No Point Making Money If You Don’t Spend Your Money

Imagine you’re a financially successful 35 year old professional making $250,000 a year.  You’re still $130,000 short from being in the top 1%, but by any other metric, you’re doing just dandy.  Yet, instead of living a comfortable life, you live like a pauper, renting the same dumpy one bedroom since you were 25.  For wheels, you drive a 2002 Toyota Corolla and for vacation, you always stay domestic, never wanting to see the world.  Everything you do, or don’t do rather, is because you want to save money.

Some of you may think this is a great way to live, as certainly you’ll be saving a boat load of cash for retirement.  I say there’s absolutely no point making that kind of money if you are going to live so frugally.  Six figure jobs are a dime a dozen, but generally come with higher stress.  As such, you might as well just make a fraction and lead a carefree life if you never plan to spend your earnings.

Watching the zeros grow in your bank account is a very empty feeling after a certain point.  It might boost your self-esteem to tell your friends how much you have, but that’s just shallow.  Cash is only a medium of exchange, and a means to provide a better life.  If you aren’t utilizing your cash, then you are wasting your time.

HOARDING LIKE A TORNADO IS COMING

There’s a fine line between being smart with your finances and being overly frugal.  Let’s say you’ve always wanted to buy that second-hand $30,000 Porsche in your 30s and your gross income is 10X that amount.  Instead of buying what you want, you get a $8,000 Toyota Corolla to save money in your 30s.  Well after 10 years, guess what?  You’re in your 40s and the novelty has worn off.  You’re just another 40-something year old knuckle-head going through a midlife crisis.

Comfortable shelter is the same thing.  The rental stock is generally inferior to the ownership stock.  Due to rent control, many landlords haven’t updated their apartments in years.  Sure, you may be saving money renting your same 1 bedroom in your 30s as in your 20s, but you’re also crimping your lifestyle if you can afford to buy or rent a two bedroom or three bedroom apartment or home.  You’re going to be middle aged and feel proud of yourself for saving X amount of dollars.  Meanwhile, someone who spent what they could afford has been living a much better lifestyle for the same time period.

Great vacations are priceless because of the everlasting memories they provide.  Instead of flying off to Greece, you decide to experience your 3rd staycation in a row to save money.  Meanwhile, you’re getting older and you’re no longer as nimble as you once were to hike those great mountains.  It’s harder for you to sit comfortably on an airplane for longer than 3 hours because of deep vein thrombosis and numbness in your legs.  Now, what’s better?  Living a better lifestyle that you can fully afford, or saving an extra buck or two?

LIFE IS FINITE

Most of us who are educated and who work hard are going to die with TOO MUCH money in our bank accounts.  I know retirees who have great pensions with no mortgage and very little expenses still try and save as much money as they can.  Well guess what?  That’s kind of counterproductive, because saving money while you are retired is like saving money to spend in death.

I’m likely saving too much money by putting away 70% of my after tax income.  It’s been instilled in me ever since I got my first crappy job at McDonald’s to save the majority of money and not spend.  It’s very hard for me to spend more, largely because I feel I have everything I need.  It would be nice to have an ocean view vacation home in the South of France, but that seems like just too much hassle.  The only thing I’m thinking of purchasing is a 2nd hand car to replace 12 year old Moose in 2012.  I need to live it up more.

After maxing out your 401K and IRA and then saving 20% of your disposable income after retirement contribution, I say we should spend guilt-free the remainder on whatever we darn please.  If we try our best and fail at spending all our disposable income on living life, then saving the rest isn’t so bad.

Recommendation For Increasing Your Wealth

Manage Your Finances In One Place: Get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts in one place so you can see where you can optimize. Before Personal Capital, I had to log into eight different systems to track 25+ difference accounts (brokerage, multiple banks, 401K, etc) to track my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing and when my CDs are expiring. If you are interested, they can even provide tailored financial advice for a small fee much cheaper than traditional wealth managers. Personal Capital takes less than 1 minute to sign up.

Regards,

Sam

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

You can sign up to receive his articles via email or by RSS. Sam also sends out a private quarterly newsletter with information on where he's investing his money and more sensitive information.

Subscribe To Private Newsletter

Comments

  1. Money Beagle says

    I’m with you. I think that as you make more money, you should be able spend more as well. The trick is to balance the increases you get along the way, so that you’re both saving and spending a little more. That allows you to ‘enjoy’ life (in terms of what money can buy) all along the way, not just at ‘the end’.

