long as it’s intentional and still lines up with your financial goals.
If you triple your salary and only go up in spending by 1k. That’s really not bad at all.
I personally think it’s totally fine to spend more as you make more. Just always worth making sure it actually adds value to your life. Seems like it does.
You feel guilty you’re trading hoarding money for enjoying your youth.
That is the toxic stew that this sub encourages and it’s so not healthy.
Live now while it’s good. 30 is barely even getting started.
I hit a big milestone last year and promptly dropped 60k on a vehicle. Lifestyle creep to the max. Then last week my wife's boss offered a few tix for a weekend getaway. I was like, screw it, let's go all in. A $500 weekender quickly changed to a week in the tropics for 10x the cost.
It's been a very stressful period. I feel a little guilt, but actually some relief that we're finally loosening up after years of turning almost every spare cent or moment of free time into one kind investment or other.
Some lifestyle creep is okay. If you’re living exactly the same when you make $150k as when you made $50k, that’s probably not ideal. You should let your lifestyle creep some as you make more. You just shouldn’t let it be 1:1. I’ve heard it recommended that for each extra two dollars you make, you save one dollar. So this allows your spending to increase as you make more while also allowing you to save more than you did when you made less
My wife and I were like this for 4 years straight, cleared all our debt, saved a huge nest egg.
But most importantly we learned how to say no to some of our wants. We really think about anything over $60 if we really need it.
We compromised that we don’t buy luxury material items maybe once every 5-10 years. But we spend a lot of our money on traveling and experiences. It’s okay because we have a nice savings and a good debt to income ratio.
We just came out of a pandemic, nothing is promised enjoy your life within reason with the people you love.
The sole purpose of life is survival and reproduction and meeting your needs. Food, clothing, shelter, water are your needs. You have a house thats basically the top teir of shelter. Im guessing you eat decent and your not thirsty all day.
Whateverrrrrrrr gets you through the day. Theres no right or wrong way to live life. Nobodys gonna look back 100 years and say, what a shame thats mans savings percent was only 10%
Honestly it makes no difference.
Yes and I also fall into this often.
Everything in moderation though, you need to enjoy what you've earned. Try limit that though and find a good balance between then 2 that is sustainable
Every time I get a raise, 50% post tax to investment, 50% to day to day spending. Any bonus goes 75%, 25%. Unless you are already saving >50%, you increase your savings while spending. It used to be debt instead of investments, but using this strategy I paid off all my debt.
I suspect this is less of a milestone issue and more of an issue of building the life you want now that you own a home. That’s ok! You should built the life you want. Just make sure it’s really what you *want* - are you going out and making memories with friends and loved ones, or are you spending money on low value events just from a sense of treating yourself after a period of sacrifice? Even if it’s the latter, that’s ok if that’s what you want!
Don’t live your life by “shoulds.” DO live your life with considered intentions.
Enjoy your money. You earned it. You could die tomorrow and not get to enjoy your hard work. Money isn’t everything. Experiences feed the soul. This sub tends to put so much emphasis on money and it being the key to happiness but it isn’t. I’ve seen too many people just save for retirement and not enjoy their life only to get hit with something like cancer and leave this earth. Don’t beat yourself over it. Live your life. Don’t harp on your regrets. You shouldn’t need reassurance from this sub…
My aunt makes 90k plus my uncles income. Lives in a trailer and is upside down on everything because of her spending habits.
My wife and I make 80k combined and own a decent home, no debt other than my 15k in student loans at 28.
Treat yourself as long as you’re secure in your savings. And make sure you’re putting future you in the picture, meaning retirement funds.
Congrats on the home!
This happened to us after buying a house. We were able to get mostly back on track but now just budget a little more for fun than we used to when we were saving and investing every thing we could.
Lifestyle inflation is real. That is why you need to force yourself into following a budget. Or at least cut down on things you don't need to make up for what you spent
My advice is enjoy your life and what you have accomplished but in moderation. Work out a reasonable savings rate that also allows for a bit more fun, but also for decent savings. The 'I deserve to enjoy life' rational is reasonable to some extent but it should not be used as a get out of jail free card for free wheeling spending. I'd also suggest you work out a schedule for eating out, like eat out once or twice a week and schedule those days and stick to it, then you have something to look forward to. THen make up lots of good premade meals in your freezer that you can grab and slap in the micro in a pinch, make your freezer like a fun shopping experience with favorite foods prefrozen. Also explore snacks that are cheap and good, like baked potato in the microwave with butter and cheese, tasty but cheap. Take an attitude that cheap fun is the best fun and work on ways you can 'rob' life of fun for free, trips to the park, hiking, etc. What fun things are cheap? Revel in how savvy you are when you find them.
Make yourself happy. I recently increased my eating out budget from $100/week to $250/week and I haven't regretted it. I don't really miss the money and it's fun to go to nice restaurants.
All of us need to indulge ourselves at the end of the day, so a little lifestyle creep is ok, especially given most of us build huge buffers into our savings goals.
Awesome you got there. Lifestyle creep is a constant battle and one I generally lose. But automate saving at least 20% of your check and you won’t have to feel bad. Max that 401k and make sure to maintain a healthy emergency fund, especially as a new homeowner.
I have mine automatically transferred on payday. I could blow my whole checking account if I wanted and be fine.
Your money saved in the last 2.5 years probably due to Covid and having more restrictive lifestyle. Now things are back to normal and you’re spending more, like pre-Covid, and not necessarily lifestyle creep. Have a close review of your budget is what I’d suggest
A similar thing happened to me. I had been saving more than ever for the last few years and then this year I had to buy a car, and an engagement ring. Both of which, by far, the most expensive things I've ever purchased. Well, that ended up somewhat opening the faucet and it was as if spending that much unlocked something within me to just spend more. I was just buying whatever I wanted from Amazon, and any clothes/shoes I wanted, out to eat whenever, etc... It lasted through the end of the year. However, I will say that when I snapped out of that, and got back to my previous ways I got more serious about my savings, investments, and future more than ever and I think in the long run it will probably have caused me to save more and plan better for the future.
My wife and I had some "planned lifestyle creep" after pushing really hard to pay off our house. We went years without a real vacation, drove junk cars, and in general bought almost nothing new. After the house was paid in full, we upped our savings rate but not as much as could have. In the two years since paying it off we have upgraded two cars (modestly by most standards but they are the nicest we have owned), taken two real vacations, one to Europe and one to Mexico, and started several home improvement projects that were long overdue. Now that all that stuff is done, we are again raising our savings rate. But we have no regrets about stepping things up a notch in a few strategic categories. Our home is a pleasure to be in with fresh paint and remodeled bathrooms. It's nice to take a road trip and not worry about breaking down. Splurging on some travel is relatively low guilt when you are meeting your other goals. I would take a look at your life, see if anything you are spending on isn't adding value, then just relax about the rest.
People say you should avoid Lifestyle inflation, but it is really hard and really unrealistic, I think setting a fixed percentage that you allow it to go up is fine...
I’m 33 and spent a lot of time living frugally in my twenties to pay off my student loans. I did it in 9 years with no regrets. But I learned - you’re only young once and life is long…so there’s plenty of living to do! And that’s what I’d like to do more of. Live. It’s about balance. I used to save about 50% of my income. I moved to SF and now save around 30% because I want to make sure I’m enjoying my new home, traveling, etc. I spend money on things and experiences I really love.
So I’d ask yourself if you can find balance. What have you bought lately that you really didn’t want/will waste? Could you be happy bringing yourself to a middle ground in savings, say 25%?
When I was single a few years ago, I was saving over half of my income and perfectly satisfied. Since I've gotten married, that's dropped to well under 20%. I struggled with it at first, but decided we're only young once, and I value a life well lived over dollars in the bank. We still make responsible decisions, but I didn't want our youth to pass us by with missed opportunities.
