#SavingGoals #Budgeting #PersonalFinance #FinancialHealth
Hey everyone! 😊
I’ve been crunching some numbers lately, and I’ve got a question for you all. Right now, I’m saving around 27-29% of my take-home pay each month, which feels pretty good. But honestly, I often wonder if I’m cutting back on too many things I enjoy, like hobbies, entertainment, and eating out. It’s a balancing act, and sometimes it feels like I’m sacrificing a bit too much to stick to that savings percentage.
So, here’s my question: Do you think I should aim for a savings goal, like 20%, and then feel free to spend whatever’s left after that? 🤔
Here are some reasons why this struggle is real:
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Guilt-Free Spending: When you’re saving aggressively, it’s easy to feel guilty about spending money even if you’ve hit your savings target. It can turn pleasure into stress!
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Lifestyle Satisfaction: Constantly cutting back might lead to feeling deprived, which can affect your overall happiness and satisfaction with life.
- Sustainable Planning: Striking a balance is essential. Saving is important, but so is enjoying life and spending on things that bring you joy!
Possible Solutions:
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Set Realistic Goals: Try setting a clearer savings goal, like 20%, and allow yourself some flexibility. This way, you can enjoy your hobbies without feeling guilty!
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Budget for Fun: Allocate a percentage of your income specifically for fun and leisure activities. This can help ensure that you’re saving while also treating yourself! 🎉
- Review and Adjust: Periodically assess your budget to see if that 27-29% is still working for you. Finances can be dynamic, so it’s okay to adapt!
Let’s Chat! 💬
What are your thoughts on this? Do you follow a strict savings plan, or do you have a spending amount you stick to after saving? I’d love to hear your experiences or any tips you have that can help us all find that sweet spot between saving and spending!
Looking forward to your stories! ✨
Moderation is a key word.
I wouldn’t save so much that you can’t have any enjoyment. Need some vacation time, etc, while still young.
But still need to save for the future and to handle setbacks.
My best advice would be to set a standard for yourself (20%), and if you have leftover funds beyond that then invest.
If you can consistently meet that goal of 20% and still find yourself trying to decide on spending money or investing, then your answer is clear to spend that money and enjoy yourself. If you don’t get to spending that money despite reaching your savings goal, then it’d only make sense to exceed 20%.
What percentage do you spend on fixed monthly costs?
You need to know this number in order to allocate what’s left to saving/investing and discretionary spending.
I’d say reducing your saving/investing percentage to 20% is perfectly fine to bring your discretionary spending number up to 20% if it’s currently below that.
You should know why you’re saving to begin with, and why you’re choosing the number you chose.
The two big things everyone should be saving for are retirement and an emergency fund. Retirement should be approximately 15% of your gross income, and your target for an emergency fund should be at minimum 3 months of expenses (if you were out of work for 3 months you could live on your savings without changing your spending).
Beyond that there are many other things you could be saving for, such as a future house downpayment, college for yourself or your kids, a vacation, a car, etc. But any of these should be clear cut goals with a timeline and an amount that you’re trying to reach.
Also, what you’re saving for impacts where and how you save it. If you’re saving for retirement, that should be done in a Roth IRA and/or 401k. College in a 529. Most other things in a High Yield Savings Account.
I’d figure out all of this and then determine if you’re saving too much or too little. Chances are you’ll be able to divvy up what you’re saving into categories that make sense for you, and then you’ll know when it’s time to spend the money you’ve been saving. Some people manage to set aside tens or hundreds of thousands of dollars in cash with no plan. There are worse things you could do, but doing so is really not optimal.
Well, what are your mid- and long-term goals?
I’m in a two-income household and we sit down and discuss longer term plans 1-2x a year and adjust accordingly.
Big trip planned over Christmas? 26 weddings next summer (true story 2022 🫠)? Know you are going to need to look at vehicle options in the near future? Saving up a house down payment? Tighten the belt and give up the little luxuries now.
Settled into a mortgage? No kids? Reliable transportation? No major trips or life events planned? Save 20% and enjoy dinners out and hobby spending.
This isn’t a percentage that needs to be (or likely, will be) constant for your entire life. It can ebb and flow to match what you need *right now*. (Within reason, of course.)
Yes to savings goals based on predictions of what I’ll need in retirement.
Yes to saving as much as possible.
Yes to using savings to spend on things that I have considered will add value to my life. Vacation with family is an experience worth spending on. Hobbies have justified spending to keep it realistic.
My point being, I save first, then justify the expenditures in my budget as a cross check to keep extraneous spending down.
I have my 401K contribution set to 15% (with 6% company match). I max out my ROTH IRA. I have about ~8-10 months of expenses of a high yield savings account.
Anything beyond that, I’ll throw into an individual brokerage account where I buy individual stocks…essentially “for fun”.
I’m a fairly conservative spender in general, the rest go toward vacation, food, hobbies, etc but that’s a relatively smaller chunk.
Unless you’re doing FIRE – just imo, saving for retirement is important but having a little bit of fun before then is good too.