    • Financial Samurai says

      That is indeed the trick. We get in such a habit this way or the other that we should constantly reassess to make sure we live the best life possible and spend on what we truly value!

  2. Norman says

    I’m going to go out on a limb here. Are you trying to convince yourself or us? You make some valid points here that YOU need to heed if you are saving 70% of your income. Go ahead, live a little.

    • Financial Samurai says

      Definitely doing some soul searching into spending more, however if you read my second to last paragraph, I acknowledge your poInt.

      The question is, if someone makes $300,000 in this example and spends only $90,000 on herself, is that too pauperish? Hmmm

  3. MoneyCone says

    It depends on what’s important to you. If you are perfectly satisfied the way you live and don’t attach too much importance to material things, it doesn’t mean you are miserable.

    Buffett has all the wealth in the world. He could drive a Ferrari and live in largest mansion in Manhattan if he wanted to, but I guess he doesn’t attach that much importance to these and instead lives in Omaha (of all places!) and drives his own Cadillac!

    As a kid I always wanted a BMW, but now that I can afford it, I don’t! Just knowing that I can afford it is good enough!

      • Xtra Crispy says

        It’s only a 414hp M3…with the new v8. The M5 has the V10 that has the 500hp. :) Not that it really matters…but it’s my dream car…and although I prolly can’t afford it, I’m shooting to purchase a used one in the next 2 years.

        I’m 26 now…wanted one by 25, but bought a condo first instead. (thinking it was a smarter decision vs. buying my baby!). Wish me luck!

    • David M says

      Excellent Points MoneyCone!

      I take a 6 week vacation most years to South East Asia or India. Here I ofter stan in $10 to $20 a night hotels. Many people can not understand why/how I could stay in such a hotel. However, I TOTALLY satisified with these hotels and do not desire anything more.

  4. Travis says

    1 – I agree that having a very high savings rate AND working until 70 years old doesn’t normally make much sense.

    A very high savings rate is a great idea in many situations, such as:
    - To retire significantly early
    - To save a lot of money to pursue some kind of life dream (starting a business, hiking mt. everest, being very charitable/helping others, etc.)

    2 – I don’t quite understand some of your assertions that spending more money translates into living a “much better lifestyle”. The particular example that stood out to me is the comparison of living in a one bedroom apartment vs a 2-3 bedroom house. How does living in a large home objectively make someone’s life better?

    I’d argue that in many cases, the opposite is true. The homeowner must spend significant time on upkeep, lawncare, etc..

    The travel example I do understand.. A few of the most memorable times of my life have been while traveling, though all domestically. Many have also happened within 100 miles of home.

    The thing is, different people get enjoyment from different things. One person may have as much fun as they possibly could while working out in their garden. Another might believe they have to go hike Machu Picchu or get bottle service in Moscow to be as happy.

    • Romeo says

      Well stated, Travis. I think the point though is to have people understand that there is a such thing as saving too much money. But Sam, I think it’s only a such thing of saving too much money if it makes you uncomfortable and miserable doing so. For example, if one saves $70K per year, and has been doing so such that their goal of retirement is way ahead of schedule, why shouldn’t they spend $5K on a desired vacation?

      I think what’s missing is the psychological aspect of the argument. So people are just bred to save for whatever reason, just like people are bred to rack up tons of debt. For whatever reason, it will always feel better to save $10,000 than to spend it on a watch or a luxurious hotel stay.

      I’ve been wanting an Ipad since last summer. The price? About 0.005% of my annual income. Why haven’t I bought it? I just can’t bring myself to understanding how it’s better than my laptop.

  5. krantcents says

    This was one of the reasons, we started traveling on major trips years ago! Putting yourself on an extreme savings regime is like an extreme diet, it can not last.

  6. Travis says

    In addition to my previous comment.. I think it is important for people to consider what things/activities they get real joy from in their life.

    For example, my main hobby is bicycle racing. It is not a cheap hobby. If I stopped doing it, I could increase my savings rate from about 65% to 75%. But I would not be as happy as I am. I know that it is a high priority in my life and so I choose a significant amount of money and time on it.

    Another example is spending money on eating out or fast food. Many people consider eating out to be a luxury or an element of a good lifestyle. For me, I am happier if I never eat out, because:
    – I can eat much healthier at home and thus do better in my racing
    – I don’t generally get any particular enjoyment out of eating out (the food or experience)

    I think that considering the enjoyment you get from spending money on certain things, prioritizing, and aligning your actions with your priorities is very important. People can be much happier that way than by just spending carefree.