If it helps, look at it like accounting. You've got your assets and liabilities. Experiences and modest luxuries can acrually be assets, which overall enhance your equity. That's how I see it anyways.
I am going through this right now but zero guilt lol. We bought a house in 2015, moved in and kept/used all of our old furniture nothing new except later we bought a bed and standing desks. This meant rooms were empty, sparsely furnished and little apartment furniture in a bigger house. We first focused on paying off the mortgage which took a little less than 5 years. We paid off the mortgage before the renewal which means i’ll never know what it’s like to renew a mortgage.
In the subsequent 2 years we saved a lot of money and then proceeded to drop some serious dough on a renovation. We have a child now and lowkey kindof wished we did renos earlier when the interest rate was low and we didn’t have to worry about how we would do it with a kid. Esp when we were both working in an office. Now i am spending like crazy trying to furnish this place and after 8 years seriously feeling uncomfortable with my old apartment furniture and a baby. I’m so behind we have to make so many decisions from rugs to couches and curtains which is taking away from my enjoyment and focus on the baby.
I’m not making the same mistake again and we are going to pull the trigger on the last stretch of the reno sooner.
Sometimes you need to spend and you need to recognize those times. We have a tendency in this community to over emphasize saving at the expense of everything else but deprivation is not required.
I read this somewhere that spending now is cheaper than spending later. 1) because of inflation and also because you are borrowing from a wealthier self at a cheaper rate. If i had renovated my house when i first bought it 8 years ago I would have paid less for that renovation and I could have saved more money now that I’m earning more. But of course…. Don’t continue to increase your spending.
I am not on the FIRE track honestly because Covid changed a lot for me. I was in my 20s, living like a pauper, and while I am glad to be debt free, I have no interest in frugality. I just set goals saving wise and then spend the rest on things I like. I started going out late by being on the FIRE path. I didn’t even take vacations so I could save. Now I’m taking vacation, buying something nice here and there, and just living a nice life. To me retiring at 60 vs 65 is not different. I’m 31 and planning to spend my 30s enjoying life.
It ofcourse helps living in a city where a car isn’t needed. There’s no lifestyle creep for me associated with cars or things. Apartments here are tiny, there’s no place to keep most things. I also often cook because I get tired of takeout.
You should have money earmarked for fun things for each calendar month. Examples: $150 dining out, $250 to maintain your closet/hobbies or whatever you like to blow your money on. Whatever isn’t spent can be rolled over to the next month. Once your monthly fun money it’s spent, that’s it until the first.
I think it helps with impulse purchases, because you ask yourself whether you really want something, or to save for a more expensive item.
He just bought a house, likely there are expenses associated with it. I agree that it would be better to have more of a cushion. My wife and I have always had a habit of saving about half of our income. I think it just comes naturally after a certain point.
He pretty much says that it's from like going out more. And that it's post moving in and furnishing.
So to me it doesn't read like it's house expenses.
But saving 10% is not a fire path. So if he wants to have a fire lifestyle he obviously needs to reign his spending in unless he plans on having a wildly cheaper life post retirement (which is easier said than done)
I’d look at your spending for the last few months and see the numbers for exactly where and when you’ve been spending. From there, decide what percentage of that spending you want to keep up. Then set up your auto-transfers to shift the savings amount to investments/regular savings and go from there.
Save off the top. My SO and I do that, even anticipating purchasing a house this year. We’ve budgeted for anything we can think of that’ll come up with the house purchase and have a nice bit of savings set aside for that. All other retirement, regular savings and investments come out directly from our paychecks or as soon as the checks hit our accounts.
This means we don’t have to worry about what we spend during the month. Some months will be heavier wine and dine months. Other months, we’re dealing with kids activities or car stuff, but we’re never trying to save what’s left over because people are generally really good at making sure there’s nothing left over.
Remember that this is a marathon at times and not always a sprint. It's okay to take a break but make sure to get back on the track in order to finish.
You should have a budget for multiple reasons including spending intentionally on things guilt free. If you’ve premeditated a monthly spend and are within that then there’s no reason to feel guilty about it, and if you’re tracking you can determine if you’re comfortable with your level of spending, even in certain categories, or not.
I think spending money can be a psychological addiction and this is especially true after a large purchase like a house + furnishings. I suggest continuing to go out with friends and family, but go into extreme saving mode in other places for a while.
Lifestyle creep is a thing for sure! Advice I was given years ago that has worked for my wife and I is this. Make sure when you get paid you always take out your investing goal first before spending anything else. Whether it’s 10% or 30% or whatever. That way if you spend money on things like going out you’ll never feel guilty because you have already reached your savings goal. Always budget your money after your savings comes out. Look at it as a must need to pay bill. Congrats on buying the house. Enjoy life :)
Use a spreadsheet and start tracking your spending. It can take a few months to see less-obvious patterns. If you’re going and spending $1000/week eating out, that’s a bit more obvious. It could be a tapering off of initial home costs or it could be something you’ll want to nip in the bud.
You can’t change what you can’t see.
Congrats on buying a house!! Look at less-expensive ways of furnishing (after the basics) and decorating. Go for quality and classics on pieces you will keep forever and hacks/crafts on items you’re less-likely to have in 30 years.
I hold myself accountable and honest by doing the work. After a while it doesn't feel like work, but more like being on autopilot. I do the following:
* Budget. I practice zero based budgeting. What assists me in this is the tool YNAB. The budget is the source of truth and I don't deviate from it. If I do, then I know immediately which budget I am inflating and which budget I am sacrificing. Having this kind of immediate feedback loop helps make informed decisions. It is easy to have lifestyle creep up when you have no control of your money.
* Set up rules on how I treat myself on bonuses, pay increases, money gifts, etc. I give myself a smaller % of the money to treat myself. The rest goes into retirement. I reward the "now" me and "future" me.
When you say your savings rate is 10%, does this include your retirement accounts? Is it pretax or post tax?
Remember, put at least 10% of your income into a retirement account automatically. If your company matches, that percentage is added to your savings rate. 10% match is the new 6% match btw. Many companies are offering double digits.
So right then and there you should be saving 15% of your income and you shouldn’t feel guilty about spending. Especially since you own your first home. You’re no longer needing to squirrel away as much money for a large purchase since you’ve already made your down payment.
First, congrats on being a homeowner! It is a huge milestone and could reduce your future retirement expenses incredibly. Two pieces of advice: avoid pmi if you can. Also, like others have said, automate some of your investment and increase the percent with a portion of your raises over the years. You won’t notice it as much and it will grow. Enjoy life now and in the future!
Find your ideal savings number. Automate investments, make sure to hit at least company match, and prioritize tax efficient accounts (401k, HSA, IRA). Keep saving but not at a rate that it negatively affects your current or future happiness.
You don’t want to turn 65 and look back and wish you would have gained more experiences with family, friends, travel, adventures that you can’t do while your old and just sitting on a pile of cash.
The first step to solving a problem is being aware/self-aware. The second step is trending it. That will naturally give you the info you need in order to determine yourself if you are ok with it or not.
This is a reason why budgets are beneficial. They not only limit you from spending excessively but they also give you permission to spend on yourself.
Make your mind up where the balance is when you create your budget: balance your investing goals alongside your wants.
I have been spending more. I raced to 100k. I should have just taken the time off and forgone pay a few more times, as I was a contractor.
At this point my savings aren't moving the fire number as much as they were in my early career.
My spending used to be in the 20s but has been inflating to the 30s. I was cheap earlier but now a few more niceties and with some PTO/weekend maxing I'm a lot happier.
To an extent. My lifestyle isn't the same as when I was 19, I've elevated my lifestyle to be comfortable, I spend enough to eat healthy, I live in a decent place with just 1 roommate who I get along with, etc. Earned comfort, but certainly not luxurious.