I don’t “save” anything. I pay all my expenses and then make financial decisions that won’t move me backward. For me, there is no structure, just reactionary spending.
You need to have a current lifestyle that you like, not just save for some mythical future lifestyle that will be grand. On the otherhand if you increase regular spending *now* you also increase your expected spending in the future, which increases your need to save. Find the happy medium that works for you.
That said, I was very glad that I oversaved in some years, when in later years I was hit with unexpected events that cost money I hadn’t anticipated, and drastically reduced saving for some of those years.
It’s more like joint account then 2 personal accounts
Money goes in joint account bills come out automatically what’s left goes in savings. Usually leave 400 in each personal account.
If you are content with your life, continue saving and investing the excess.
1) You may have some years in the future you want to splurge more
2) Unless you gave great long term care insurance, you could need that excess
3) You can retire early
4) Great peace of mind that you have funds in case you want to take a long sabbatical, you lose a job and the market is tight for an extended period, or we have a much worse pandemic
I saved my excess savings and retired at age 45, 12 years ago. And, I’m very glad I did!!!
I try to save as much as possible personally. There’s always a balance but I err on the side of saving. You don’t want to sacrifice so much that you refuse to go to see a movie with your friend to save a few bucks but you also don’t want to buy a new car just because you have the money after saving. Just my two cents.
My dad always said pay yourself first. This is a man that sold vacuum cleaners at Sears for 40 years, raised a family of five, paid off house, retired worth over a million.
[https://www.investopedia.com/terms/p/payyourselffirst.asp](https://www.investopedia.com/terms/p/payyourselffirst.asp)
The answer is “it depends” for example The Money Guy show recommends saving 20 to 25% of your income. But in some of their materials they recommend that because it covers most people. But there are cases where you should do more or could do less. If you started investing 25% at 18 and have been doing so for 40 or 50 years you can probably take your foot off the gas if you have another goal you want to focus on because you will be ahead of the curve. If you are 62, have 0 in investments and hope to retire at 67 25% will probably be not enough.
So in general I concur. 20 to 25% investing rate is generally fine. But you have to also look at your overall picture. How old are you now, how old until you plan to retire, and what are your current balances? If you are ahead of the curve you are probably ok. If you are way behind you may want to think twice.
Savings goal. And another savings goal. And another savings goal. And another savings goal.
I have extreme guilt for buying stuff for just myself so I don’t buy myself anything unless I absolutely have to. I’m broken, please don’t do this.
Awesome job and discipline saving over 25%! I’d keep that up.
Modified version of the set saving goal. “Spending it on future self” I have a saving goal for the month overall and weekly.
Ex. I want to save $400 a month, $100 a week.
Week one I save $120 so I hit my $100 for week one and use the extra $20 for week two
Week two: only need save $80 since I already got $20 banked from week one. Save $120 again. So mentally I’m winning by hitting my goals and also making the each week cheaper than expected. So I roll over the “$40” to week three making that goal $100 —> $60
Week three: save $100. I hit my original goal but also had the extra “$40” for week four now.
Week four: $100 again but now it’s $140 since I had stashed the extra $40.
So overall I saved $440 instead of $400. (Hitting my goal and saving a lil more than expected)
It’s a basic example but it allows me to save more and be able to spend it in the future worth way more than currently. I’m 24 so I got time to grow it. Delayed gratification is a huge concept I believe in that helps me focus on saving it. I stash it in brokerages and HYSA so I get my dopamine fix for seeing those grow more too. I have my fun money to for date night, gifts, and stuff but I make sure future self is gonna be more set than me currently. If my future self has even more money then I do now then I can really spend and splurge on friends, family, and memories instead of cheaping out.
I attempt to save as much as possible after necessities and spending allowances. No hard and fast number.
Kind of both.
I set a certain budget number for my long term savings goal and try to limit my spending in other budget categories by living below my means. I then generally have leftover money that I save in a more liquid account.
Both. I try to save/invest as much as possible and I do that by incorporating a savings goal into my budget. I build fun into my budget as well and if there are adjustments to my budget through the month and I have some leftover I will transfer to that to either savings or investments on top of what I already put into those categories monthly.
I save my percentage and am free to spend the rest or just roll it over with the next paycheck.
First figure out what your goal is. If you have already made sure you don’t have any consumer debt to pay off (over 6-7%) and you setup the right sized emergency fund, you can then figure out where you are aiming.
Are you trying to retire in the 60’s, 50’s, 40’s, or 30’s? How much will you need saved to get to the nest egg that can support that? Do you have intermediary goals like travel, house, wedding, car, etc. before you get to retirement? Do you feel like you are missing out on a lot of hobbies, trips or experiences? What small sacrifices would you consider a fair trade to do more of those things without dropping your savings rate too much?
Once you have answered some of these you can start to plan backwards and see how much needs to be put away to get you there. You are already doing great with savings above 20%. If you can keep that up even as you life changes and your income grows you will begin to have so many more good choices to decide between.
No one wants to be in the stuck working into 70’s or 80’s bucket and you are far from that.
If you want specific advice you would want to list your income, assets, and the overall goal you have in mind 🙂