    • Financial Samurai says

      Whatever makes you happy Travis! Didn’t realize bicycling is that expensive… how much is your bike?

      I love eating out and am happy to pay up for great service and a beautiful meal.

      • Travis says

        It’s a great/interesting world with all of the individual differences between everyone. What is a horrible bore to one person may be the time of their life to another. :-)

        Bicycling can be fairly expensive. Probably much cheaper than car or motorcycle racing as a hobby.. Here are what a lot of people who race spend on things:

        Bike: $2,000 – $6,000
        Racing wheels: $700 – $3,000
        Clothing: $50-100 for a jersey, $80-150 for shorts
        Shoes: $150-$400
        Helmet: $100-$300
        Powermeter & Computer: $700-$2,000
        Race entry fees: ~$30 per race. (x say 40 races = $1,200)
        Gas driving to races can be significant
        Plus a ton of other stuff…

        You don’t have to buy all that stuff every year. It is definitely expensive than cheap hobbies like reading, playing video games, etc.

        As racers improve and can join better teams, they can get discounted equipment and money for race entry fees. But it’s not a hobby that you can make any significant money in. (other than the very best – the pro’s racing at top level in Europe)

  7. Jonathan says

    There’s always the possibility that this successful 35-year-old hopes to retire at age 40. You sure can’t do that too well if you live it up in your 20s and 30s.

    That said, I agree with the basic premise of this article – I grew up in a “cheap” household and as a result I’ve always strived to be frugal but not cheap. The difference, to me, is that a frugal person knows their priorities and looks to save on the less important stuff, but spends more freely on the truly important things.

    • David M says

      I love your comment, “a frugal person knows their priorities and looks to save on the less important stuff, but spends more freely on the truly important things.”

      I agree 100% – I’m willing to switch deodarent, toothpaste, soap, etc to get for free as they do not matter. I’m also happy stay at inexpensive hotels when I travel. However, I’m also willing to eat in some of the nicest hotels in the world – money well spent to me.

      I have eaten at The Oriental in Bangkok, The Taj in Mumbai and Raffles in Singapore for examples.

      • Financial Samurai says

        Ah, but have you eaten at the Sukhothai in Bangkok? :)

        I agree with the frugal comment too, but we should ask ourselves why we are so frugal. I’ve got a post coming up on the subject!

        • David M says

          Have not eatan at Sukhothai in Bangkok – maybe during my next visit to Bangkok – I have been more than 10 times as its easy to get flight to Bangkok.

          I stayed at the intercontinental for 5 night – you might be thinking – what about $10 hotels? Well this was with priority points and they were running a special so it was only 5,000 points a night instead of the usual 40,000 points. They did not even flinch when we came with our backpacks!

          I have eatan at the Amandari in Bali – at the time I did NOT know this hotel was over a $1,000 a night! The food was really good and probably about $100 – this was about 15 years ago.

        • Mike Hunt says

          You guys need to look me up next time you are in BKK. For a great dining experience, I would recommend dining at Gaggan, it is a molecular gastronomy place that mixes it up with Indian food, the chef studied in Barcelona where the movement started.

          Dinner for two is $150, went there only once with my wife. We will go again but want to save it for special occasions. That is the point with nice things, they need to be infrequent enough to be fully enjoyed, in my opinion.

          Which is why I would like to stay in a modest $50 hotel for a few nights then follow it with a $400 hotel for 2 nights, it will be more enjoyed because of the contrast and the pleasure of savoring a rare experience.

          It’s like eating a slice of the best chocolate cake you have ever had, one with edible gold that costs $100 a slice. The first slice may be worth it but if you eat 4 slices you will feel less happiness than eating 1 slice. Such is the experience I have with expensive luxuries.

          If you were a king and all the luxuries were encountered each day I would argue it would be no fun or you would be so addicted to them then anything less would be torture.

          As for staying in Bangkok, the Intercon is pretty nice but so are many places along the river (Oriental, Marriott resort & spa, Peninsula, Hilton Millenium, and the Lebua State tower. The latter has a great restaurant and bar on the roof that is worth checking out, it has an ultra-cool atmosphere.

          -Mike

        • David M says

          In Reply to Mike Hunt,

          Thanks for the restaurant recommendation.