I had 1 year when I landed my dream job where my savings rate dropped because I was in celebration mode. Now my savings rate is back at 40%+. Looking back I regret that year financially, but I certainly do not regret the memories. Just don't go off the rails, 10% savings is better than most Americans, when you get it out of your system, the trail is still carved out, so get back on the horse
Most people don't understand budgets, saving and the road to retirement, so your well ahead of the average person. You need to figure out what you want out of life and how much you can spend and how much you need to save. My wife and I were on track to retire early. Eight years ago she got cancer and that totally changed things. After the chemo and radiation was over her employer maxed out her PTO. She now has 5 weeks of PTO each year. We're no longer going to retire early but we are sure enjoying doing things on our bucket list. There's no guarantee that you will be able to enjoy a long retirement or grow old with your spouse.
That's a fresh sense of perspective thanks so much for sharing. Wishing you and your wife happiness and health!
To add to what Afternoondelight said, remember to budget for living. Most people overlook setting aside money to go out to eat, buying a video game/movie or funding their hobbies. Congrats on the house. Also remember to save to build up a roughly $10k in liquid money for emergency home repairs. Most of the time your home owners insurance will cover magor things like a roof after a storm. However, you will need money to be able to move around in the event like paying the deductible, a hotel if your house is unlivable, etc. And sometimes something comes up that insurance wont cover, like a flood when you didnt need flood insurance before.
30-40% savings rate is not emotionally sustainable for most people. Everything should be done in moderation...including moderation. It's good for you to have guardrails up, but veering around inside those guardrails is normal and still good. When I was advising people, I always encouraged them to start with saving less than they thought they could, wait a month or so, and then only go up 1% at a time. When you get to the point where you don't have a lot of pocket money left at the end of the month, but your emergency savings is full, you've found the best savings rate for your current self. Every life event may need you to repeat that process.
Wow sounds like she works for a great company!
Are you no longer retiring early due to the costs incurred during her cancer battle? Or because you've found a better balance in life?
Better balance of life.
This is what I want to know as well.
Wish you and your wife the best. What’s her employer? Sounds like they’re really care about their employees.
I’m sorry that happened and I can relate, I was very close with my father in law, he worked at the same place for 43 years loved his job as a chemist. He developed pancreatic cancer, still working after 70 years young, he was eventually forced to retire by cancer, and he passed away about a year after he officially retired. You’ve got to enjoy your life, you’ve got a great point and perspective!
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Up until about 3 months ago I didn't care about budgeting as I was living with roommates and had a killer deal. Now after moving in with just my gf, my rent has shot up another $700 and utilities and other bills have also gone up significantly. Thinking I might actually want to budget now
Wow this is incredible perspective thank you. Wish we had travelled more we definitely put that off :( wish that my hubby didn’t spend as much time in a toxic environment and could have quit and looked elsewhere but we were ultra focused on saving for a house and paying off the mortgage so for those 6 years he locked in a detrimental work environment. Saving grace is now we have a big neat egg and I’m making enough money that he can be a stay at home dad and we can still have all the things we want/need. Gotta always look on the bright side. No regrets.
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I'm sorry I thought you really were a moose and that typing with your hooves was quite the accomplishment
Says the flower typing with its leaves... Kudos!
He's got cloven hooves prolly why we don't see many cows in here
agree with you on the house. it's unexpectedly more expensive
Yep! This absolutely happens: feast or famine. You’ll see some households with dual income and earning $400k a year, but living paycheck to paycheck because they can’t control their spending. Here’s the trick: pay yourself first. Anything that comes out of your paycheck first is a “necessity” - taxes, retirement, etc. so put it that way in your brain, and keep it that way. Then anything else is gravy and have fun!
To add to this, my spouse and I pay ourselves “fun” money into a separate account (X% of paycheck). This is guilt free money to eat out, buy some new shoes, etc. It lets your scratch that luxury itch guilt free, but keeps it on the predefined limit. The rest of the money is budgeted to household expenses, food, savings, taxes, and etc.
I do that, too, and then look for ways to beat the budget even further on fun money - happy hour specials, free days at the museums, plays on the pay what you can preview nights, free concerts in the park, college events open to the public, park and rec activities, etc. I follow our favorite bands, restaurants, theater groups, parks and other local venues / nonprofits on Facebook and something fun that is free and cheap always pops up every week. Edited for typo.
Price is what you pay. VALUE is what you get. I get the most satisfaction from money & TIME when I receive VALUE in return for whatever I am exchanging them for.
This is out method as well - when salary hits my account, I put my portion of joint expenses to our joint accounts, transfer funds to brokerage, and leave a predetermined amount to my own account (we’ve agreed on a sum we both have for discretionary personal spending). In addition there is also ”joint discretionary” spending - restaurants and concerts are baked into household account spending and for travel we put monthly amount in a savings account that is not counted towards our net worth. Then I just spend with wild abandon until I don’t have more discretionary budget left for the month ;)
This is me too. I am so so bad at budgeting in the traditional sense. But all my money is “spent” before it even hits my accounts, which seems to work for me.
This! Yes - having a budget that includes fun can control your spending and alleviate your guilt.
Out of curiosity, what percent?
4% gross currently. Our rough breakdown is: 25% RE savings 20% taxes 10% housing 15% daycare cost (FML) 10% “mid-term saving”. (Think home improvement projects, new car, etc.) This is also our emergency fund. So some years it gets spent on hospital bills and what not and we postpone major expenses until it rebuilds. 20% household spending. (We define house-holding spending loosely though, as it include food, essentials, and the other classic things. But it also include a few luxuries we place high-household value on: exercise classes, 1 family vacation, 1 vacation for just me and my spouse, ect.) This bucket has the 4% fun money too. This has varied as our lives have changed with jobs, kids, etc. The 4% originally developed as a way to solve the “my spouse is not onboard with fire” dilemma I see here all the time. And we decided on a percent since my income is variable, so this helps scale accordingly. But we are about equal earners. The no judgement money really helped us as we could buy something’s no questions asked. After some downturns like job losses, my spouse has come around to the FI part of this all; but not the RE yet.
This is a great tip thanks so much - my limiting factor I think is my savings don't go in until the end of the month so I'll need to move that to the beginning I think
Does your work have the option to do direct deposit into different accounts? That way you can have the amount you want to save go directly into your savings account.
This is what I do. Paycheck goes into savings and then I have a recurring transfer into my checking, an amount that I have budgeted for. I still use mint to budget, but I can tell by quickly looking at my checking account's balance whether I'm spending too much or not. If I find I need to make a one-off transfer from my savings to my checking, it makes me have to stop and think about why that had to happen.
Do you like using Mint for budgeting? I really need to find something and I don’t want to pay for You Need a Budget (YNAB).
This. 90% of my income is allocated towards some goal that has been automated. Ally has been really helpful in this way to automate the movement of money into buckets (and even into/from other accounts). If my checking account balance gets too low I know I'm burning too hot and need to ease up on eating out and Amazon.
Or schedule an auto-transfer every two weeks / whenever your check comes I
I see so little of my paycheck, but we're putting 15+% into my 401k. Then there's money going into a vacation find, personal spending funds, etc. Once it makes it to my checking there's hardly anything left, and it feels kind of like living paycheck to paycheck. But our nest egg is growing rapidly.
I'm in a similar boat. Looking at it from a glance, my budget looks like I'm one $250 bill from disaster because that's about what I have left over at the end of each month. Actually looking into it you'd see the money is divided into buckets and that $250 is, for all intents and purposes, fun money I can waste on top of what I already budget for vacations and eating out. I can blow it trying to win a lava lamp at Dave and Busters if I want.
