#FinancialPlanning #Investing #Saving #Budgeting
Hi everyone,
Hope you’re all doing well! I wanted to share a bit about my financial situation and get your thoughts on it. Please don’t mind any language mishaps as English isn’t my first language.
My partner and I earn about USD 9,500 a month after taxes. Our monthly expenses, which include our mortgage, groceries, childcare, and other necessities, are around USD 6,500. We also set aside about USD 1,000 each for personal expenses, which leaves us with roughly USD 1,000 each month to save or invest.
Coming from a low-income background, it feels great to have this extra cash, and I’d love to start investing in ETFs to help secure our financial future. However, I’m realizing that our current budgeting doesn’t account for larger future expenses that we know are coming, like:
- 🚪 A new bed—we desperately need one since ours is worn out.
- 🪟 Window replacements—which will run us about USD 8,000-10,000 in the next five years.
- 🚲 New bikes for the kids as they grow.
- 🚗 A replacement for our aging Renault, likely costing USD 8,000-10,000.
These larger expenses are definitely on the horizon. On one hand, I know it makes sense to budget for these future costs. But on the other hand, **it feels like a never-ending cycle of saving** that keeps me from actually investing. If I’m always saving for the next big spend, how will I ever have enough to invest and grow my wealth? 🤔
**Here’s where I see the challenge**:
– **Saving for future expenses** leads to a lack of funds for investing.
– **Ongoing saving** might prevent us from building that investment cushion.
– **Balancing saving and investing** feels nearly impossible without going into debt later.
So, what can we do about this? Here are a couple of ideas:
– **Create a sinking fund** for large future expenses, so you have a dedicated amount saved just for those.
– **Consider a slight increase** in your investment contributions if possible. Even small amounts can add up over time.
– **Review your expenses regularly** to see if there are more areas to cut without impacting your quality of life.
What do you all think? Have you faced similar struggles where saving felt like it was blocking you from investing? Any tips, tricks, or experiences you can share would be appreciated! Looking forward to hearing your perspectives! 😊
I’d start looking at your expenses. Spending $8500 of your monthly $9500 on current month expenses is going to make it very difficult to save.
2000 a month for discretionary/fun expenses is crazy high to me, especially since it’s most of your “free” money every month.
You’re correct that you’ll never get ahead with long term savings or investing if you burn almost all your cash every month.
Maybe take a careful inventory of where that 2k “fun money” goes and see if it’s really worth sacrificing your long term goals.
Have you thought about using your savings to start a small side hustle? Could be a fun way to generate extra cash and still invest a bit.
Without even looking at what you consider to be essential, you are choosing to spend those $2k a month that you could be investing instead. You could do the same things, just a cheaper version of them.
While I agree that the discretionary spending is a bit high, sinking funds are generally for current expenses, due within the next 12 months. Unless it will take you the full five years to save for windows, you don’t have to start now. You can invest that money and then pull it out closer to the expense so you have time in the market. Obviously this will result in realized gains and taxes, but you gotta pay em at some point.
I just keep a sinking house fund in cash and deposit a couple hundred a paycheck to it. If there’s not money in there for it, then it’s not time for the upgrade yet. If it’s a true emergency like a burst pipe, then it’s from the emergency fund.
But in general yes, dollars are limited and you have to decide how to allocate between saving and spending. You’re in a lucky position that you have the option to simply spend less and not all of your income is taken up by bills.