          All the hotels you recommended are great – however, when I get my value scale out, they do not make the grade. The intercontinental was AWESOME for the price a paid – 5,000 points a night! I did not even spend money at their hotels to get the points – I got a 30,000 point bonus when I got the holiday inn credit card.

          I love Lord Jim’s at the Oriental – have been about 5 times – they have great sashimi and great service!

        • Mike Hunt says

          David,

          A new St Regis (part of the Starwood group) is opening up in Bangkok, and that promises to be an excellent hotel. Use points though as the per night price is expected to be north of $500 USD.

  8. MacroCheese says

    All about goals right?

    If the miserly 35 year-old plans to walk away from work forever at 40 to travel the world or set up shop on a yacht just off the coast of France, his lifestyle makes perfect sense.

    But hoarding for hoarding sake is just a bit Scrooge McDuckish for me.

    My cheapness was burned into me at a young age as well. I’m also blessed with a frugal wife.

  9. retirebyforty says

    Are you nuts? Saving 70% of your after tax income is a terrible idea. You’re suppose to spend money to help lift us out of this slow recovery. Buy that new Porsche already, you can keep Moose around for when you go skiing. One of my buddy got himself an M5 after he broke up with his model girlfriend. Why stop at M3? hahaha! :D
    Great vacations are awesome! Don’t forget to blog about it though because you’ll forget about it when you’re in your 40s.

  10. Jeff @ Sustainable life blog says

    I think you bring up a great point. There’s no point in saving your money until you die – you cant enjoy it. Of course, If you’re interested in leaving some for your children/grandchildren, then do so, but spend everything else – you cant use it when you’re dead.
    I have to second the thing you mentioned about fitness – I may be heading to alaska this year, and really want to go visit the national parks north of the artic circle – they say about 300 people get in there per year. I really, really want to go, but getting there requires chartering a flight, which can cost hundreds of dollars per hour. I can save for it, but on the other hand, I’ve still got debt. but I may not be fit enough to do this 5 years from now. Who knows?

  11. Jurrell Kemp says

    Making a large amount of money is nice but people have to remember one thing “you can’t take it with you” it’s good to save and give at the same time but at the end of the day it’s better to help someone with that money rather just let it sit for years to come.

  12. Little House says

    I think I agree. Most people who are frugal to the point of miserly never experience life. It’s not like they will all of a sudden through caution to the wind and live it up during their retirement years. Most contrary, if a person is miserly during the prime of their life, that behavior usually continues into retirement. It’s sad, but true.

  13. JT McGee says

    MoneyCone beat me to it and mentioned Buffett. Amazing how having made billions he never spent more than $100,000 a year of it–his annual salary.

    I see my money in the same way Buffett does. I’m not really big on nice things, nor do I really care to own them. However, I will absolutely not work a day past my time. The nicest thing that money can buy is time, and I will be certain to keep that in mind. If I could “retire” to a hobby/income source of reading 10-Ks and 10-Qs all day at 40, then that is exactly what I will do. When what you love is what you do, there’s nothing better!

  14. The College Investor says

    I want to save enough to be able to give to my children when the time comes. Not to spoil them, but be able to give them a car, help with a house, etc. I also want to give myself some cool stuff later in life. So, I’m making a lot and saving a lot now, to hopefully spend it later.

    • Financial Samurai says

      I donna man. Buy them a car and a house basically wipes out why they need to work much at all. I’d make them work for it, and only if it makes financial sense and they’ve proves their effort will I pitch in.

      They need to know the value of the dollar.

      • Robert @ The College Investor says

        I agree…I should have said help them in bigger words. They do need to earn it! My mom got me my first car, with the condition I worked to pay for everything to do with it. It was a POS old truck, but it was worth working for!

  15. Romeo says

    I believe the most important thing to do is to set effective — realistic, purposeful, and measurable — goals with one’s money. Once these goals are established and are put in place, people should spend away on things that they desire.

    For example, if you want to retire by 40, find an online calculator, make some assumptions for investment rates of returns and how long you would like to live in retirement, and see how much you would have to save monthly to have a certain annuity. If it turns out to be $1000 monthly, but you are currently saving $2000, then for Pete’s sake stop saving so much money and live a little.

    With $300,000 annually, and relatively low payments on mortgages and other things, there should be no reason why this person couldn’t spend $100,000 on dumb ass things, but things that make them happier. In fact, at $300,000 annually, I would hope that he or she has no mortgage, especially before they buy an M5, M100, or M[fill in whatever number you like].