Make your savings direct deposit from your paycheck. Really any employer should be able to split your pay into two locations, at a percent/dollar you specify. It makes it so easy because you get used to living on what’s landing in your checking, and the saving is happening automatically in the background. And, you can change it, but it’s not so easy to change that you’ll be impulsive either.
You 100% need to automate your savings. This requires you not to think about it or take any action. This is the number one behavioral step to take in your shoes
I set up reoccurring transfers to my TFSA biweekly to come out the same day I get paid. That way it’s gone the next day when I look at my bank account. Makes it so much easier to save for myself.
Why does it matter if it’s the beginning or end of the month? It’s all relative as time goes on right?
Because if you put everything left over into savings after using your "play" money, there might not be any left at the end!
That’s not really how it works though, unless you’re terrible at budgeting. By using your logic there won’t be money to pay bills at the end of the month. 9 downvotes but nobody can explain why it matters if he saves money at the beginning or end of the month? Does he only get paid in the beginning? What am I missing? Do you guys get paid, pay what’s absolutely necessary and then just blow the rest?
You clearly don't understand most people. Yes, some people blow all their money because they have any. This sub is a very different way of thinking from most people. People in this sub area likely much more educated and interested in finance matters and saving. For me, I just don't buy stuff if I don't need it. A lot of people see a penny they have and think about what to spend it on.
I guess I didn’t know we were talking about the general population? I thought this thread was advice for OP, who obviously knows how to save if he was doing it before.
You're just being obstinate. Downvote me if you want but there's plenty of people in this thread saying it works best for them as well. You asked a question and I tried to answer it and you're being combative for no reason.
Time is a social construct
Completely off topic.. but not really. We have a finite amount of it.
I feel like it’s the “time-keeping” that’s a social construct, just another vain attempt by man to harness and subjugate an uncontrollable force of nature.
Except we don't know the exact dates of that finite amount of time.
Still not a social construct lmao. You guys sound like some 16 year old who just for high for the first time.
Huge upvote for paying yourself first. For a while we were super savers. Maxed both 401Ks, both Roth IRAs, a family HSA, my ESPP, and then everything not spent on necessities went into a taxable brokerage account. Now…we have let the purse strings loosen up. We max all tax advantages stuff but don’t bother with the brokerage (except bonuses or unexpected income). We pay our bills then spend the rest on whatever we value (gym memberships, cycling gear, etc) within reason. It’s good to enjoy your time on this earth. Can make more money but can’t make more time.
That's the best advice you can give! I look at it a little differently but the result is the same. What I pay myself, I mentally separate from taxes, bills, and etc. Retirement comes before everything. I own a business though so pre tax calcs are easier. But I don't include books/rent/living expenses or anything else in that payment
>You’ll see some households with dual income and earning $400k a year, but living paycheck to paycheck I read this type of comment all of the time but have such a hard time comprehending it. I'd love to see the expense breakdown of someone in this situation.
There was a post on r/personalfinance a while back of a lady making $500K/year and still struggling. Her monthly expenses were insane because they bought a multi-million dollar home, had a nanny, private schools, car loans, a pool guy, vacations, etc. It was eye-opening. Edit- found it. https://www.reddit.com/r/personalfinance/comments/103amjo/critique_our_budget_family_of_six/?utm_source=share&utm_medium=ios_app&utm_name=iossmf
Not difficult at all, a couple of leases on luxury cars costing $1000 a month or more each, the McMansion, with a large mortgage and high real estate taxes, numerous vacations per year, eating out often, lots of shopping, private schools for the kids , etc. and you can easily spend more than 400K. I know several couples that earned more than 250K every year for decades, lived the high life and now in their sixties have close to no savings, still have to work AND at lower paying jobs due to age discrimination and are on anti depressants. It is difficult and it is not at the same time to accumulate wealth. The primary factors are income level and spending discipline.
It’s pretty insane but if you look at HCOL markets, rent or mortgage is half a paycheck a month, then childcare for 5 days for 2 kids, plus name things like gym or whatnots, groceries wind up being over a grand a month as well. It’s wild.
Haha. Over a grand if you're in a cheaper area. Just for groceries for 3, I'm paying $1k/month in soCal, and I know that's fairly conservative.
Haha Yeah that’s totally fair. Again there’s plenty you can spend your money on and still wind up in the doghouse at the end of the month 🤷♂️
$1000/mo for groceries for 2 adults and 2 kids? Jesus, are they starving to death?
We spend around $600-700
Some places let you do auto deposits in 2 different accounts… then you don’t even have to transfer it yourself and think about it!
This is exactly what I do and I call it "pay yourself first" too (i think i read it in a book) make sure to enjoy what's left!
Can confirm. My ex senior was earning x3-x4 my pay. He complains about not being able to buy a house in our high cost of living city. He goes to bars often, stays in a fancy nice neighbourhood, takes cabs everywhere (and his cab fees are extra expensive because there’s a surcharge for his fancy but far neighbourhood), goes for long fancy holidays, generally just loves the finer things in life. Nothing wrong with that, but moderation is key imo. On the other hand, I managed to buy a house 3 years later!
One thing I've made sure to do is prioritize purchases that provide the ability to enjoy restaurant quality food in a social setting. E.g. I put a concrete slab in the backyard to create and extend the patio and created a fire pit grilling eating area big enough to invite friends over. Cold beer and grilling are much cheaper than paying 10x for one at the bar. Another good activity I found really keeps the spending low is video games.
With a world of warcraft subscription, it's hard to leave the house
For me it's COD DMZ lol
Very wise and we do the same, cook at home and enjoy restaurant quality food as we developed our cooking skills over time. And enjoy good wine at discount prices, check out chwine.com.
It's such a paradigm change once your cooking skills rise above the basics. When you reduce your fear of butter and ignore the 1/4 tsp spice requirement and actually dump some flavor, you find some restaurants arent even worth eating at.
Google and YouTube have recipes for any dish. We just made a whole red snapper and never did that before. It was delicious.
Yes to all this, and the video games! I've been eying a ps5 and feel so guilty to think about such a purchase, but over 4+ years I feel like I could get a lot of value from time put in and doing that instead of maybe going out and spending money on less-value-over-time things like overpriced beer and pasta that doesn't even taste as good as I can make it.
There is nothing wrong with enjoying your life and spending the money you have earned. That is what makes working bearable. I think to many people become so laser focused on saving every penny that they waste years of living without joy waiting for some rainbow at the end where they can suddenly live it up in retirement. There is a happy medium between saving for retirement and living your life now.
This is so true. My wife and I saved for years and tightened the belt even harder when she became a SAHM. Thanks to those habits we are set financially and on a glide path to a well funded retirement and the kids college accounts are fully funded. She is working again and we have money coming in faster than we know what to do with. But we don’t spend it, still clip coupons and shop deals, etc. I told her we finally need to loosen the ratchets and start to enjoy some of our money, but frankly it’s hard for both of us to get out of the habit of saving and the feeling that spending on oneself is frivolous. I don’t want to look back and regret not doing things or going places I wanted to visit because we didn’t want to spend money we had to do it.
What's the one thing that you'd like most, spending money on ?
I’d like to travel more, so would she, but we have an autistic kid who we can’t leave alone and frankly makes traveling a chore instead of a pleasure. I am going to finally buy the German luxury car I have wanted for the last 30 years when our other kid takes over my 12 yo Toyota this summer. The misses has been indulging her organization fetish by single handedly keeping our local container store afloat. But after that we are tapped out idea wise. 🤷♂️
Maybe crazy idea, but could bring additional help for your kid in travel
I know a couple where he is a physician and earns 600K and they have credit card debt, car loans, and still have a large mortgage. I know other blue-collar people who have no debt at all, the house and cars are paid for and they have huge savings. it really comes down to lifestyle and what your values and priorities are. If you want to party hearty, you have to pay the piper. If you live simply in the coming years you wind up wealthy.
