How do you balance saving money (for security) vs. spending money (to enjoy life before you die)?

[Anonymous]

On paper, DH and I are absolutely doing "very well" though perhaps by DCUM standards not "amazingly" - plenty saved for our age (retirement, 529s, brokerage), well-insured (life, disability, umbrella), and a nest egg coming from my parents and DH's parents that will help us out tremendously (but we'd be okay without, too).

Our income recently tripled in the last 3 years. We increased our savings by a lot, but we've also increased our spending by a lot.

On paper, I should feel JUST as secure as I did before our income increased IF NOT MORE. And yet, I don't. I felt better when I had to work hard to save XYZ, and now saving 3 times XYZ is actually pretty easy (since our spending also increased by about 3). I feel like if it's this easy, I must be doing it wrong. I must not be saving enough. Because it ought to hurt to save a little bit, right?

Also, I feel uncomfortable spending so much money. I feel like a fraud. I feel guilt. But I also don't want to stop because, well, money buys nice things and experiences.

DH is pro-spending because, as he says, our kids are young, and we might as well put the money towards help around the house, regular date nights, and family vacations, because 10 years from now we won't be able to go back in time and have more time with our kids or with each other. I'm sure I'm buying more crap, but mostly we're trying to spend on experiences and conveniences.

But I feel so guilty spending. I feel like our income tripled, and we should just SAVE IT ALL, right? That's what the responsible person would do? Save until they die?

Ugh.

How do you balance this?

[Anonymous]

Which spending did you increase and by how much?

You don't have to SAVE IT ALL but if you 3xed your housing costs, there is a rational reason for you to feel like you may be farther out over your skis than you want to be, b/c houses are not perfectly fungible with cash.

[Anonymous]

No, we did not increase our monthly housing costs. We did do a lot of renovations on our house, and a lot of the spending went there. Obviously we could hope for a ROI even though we don't plan to move.

[Anonymous]

All disposable income (after fully funded retirement accounts) gets split equally between savings, college, vacation/overnight camp. This allows me to more easily spend and balance now v later.

[Anonymous]

I admire the way my parents handled this. They stayed frugal with spending when their income went up. They didn't really splurge on experiences or things while we were at home, but traveled extensively as empty nesters, fully paid for our undergrad and grad school, treated us to experiences and family trips as adults, and helped us when we were buying homes and getting established. I think if they had spent a lot on us as teens we would have had different expectations when we went out in the world (fancy restaurants, trendy clothing, luxury vacations). Instead we all have very middle class taste, and appreciated the splurges as just that. Spending on conveniences and more time together as you say is also worthwhile, it just doesn't need to be in a high-end location or with 'stuff'.

[Anonymous]

I recommend reading the book "Die with Zero" which has a lot of interesting perspectives on the balance of time, health and money and helps you discover your own. There is no one right answer for anyone.

[Anonymous]

The correct answer is that you save fanatically at all costs if your net worth is below $500K (or $1M per couple due to divorce risk).

That's because $500K is just enough to secure the very basics of a middle-class life - $300K for a condo, $50K for a car, furniture and emergency fund, and $150K in investments (assuming the $150K is obtained relatively early in life so it has time to compound into a reasonable supplement to Social Security in retirement). Spending money "to enjoy life" before you've secured that minimal level is irresponsible, and you deserve any financial misfortune that comes your way if you behave in that manner. Once your net worth is above $500K, the balance should shift to enjoying life (while still being financially responsible).

And yes, that is the *CORRECT ANSWER*, not just my opinion. You're welcome.

[Anonymous]

We follow the simple rule of saving 50% of our take-home and we spend the rest. I have the same struggles and this is an easy way to automatically balance saving/spending. Roughly $600k HHI and we save approximately $200k per year in brokerage.

[Anonymous]

I decided in my 30’s that I considered a diversified portfolio as something for today and something for tomorrow. I will have a pension and I have a TSP and a taxable brokerage account. But in addition to my primary residence I have a weekend place (owned outright, no mortgage) that I don’t rent out. I’m sure I could do better in the market but I can actually use and enjoy the asset. I also have a long term rental property that I’m hoping to be able to give my kids when they get out of college. And recreational land for camping and outdoor activities, also owned outright (for the same reason I have the weekend place). I work to live, I don’t live to work. And I’ve seen way too many people leave this world way before they should. I try my best to balance present with future and can always liquidate my real estate if needed.

[Anonymous]

Team DH. Once you've set aside a reasonable amount in retirement & college funds, seize the day. Your kids are young for only a short window - do all the things. Once they're teens, you're not the sun in their orbit anymore.

[Anonymous]

Rich people's problems.You make more money and have more money coming to you than most people in the world, and look at that- it created a problem.

[Anonymous]

Anonymous wrote:Team DH. Once you've set aside a reasonable amount in retirement & college funds, seize the day. Your kids are young for only a short window - do all the things. Once they're teens, you're not the sun in their orbit anymore.

Agree. Life can be short. If you’re preparing for the future with retirement, etc. enjoy life.

[Anonymous]

Following. Love the perspectives shared.

[Anonymous]

I think that this is where people can benefit from having a fee only financial planner. It’s probably hard for you to spend without guilt because you don’t have clearly articulated “SMART” goals for your life/your money so you have no idea if you’re on track for them. You don’t know if your financial foundation is adequate (do you have adequate life and disability insurance? Do you have an appropriate estate plan in place? Do you have an appropriate amount of emergency savings given your job security and your careers? Have you considered what expenses qualify as an emergency? Do you have saving for unexpected but expectable house and car maintenance) and that leaves room for anxiety. If you had a big picture plan in place for where you’re going, and knew you were continuing to make progress towards those goals, rather than just an amorphous goal to “save for retirement, save for college” you would certainly feel more comfortable spending the excess. And if your problem is that you have more than you need, and you feel guilty about that, maybe figure out a way that’s meaningful to you to give your money away to others who don’t have what they need, and incorporate that into your spending too.

[Anonymous]

I feel this way too, but have managed to get more comfortable with spending. Our financial planner does a projection every 3-4 years of what we will have in retirement and what our savings goals needs to be. The last year hasn’t been kind because of the market dip, but overall we are on track for a very comfortable retirement. We are also done with college and weddings, so that helps.