  16. Jeff says

    Never thought I’d see a post like this on your website haha. Being the host of the pf community and all, I thought saving and being “cheap” were somewhat religious views.

  17. L Marie Joseph says

    Everything need balance if not you’ll go crazy.
    I told my husband that I don’t want to want until I’m
    65 to see the world. I want to do it in my 30s while I’m physica
    I’m physically fit and can walk long trips. I want to create
    memories while my child is still young. I pay cash
    for my vacations because I don’t want the headache
    later. Save your money and enjoy the benefits

  18. Mike Hunt says

    Sam, if you want to spend more money then why don’t you take a better vacation this year? I suggested the Maldives but never heard any response…

  19. optionsdude says

    I think the comment about balance is the most relevant. Striving for balance in all aspects of life is very important. I guess the main question is what is an individual saving for? Is there a purpose for saving all that money and not spending? Or is it simply a fear of loss or loss of control? Those are some of the questions that would need to be asked and answered.

  20. Srinivas Rao says

    Sam,

    As I’ve mentioned in other comments I’ve always had a tendency to live beyond my means. Now I’m in the polar opposite situation of living below my means. I think you bring up some great points and you should probably enjoy life a bit when you get to the phases you’re talking about. I think however some people tend to increase their standard of living right on par with their pay increases. I think if you allow for a short time buffer life gets a bit more comfortable.

  21. Pat S says

    You make some great points here. Makes a lot of sense for you, but most of us aren’t quite there yet.

    You are describing the difference between being frugal and being a miser. Silas Marner is a great book on that very issue.

  22. Mike - Saving Money Today says

    I think it’s a fine line between being responsible with your money and being a miser. You can’t take it with you so you might as well enjoy life along the way. otherwise, what was the point of working so hard to begin with?

  23. Darwin's Money says

    I like to think we have a good balance. I’m making sure we get 5 figures in college funds and retirement funds each year, but we take 2-3 vacations a year. Doing Disney soon! So, could be saving more. Could be spending more. But we’re trying to balance some saving for a rainy day, our kids’ future and enjoying life now!

  24. Andrew Hallam says

    Take a year off Sam, or two. Travel the world. If you don’t have children yet, now might be the perfect time take off. Perhaps, the longer you save that kind of income, the more stressful it will be to spend your money.
    As for the fancy car. I’m probably an odd one when it comes to that. I’d only like to drive it, at night, when nobody could see me. Is that weird?

    • Financial Samurai says

      Sounds good Andrew. Although, the person I use in this example is not me. It could be a person making $80,000 a year and only spending $25,000 a live.

      Taking a year off would be great, b/c I never took time off from college to work. A sabbatical would be nice!

  25. Dividend Mantra says

    I agree with some of the comments above that mention money buys time. I don’t make a lot of money, and 2010 was the first year I cracked the $40k mark, yet I still plan to retire by 40 years old. I try to save at least 50% of my net income….which is a lot for a low income base. I’d rather live the rest of my life frugally, free to spend my time how I want then working until I’m 65 and spending my money on material objects that have an immaterial net effect on my happiness!

    Thanks for the article, and it’s always nice to provoke one’s thoughts on one’s way of life.

    • Financial Samurai says

      Hi mate, that’s great you are saving such a high percentage on your income level! Stick to what you believe in and I’m sure you will be a success! Thanks for your thoughts.

  26. Dividend Monk says

    I think it depends on the individual.

    I spend a fairly small percentage of my income. It’s not because I force myself, but instead simply because there are few material things I want to buy. When I perceive something to provide value that is worth the cost, I buy it. Plus, I value experiences over things, so I’m more inclined to spend on an experience than on a thing. I like enough income to do what I want to do, but anything above that is going to be saved or given.

    Your car example makes sense- if a $30k car will make someone quite happy, and they’re making ten times that amount, then buying a cheaper car just to save several grand isn’t really worth it. Go for the nice and beautiful thing.

    My reasons for saving so much are that I’m capable of making a substantial income, but have little desire to spend it, and the money can be put to work so that me and those I am responsible for are financially set. Any more than that can be sent to charities or used for various causes. When one has enough money to live off of, then work they do is for enrichment rather than out of necessity, which is a good situation to be in.

    There are definitely instances where it can go too far, though.

      • Financial Samurai says

        Good stuff. Do you ever get a sense that you are saving too much though? I guess it also depends on your income level eg if you are in the top two tax brackets, living off 30-40% is still pretty good. But then again, if you make less than 100k, living off of just 40-30k gross is kinda tough no?