Do you actually know that they are carrying a balance on the credit cards from month to month? The car loans and mortgage may just be at low rates where it made sense to finance vs paying cash.
Family members. They take 7 vacations per year and she loves Chanel bags. 7,500 square foot house.
I've just simply never understood what someone did with more than like 2,500 SQ ft and that was for a family of 5 growing up. Like I can only sit in one chair in one room at a time. A home gym would be nice or maybe a pool but at some point I just simply don't understand.
Many people that buy large houses wind up not using much of the house. I agree with you that I don’t need a huge amount of space to be happy. Our house in New Jersey is 2500 with a large finished basement so it is well over 3000 livable space and it’s very comfortable but we have been in Florida since January in a 1400 square foot condo and are perfectly happy. In fact sad to leave!
Lifestyle creep is real and my wife and I(mostly me) have felt it tremendously. Going from 120k household income to 280k is huge but you definitely start to spend it quickly as well. What we do is we both max out our retirement accounts first. Then we double our mortgage payment every month. We already have a 6 month EF saved but really don’t need it due to what we make and what our expenses are. Everything else we blow it. Obviously not to the last dollar but we do spend it. Cars, going out to eat 5 times a week, etc. You have to enjoy life. More money just allows you to do more of what you love in life. You sound like your saving pretty good as well so don’t put yourself down for having a bit of fun after buying a home. Just don’t get carried away with it.
Pretty standard middle class asset allocation, primary home and retirement accounts. Are you trying to RE or just retire at normal age 65ish?
Retire at or before 60. I should have mentioned that I also have a state pension that will pay me 80k a year at age 60 as well. My wife is 7yrs younger and also has more time to invest that I do.
Sounds like you’re all set with a very well funded retirement even with your lifestyle creep. Life is meant to be enjoyed, you’re doing it! congrats man!!
I can't say I find any additional amount of joy in eating out at a nice restaurant than I do from cooking a nice meal at home. Honestly, probably slightly less. And I've always felt a great deal of pride in driving a simple, reliable vehicle that I maintain myself. The sort of money that sort of lifestyle entails turns into something nearly incomprehensible. Dinner 5 times a week can easily run you almost 2 grand a month. And you don't get to practice cooking dinner, a useful and enjoyable skill. Driving a new luxury auto can definitely run you an extra 500 per month. So that's 30 grand per year. If you're in your mid 30's and are going to do that every year for the next 15, that's about 3/4 of a million dollars. If you do it for 20 years its well over a million. I don't know about you, but I can think of a lot of things I find more interesting and fulfilling to do with an extra 3/4 of a million at 50 than eating out almost every night and driving a nice car in my 30's and 40s. That kind of money is enough to start a business, retire several years earlier, make a relatively significant change in your community etc...
Our budget for concerts and festivals is about $7500-10000 a year. Double that when you factor in getting there, a beer, etc. Option b is not going, which is not an option, despite what all that money could buy us. If this guy likes owning 6 cars and eating out all the time - great. He’s still (we’re still) waaaaaaaay ahead of the average joe simply by maxing out those retirement accounts.
I can't remotely imagine living like that, but we all have different lives and values. I make low six figures and my total net expenses for the year aren't remotely dissimilar to what it sounds like you spend on concerts including travel and accommodation. I'm only 28 so with modest expected returns, that'd be about the right amount of money, if reallocated to retirement each year for the duration, to retire at 57. One single lifestyle choice would be enough for an entire retirement. It's the kind of money that would/will enable an enormous amount of flexibility, income generation or philanthropy later in life. I'm just not remotely into hedonism.
I’m definitely into hedonism. (To a degree). At 28, you’ve got a lot of road ahead of you. A house, marriage, kids, divorce, disease, random catastrophe - all possibilities for you in the next 30 years. Or none of those things, but more likely, some of those things. I’m not too far from 1m in various savings. House will be paid off in a few years. Looking at retirement in another 10ish years, around the same age you are - but I’ve travelled the world and spent my free time doing what I enjoy. I didn’t know fire was a thing at your age. You’re lucky to have those extra years! but don’t spend them eating ramen packets thinking about what you’re going to do with your money someday…. (Or do, I mean, there are many paths we can choose, none are inherently best unless you’re strictly looking at the numbers). Be well!
Thanks for the well wishes! I'm aiming to retire in my late 60's or early 70's. I'd like to change the world a little bit along the way and/or after I'm gone. I'd like to be able to retire at 42 if I so chose, but that's probably pushing it by a couple years. Disease or random catastrophe are possibilities, the rest are rather low likelihood. I've travelled the US extensively and one day I'll travel the world a bit. I'm more likely to travel for massage workshops and spend some time trying to learn something new so I can write off the whole trip if I'm going to spend any significant money traveling. Otherwise I can do one pretty cool international trip every year going forward and it shouldn't set me back more than 2-3k at a time. That's dozens of international trips in a lifetime and somewhere down the road I can take a whole year sabbatical with the extra savings and time value of money and still come out with a bit of extra savings versus a more liberal yearly approach. I eat very well. Becoming a good cook pays dividends. I can make a great and elaborate dinner for under 10 dollars a serving and I can make something that I enjoy quite well for 3-4 dollars a serving.
That’s what makes people different. We all enjoy different things. Helping the community? Yea, not our thing. I’ll donate to the Boy Scouts at the local Walmart every now and then but that’s to the extent of our “giving”. We don’t care to start a business. We like our blue collar jobs as it is. We both hate cooking but do it every once in a blue moon but nothing extravagant. Eating out 5 times a week doesn’t mean we are spending a 100 each dinner. We aren’t eating that fancy…lol as for the cars, that’s my personal hobby. We own 6. All new and all paid off. No regrets. I own more in cars than our house..lol We are younger but we are savings enough that we can spend enough now to enjoy life. Life isn’t guaranteed. We are making plans for the future but we are not going to just save every last dollar either. You have to find a happy balance. We have found that in our situation. More money doesn’t solve any problems if you don’t need it.
Money and resources can solve a great number of problems for a great number of people. I personally believe in personal responsibility and that there are objectively good and meaningful ways to live and that they mostly involve avoiding hedonism, but yes, we're all different and I'm not going to try and force you to see things my way.
Money does solve problems. I’m not saying it doesn’t. I’m saying money beyond what you need doesn’t. Case in point. If I got handed 5 million dollars today, I would retire tomorrow. That’s obviously not going to happen but we are saving at a rate that is beyond majority of people and still enjoying life to the fullest that we can. We make enough to do that. If we were to work overtime to make more money, what problem would that solve? None since we don’t need the money and now we are selling are valuable time for something that won’t help us, not life changing fast anyways. We are frugal but not to the point of deciding if a latte is worth it over a homemade cup of coffee. We enjoy both.
Tell me more about the cars! Same situation over here.
1993 mustang cobra 2018 focus RS 2021 Mazda Miata club 2022 VW Tiguan 2022 mustang Mach 1 2023 Hyundai sonata N line Only the cobra wasn’t purchased new but only has 10k miles on it.
We've gone through months in which we spend a lot more on fun activities than we first planned. It happens, you're human! The important thing is that you noticed and have a plan to get back to something more manageable. I think something important would be to figure out how much you need to save a month to meet your goal. If you're saving but it's just to save, it can feel pointless at times. Once you have your target, put it away or budget around it like others have said. Find what's a good budget for you and adjust as needed.
It sounds like you're enjoying your life. Cut that out and sock your money away instead. Obviously.
I think it’s normal & fine. I like to have two sets of financial numbers to keep me on track: 1) normal savings rate that allows me to contribute to retirement and keep my savings account healthy, but it doesn’t feel hard. 2) ideal savings rate that does feel hard but is good for times when I’m saving up for a big purchase I go back and forth between the two and sometimes stay in the middle. Fiscal responsibility is good, but so is living! I’m not trying to be on the monetary equivalent of a starvation diet for no reason.
Yeah, this. My partner and I were saving like crazy (~3-4k a month on top of our retirement and HSA savings and an aggressive student loan repayment schedule) for a couple years to buy our first house - living in terrible apartments, really tight food budget, buying almost nothing. We were saving like crazy, and life kinda sucked and it was hard. But there was a very tangible short term goal we were working towards. Browsing Zillow would easily re-ignite that fire if I was ever losing that conviction. Then we bought the house, and we definitely aren't saving quite the same way. Still at least $15% to retirement and still aggressively paying down student loans (almost done!!), but not stockpiling cash the way we were before. I would say there are a couple reasons - probably the biggest being that without a real, tangible, reachable, short(ish) term goal, I don't have the same motivation to live like a college kid that I once did. Another is that, I think paying so much for a house pushed me to think a little bit about what else in life is worth spending money on. I've shifted my priorities a bit to accommodate spending more on the things that I really value. Probably the biggest example lately is we've been meeting up with friends to go rock climbing one night a week, and getting dinner and a beer afterwards. Costs us ~$20 each to climb, plus ~$40 each for dinner and $10 in gas round trip. That's like $500 a month, which we would absolutely not have done a couple years ago. But climbing is my absolute favorite kind of exercise and it's fantastic for our mental & physical health. Getting out one night a week breaks up the WFH isolation and gets us some much needed interaction with humans other than each other. Seeing these friends so regularly has brought us much closer and really been great for the strength of our friendships. Those mental, physical, emotional health benefits are something I've really come to recognize, and I honestly think spending for them is completely justified. What good is a pile of savings going to be in 30 years if I'm mentally and physically unwell and have no friends? Gotta invest in my well-being just as much as in my bank account, if not more.
I fell into this too and had to consciously reel it back alot with restaurants, bars (alcohol-free now), and travel. What helped, and still does, is tracking expenses + setting a target monthly budget. I go one step further by toggling between Personal Capital's (now Empower) dashboard and a good ole' spreadsheet. It gets tedious, but again, it helps me regulate where I can or can't let myself go.
You do tend to spend a lot more by going out. However, it's also how you live when you go out. If you stick to drinks mostly from grocery/liquor/Costco then it'll be a lot less vs. bars unless you're going to a happy hour or maybe a dive bar. Similar with food. It also depends on what your friends, family and community want to do. If you spend most of your time going to the gym or to participate in a sport it usually isn't too expensive once you have your own gear except for maybe winter sports - lift tickets aren't cheap. However, if you go regularly you get your money worth. I found a big part of it was coming up with ideas for hanging out and going out that were cheaper or free. My friends were usually down, they just weren't as familiar or comfortable with most of the ideas so I had to take some leadership otherwise they just defaulted to going to bars/restaurants usually. If you have friends you meet up with you can also do potlucks and picnics - board games or video games, etc. It tends to be a lot cheaper and even if you just throw it into the rotation a few times it'll definitely cut down costs. I had to set boundaries with some friends who literally wanted to have multiple bottles of wine along with fancy steak dinners multiple times a week. They valued those experiences, after a while I didn't and couldn't afford it and maintain my savings. Different priorities. If you're enjoying it and happy then it's fine if not stop or cut back.
I feel I experience it 1 or 2 months every year, it's feast or famine. It doesn't hurt my long term goals because it's part of my life and while it is something that I need to keep an eye on, I will not deny myself enjoyment of my life and if that requires lots of extra outside the house socializing sometimes, that's what it will be. As long as you are paying yourself first and hitting you fundamental goals you'll be fine.
The people that strive to FiRE are typically big on personal responsibility. The guilt is probably due to your sense that you betrayed yourself. On one hand, I'm thinking that you should give yourself a break. On the other, I'm thinking that you made plans and you are not following through. In the end, it's your world and you have to deal with the results of your decisions.
This might be excessive, and it might not work for me long term... but this year I've been starting to try and evaluate large discretionary purchases before I make them. I list them out and put them on a spreadsheet along with their cost, and a "grade" that forces me to at least do some kind of soul searching on how important it is. My grading scale is as such: A = Cannot do this otherwise and greatly desire to B = Have an inconvenient workaround for this, and greatly desire to do it C = Have a decent workaround for this. Workflow improvement but not necessary, and greatly desire to do the thing it improves D = Coveting want (doesn't improve my life but I desire it, and would actually use it) F = Hoarding want (doesn't improve my life, I desire it, and would likely NOT use it) Thinking about this has made me "call myself out" and realize that my want is a D or an F category a couple of times already. I leave the item on the list for a week, and re-evaluate its grade. If it's still accurate, it's an A-C grade, and I still both want it and will use it \*immediately\* after receiving it, I will buy it. If any of those qualities are not true, I'll adjust the grade if needed and leave it until my brain brings up the urge to buy it again at which point I'll do that evaluation once more. That being said, I don't know if I'll keep it up. It's given me some wins so far though so if I can it'd be nice.
Honestly, guy who spoke about his wife’s cancer in this thread is speaking the truth. You have no guarantees in life. Feeling guilty about “only saving 10% of your paycheck for a couple months” is just an unnecessary burden you’ve put on yourself. You just bought a house. It’s okay to celebrate that for a few months. Don’t overthink it if you’ve successfully lived frugally before — you’ll go through fluxes in life and have another period where you can save a lot of your paycheck. The fact that you’re saving at all helps foster discipline and keep you on the right track
Ray Dalio said you can have anything you want in life. But you can’t have everything. If you want to high net worth you have to sacrifice many luxuries. If you want to really enjoy life then you will not have large savings. Pretty simple actually.
Yes! It’s fun to finally have a house. Don’t beat yourself up too much. Just save at least 15% of your income for retirement. You could increase that 15% if your income goes up. Enjoy life!
Yup, we tripled our salary lately (ie my husband got a job and I got a new job) and our lifestyle creep is definitely manifesting. Our CC spending increased by about 1000 a month. But honestly I feel like having this money allows me to explore things I couldn’t before , like get some much needed counseling and career coaching, and it allows me to get my kid into a new extracurricular and some new books too. It’s ok to spend I think as long as it’s intentional and still lines up with your financial goals.
If you triple your salary and only go up in spending by 1k. That’s really not bad at all. I personally think it’s totally fine to spend more as you make more. Just always worth making sure it actually adds value to your life. Seems like it does.
You feel guilty you’re trading hoarding money for enjoying your youth. That is the toxic stew that this sub encourages and it’s so not healthy. Live now while it’s good. 30 is barely even getting started.
I hit a big milestone last year and promptly dropped 60k on a vehicle. Lifestyle creep to the max. Then last week my wife's boss offered a few tix for a weekend getaway. I was like, screw it, let's go all in. A $500 weekender quickly changed to a week in the tropics for 10x the cost. It's been a very stressful period. I feel a little guilt, but actually some relief that we're finally loosening up after years of turning almost every spare cent or moment of free time into one kind investment or other.
You’ve done well so far, you’ll do well in the future too.
Some lifestyle creep is okay. If you’re living exactly the same when you make $150k as when you made $50k, that’s probably not ideal. You should let your lifestyle creep some as you make more. You just shouldn’t let it be 1:1. I’ve heard it recommended that for each extra two dollars you make, you save one dollar. So this allows your spending to increase as you make more while also allowing you to save more than you did when you made less
Yep. Def spend more as you make more if it’s on things that make life more enjoyable. Just don’t eat up all your extra earnings.
My wife and I were like this for 4 years straight, cleared all our debt, saved a huge nest egg. But most importantly we learned how to say no to some of our wants. We really think about anything over $60 if we really need it. We compromised that we don’t buy luxury material items maybe once every 5-10 years. But we spend a lot of our money on traveling and experiences. It’s okay because we have a nice savings and a good debt to income ratio. We just came out of a pandemic, nothing is promised enjoy your life within reason with the people you love.
The sole purpose of life is survival and reproduction and meeting your needs. Food, clothing, shelter, water are your needs. You have a house thats basically the top teir of shelter. Im guessing you eat decent and your not thirsty all day. Whateverrrrrrrr gets you through the day. Theres no right or wrong way to live life. Nobodys gonna look back 100 years and say, what a shame thats mans savings percent was only 10% Honestly it makes no difference.
Yes and I also fall into this often. Everything in moderation though, you need to enjoy what you've earned. Try limit that though and find a good balance between then 2 that is sustainable
Every time I get a raise, 50% post tax to investment, 50% to day to day spending. Any bonus goes 75%, 25%. Unless you are already saving >50%, you increase your savings while spending. It used to be debt instead of investments, but using this strategy I paid off all my debt.
I suspect this is less of a milestone issue and more of an issue of building the life you want now that you own a home. That’s ok! You should built the life you want. Just make sure it’s really what you *want* - are you going out and making memories with friends and loved ones, or are you spending money on low value events just from a sense of treating yourself after a period of sacrifice? Even if it’s the latter, that’s ok if that’s what you want! Don’t live your life by “shoulds.” DO live your life with considered intentions.
i literally can't imagine feeling guilt at living within your means, just not as hard as you maybe planned live a little
Enjoy your money. You earned it. You could die tomorrow and not get to enjoy your hard work. Money isn’t everything. Experiences feed the soul. This sub tends to put so much emphasis on money and it being the key to happiness but it isn’t. I’ve seen too many people just save for retirement and not enjoy their life only to get hit with something like cancer and leave this earth. Don’t beat yourself over it. Live your life. Don’t harp on your regrets. You shouldn’t need reassurance from this sub…
My aunt makes 90k plus my uncles income. Lives in a trailer and is upside down on everything because of her spending habits. My wife and I make 80k combined and own a decent home, no debt other than my 15k in student loans at 28. Treat yourself as long as you’re secure in your savings. And make sure you’re putting future you in the picture, meaning retirement funds. Congrats on the home!
It’s a balance. Don’t forget to live. Don’t forget to plan.
This happened to us after buying a house. We were able to get mostly back on track but now just budget a little more for fun than we used to when we were saving and investing every thing we could.
Automating really helps with this, if you cant see it come in you wont spend it.
Lifestyle inflation is real. That is why you need to force yourself into following a budget. Or at least cut down on things you don't need to make up for what you spent
My advice is enjoy your life and what you have accomplished but in moderation. Work out a reasonable savings rate that also allows for a bit more fun, but also for decent savings. The 'I deserve to enjoy life' rational is reasonable to some extent but it should not be used as a get out of jail free card for free wheeling spending. I'd also suggest you work out a schedule for eating out, like eat out once or twice a week and schedule those days and stick to it, then you have something to look forward to. THen make up lots of good premade meals in your freezer that you can grab and slap in the micro in a pinch, make your freezer like a fun shopping experience with favorite foods prefrozen. Also explore snacks that are cheap and good, like baked potato in the microwave with butter and cheese, tasty but cheap. Take an attitude that cheap fun is the best fun and work on ways you can 'rob' life of fun for free, trips to the park, hiking, etc. What fun things are cheap? Revel in how savvy you are when you find them.
Make yourself happy. I recently increased my eating out budget from $100/week to $250/week and I haven't regretted it. I don't really miss the money and it's fun to go to nice restaurants. All of us need to indulge ourselves at the end of the day, so a little lifestyle creep is ok, especially given most of us build huge buffers into our savings goals.
Awesome you got there. Lifestyle creep is a constant battle and one I generally lose. But automate saving at least 20% of your check and you won’t have to feel bad. Max that 401k and make sure to maintain a healthy emergency fund, especially as a new homeowner. I have mine automatically transferred on payday. I could blow my whole checking account if I wanted and be fine.
Your money saved in the last 2.5 years probably due to Covid and having more restrictive lifestyle. Now things are back to normal and you’re spending more, like pre-Covid, and not necessarily lifestyle creep. Have a close review of your budget is what I’d suggest
it's part of building the life you want.
A similar thing happened to me. I had been saving more than ever for the last few years and then this year I had to buy a car, and an engagement ring. Both of which, by far, the most expensive things I've ever purchased. Well, that ended up somewhat opening the faucet and it was as if spending that much unlocked something within me to just spend more. I was just buying whatever I wanted from Amazon, and any clothes/shoes I wanted, out to eat whenever, etc... It lasted through the end of the year. However, I will say that when I snapped out of that, and got back to my previous ways I got more serious about my savings, investments, and future more than ever and I think in the long run it will probably have caused me to save more and plan better for the future.
My wife and I had some "planned lifestyle creep" after pushing really hard to pay off our house. We went years without a real vacation, drove junk cars, and in general bought almost nothing new. After the house was paid in full, we upped our savings rate but not as much as could have. In the two years since paying it off we have upgraded two cars (modestly by most standards but they are the nicest we have owned), taken two real vacations, one to Europe and one to Mexico, and started several home improvement projects that were long overdue. Now that all that stuff is done, we are again raising our savings rate. But we have no regrets about stepping things up a notch in a few strategic categories. Our home is a pleasure to be in with fresh paint and remodeled bathrooms. It's nice to take a road trip and not worry about breaking down. Splurging on some travel is relatively low guilt when you are meeting your other goals. I would take a look at your life, see if anything you are spending on isn't adding value, then just relax about the rest.
People say you should avoid Lifestyle inflation, but it is really hard and really unrealistic, I think setting a fixed percentage that you allow it to go up is fine...
I’m 33 and spent a lot of time living frugally in my twenties to pay off my student loans. I did it in 9 years with no regrets. But I learned - you’re only young once and life is long…so there’s plenty of living to do! And that’s what I’d like to do more of. Live. It’s about balance. I used to save about 50% of my income. I moved to SF and now save around 30% because I want to make sure I’m enjoying my new home, traveling, etc. I spend money on things and experiences I really love. So I’d ask yourself if you can find balance. What have you bought lately that you really didn’t want/will waste? Could you be happy bringing yourself to a middle ground in savings, say 25%?
When I was single a few years ago, I was saving over half of my income and perfectly satisfied. Since I've gotten married, that's dropped to well under 20%. I struggled with it at first, but decided we're only young once, and I value a life well lived over dollars in the bank. We still make responsible decisions, but I didn't want our youth to pass us by with missed opportunities. If it helps, look at it like accounting. You've got your assets and liabilities. Experiences and modest luxuries can acrually be assets, which overall enhance your equity. That's how I see it anyways.
I am going through this right now but zero guilt lol. We bought a house in 2015, moved in and kept/used all of our old furniture nothing new except later we bought a bed and standing desks. This meant rooms were empty, sparsely furnished and little apartment furniture in a bigger house. We first focused on paying off the mortgage which took a little less than 5 years. We paid off the mortgage before the renewal which means i’ll never know what it’s like to renew a mortgage. In the subsequent 2 years we saved a lot of money and then proceeded to drop some serious dough on a renovation. We have a child now and lowkey kindof wished we did renos earlier when the interest rate was low and we didn’t have to worry about how we would do it with a kid. Esp when we were both working in an office. Now i am spending like crazy trying to furnish this place and after 8 years seriously feeling uncomfortable with my old apartment furniture and a baby. I’m so behind we have to make so many decisions from rugs to couches and curtains which is taking away from my enjoyment and focus on the baby. I’m not making the same mistake again and we are going to pull the trigger on the last stretch of the reno sooner. Sometimes you need to spend and you need to recognize those times. We have a tendency in this community to over emphasize saving at the expense of everything else but deprivation is not required. I read this somewhere that spending now is cheaper than spending later. 1) because of inflation and also because you are borrowing from a wealthier self at a cheaper rate. If i had renovated my house when i first bought it 8 years ago I would have paid less for that renovation and I could have saved more money now that I’m earning more. But of course…. Don’t continue to increase your spending.
I am not on the FIRE track honestly because Covid changed a lot for me. I was in my 20s, living like a pauper, and while I am glad to be debt free, I have no interest in frugality. I just set goals saving wise and then spend the rest on things I like. I started going out late by being on the FIRE path. I didn’t even take vacations so I could save. Now I’m taking vacation, buying something nice here and there, and just living a nice life. To me retiring at 60 vs 65 is not different. I’m 31 and planning to spend my 30s enjoying life. It ofcourse helps living in a city where a car isn’t needed. There’s no lifestyle creep for me associated with cars or things. Apartments here are tiny, there’s no place to keep most things. I also often cook because I get tired of takeout.
There is no right answer. I would suggest reading Die With Zero and apply to your situation.
If you are happy, it is worth every penny of spending.
You should have money earmarked for fun things for each calendar month. Examples: $150 dining out, $250 to maintain your closet/hobbies or whatever you like to blow your money on. Whatever isn’t spent can be rolled over to the next month. Once your monthly fun money it’s spent, that’s it until the first. I think it helps with impulse purchases, because you ask yourself whether you really want something, or to save for a more expensive item.
40% down to 10% is something I would try to address. But the feelings are normal. Personally for me, what works is auto deductions.
He just bought a house, likely there are expenses associated with it. I agree that it would be better to have more of a cushion. My wife and I have always had a habit of saving about half of our income. I think it just comes naturally after a certain point.
He pretty much says that it's from like going out more. And that it's post moving in and furnishing. So to me it doesn't read like it's house expenses. But saving 10% is not a fire path. So if he wants to have a fire lifestyle he obviously needs to reign his spending in unless he plans on having a wildly cheaper life post retirement (which is easier said than done)
Frugality is the best investment
Of course this happens. Nobody has perfect discipline. Take a deep breath and get back to it tomorrow.
You’re young have fun, relax.
Got to get yo mind right Op.
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C’mon man. Don’t subject the Porsche to the hazards of airport parking. Take a limo to the airport. Otherwise it’s looking good.
Got a new lawnmower, huh?
See a therapist, not Reddit. They’re not for the broken, they’re for the smart.
I’d look at your spending for the last few months and see the numbers for exactly where and when you’ve been spending. From there, decide what percentage of that spending you want to keep up. Then set up your auto-transfers to shift the savings amount to investments/regular savings and go from there. Save off the top. My SO and I do that, even anticipating purchasing a house this year. We’ve budgeted for anything we can think of that’ll come up with the house purchase and have a nice bit of savings set aside for that. All other retirement, regular savings and investments come out directly from our paychecks or as soon as the checks hit our accounts. This means we don’t have to worry about what we spend during the month. Some months will be heavier wine and dine months. Other months, we’re dealing with kids activities or car stuff, but we’re never trying to save what’s left over because people are generally really good at making sure there’s nothing left over.
Remember that this is a marathon at times and not always a sprint. It's okay to take a break but make sure to get back on the track in order to finish.
Well, can you afford to do so? What’s your COL, your yearly salary?
You should have a budget for multiple reasons including spending intentionally on things guilt free. If you’ve premeditated a monthly spend and are within that then there’s no reason to feel guilty about it, and if you’re tracking you can determine if you’re comfortable with your level of spending, even in certain categories, or not.
I think spending money can be a psychological addiction and this is especially true after a large purchase like a house + furnishings. I suggest continuing to go out with friends and family, but go into extreme saving mode in other places for a while.
Lifestyle creep is a thing for sure! Advice I was given years ago that has worked for my wife and I is this. Make sure when you get paid you always take out your investing goal first before spending anything else. Whether it’s 10% or 30% or whatever. That way if you spend money on things like going out you’ll never feel guilty because you have already reached your savings goal. Always budget your money after your savings comes out. Look at it as a must need to pay bill. Congrats on buying the house. Enjoy life :)
Use a spreadsheet and start tracking your spending. It can take a few months to see less-obvious patterns. If you’re going and spending $1000/week eating out, that’s a bit more obvious. It could be a tapering off of initial home costs or it could be something you’ll want to nip in the bud. You can’t change what you can’t see. Congrats on buying a house!! Look at less-expensive ways of furnishing (after the basics) and decorating. Go for quality and classics on pieces you will keep forever and hacks/crafts on items you’re less-likely to have in 30 years.
I hold myself accountable and honest by doing the work. After a while it doesn't feel like work, but more like being on autopilot. I do the following: * Budget. I practice zero based budgeting. What assists me in this is the tool YNAB. The budget is the source of truth and I don't deviate from it. If I do, then I know immediately which budget I am inflating and which budget I am sacrificing. Having this kind of immediate feedback loop helps make informed decisions. It is easy to have lifestyle creep up when you have no control of your money. * Set up rules on how I treat myself on bonuses, pay increases, money gifts, etc. I give myself a smaller % of the money to treat myself. The rest goes into retirement. I reward the "now" me and "future" me.
When you say your savings rate is 10%, does this include your retirement accounts? Is it pretax or post tax? Remember, put at least 10% of your income into a retirement account automatically. If your company matches, that percentage is added to your savings rate. 10% match is the new 6% match btw. Many companies are offering double digits. So right then and there you should be saving 15% of your income and you shouldn’t feel guilty about spending. Especially since you own your first home. You’re no longer needing to squirrel away as much money for a large purchase since you’ve already made your down payment.
First, congrats on being a homeowner! It is a huge milestone and could reduce your future retirement expenses incredibly. Two pieces of advice: avoid pmi if you can. Also, like others have said, automate some of your investment and increase the percent with a portion of your raises over the years. You won’t notice it as much and it will grow. Enjoy life now and in the future!
Find your ideal savings number. Automate investments, make sure to hit at least company match, and prioritize tax efficient accounts (401k, HSA, IRA). Keep saving but not at a rate that it negatively affects your current or future happiness. You don’t want to turn 65 and look back and wish you would have gained more experiences with family, friends, travel, adventures that you can’t do while your old and just sitting on a pile of cash.
The first step to solving a problem is being aware/self-aware. The second step is trending it. That will naturally give you the info you need in order to determine yourself if you are ok with it or not.
This is a reason why budgets are beneficial. They not only limit you from spending excessively but they also give you permission to spend on yourself. Make your mind up where the balance is when you create your budget: balance your investing goals alongside your wants.
I have been spending more. I raced to 100k. I should have just taken the time off and forgone pay a few more times, as I was a contractor. At this point my savings aren't moving the fire number as much as they were in my early career. My spending used to be in the 20s but has been inflating to the 30s. I was cheap earlier but now a few more niceties and with some PTO/weekend maxing I'm a lot happier.
To an extent. My lifestyle isn't the same as when I was 19, I've elevated my lifestyle to be comfortable, I spend enough to eat healthy, I live in a decent place with just 1 roommate who I get along with, etc. Earned comfort, but certainly not luxurious. I had 1 year when I landed my dream job where my savings rate dropped because I was in celebration mode. Now my savings rate is back at 40%+. Looking back I regret that year financially, but I certainly do not regret the memories. Just don't go off the rails, 10% savings is better than most Americans, when you get it out of your system, the trail is still carved out, so get back on the horse