  27. Justin @ MoneyIsTheRoot says

    Lifestyle inflation is a very real thing, so it’s interesting to consider the other end of the spectrum. I would say overly frugal is not an issue for as many people. but I couldnt agree more. If you make that much, try and live a little.

  28. Glen says

    The thing with life is you have to “live.” That doesn’t always mean spending a lot of money, but it does mean doing those things that mean a lot to you and give you life experience.

    If you have the money to put away for retirement and save with lots left over, I see nothing wrong with a great vacation, good meals, and more. I think living just for money accumulation is truly running to standstill. Frugal can be important, for sure, but living is VITAL.

  29. youngandthrifty says

    It’s all about balance.. I don’t want to stop my traveling and wait until I’m retired. What if I get cancer (which is highly likely, seeing that 1/3 people get cancer in the lifetime) and can’t travel anymore? It just wont’ be the same.

    traveling when one is younger vs older is completely different. I definitely won’t be able to do Mt Kilimanjaro when I’m 60, that’s for sure! though I know people who have :)

    • Financial Samurai says

      Wow, that’s kinda depressing knowing that 33% of people have some sort of cancer. I better start eating more raw and healthier!!

      I want to travel before my knees give in. So, I hear ya!

  30. her every cent counts says

    While I’m no where near your friend making $300k, I find the more I make, the more nervous I become about spending money! When I first graduated college, it was freeing to make $20k per year. I knew I’d never save a lot with my salary, so I freely spent on luxuries like $80/hr voice lessons twice a month. I paid of my credit cards each month and either broke even or put a little bit of savings in the bank.

    Now that I’m making $90k, I can’t bring myself to paying for voice lessons, or other expensive purchases. I’m addicted to seeing my bank account numbers increase. Granted, my job isn’t stable (I work for startups so my job will never be stable) and I only have $130k in the bank right now. I keep telling myself I need $1M in the bank to feel comfortable, $4M to spend freely. But deep down I know if I ever had $4M in the bank I’d be too scared to spend that as well… at least in terms of buying anything that would be considered a luxury at that level of networth. I’d still be driving my busted ’99 Toyota (ok, maybe I’d buy a new used Toyota) and I’d be scared to see my networth go down.

    Still, I’m waiting for that $1M networth threshold to feel comfortable to make major life decisions/changes like having kids and buying a house.

    • Financial Samurai says

      $130,000 cash in the bank after 5 years post college is a very good sum of money! You did graduate 5 years ago from your previous comment right?

      You’re right. The more you have, the more you don’t want to lose it, b/c it took so long and you worked so hard to get it.

  31. Money Reasons says

    I have a few friends that make over $250,000 a year but they live and look just like me (minus the occasional trips overseas). Originally they inspired my post called “Reasons To Spend Money – I Don’t Want A Coffin Full Of Dollars”. I personally think they should spend more money and enjoy life more fully. Not so much on material possessions, but more along the lines of experiences and memories (taking videos and photos as they go). Like you said above life is limit, make the most of it while you can.

    Nobody want to ski in Aspen when they are in their 80s or 90s?

    For someone like me, I have to settle for the typical middle class beach vacations (mainly in Florida and South Carolina, and maybe in the future Georgia or Mexico), but you can bet if I had the money, I would be traveling much much more.

    • Financial Samurai says

      I wonder though if your friends are relatively even more at ease inside despite living the same lifestyle as you. The fact they are making that kind of money alone makes them happier since there’s little worries. Could be!

      • Money Reasons says

        You got it! Over they years I’ve come to realize that they are doing what they want, working the way they want and vacationing the way they want. They have complete freedom to do as they please whenever they want. So they are happy.

        • Financial Samurai says

          Yep, I think I’m reaching that stage myself. When I went to grad school, it was so fun b/c I didn’t care about grades, just learning. As I get older and save more, work becomes more fun b/c I don’t depend on it as much to survive anymore. It’s freeing!

  32. Untemplater says

    I don’t make that much and I don’t mind saving. I’m trying to get less attached to material things and use my money on travel and fun times with friends instead. I’m on a declutter mission this year and it feels so good getting rid of stuff!

    • Financial Samurai says

      I LOVE, LOVE decluttering! Zen Habits has a good post on decluttering and meditation which hit spot on.

      When we are free of things, we feel light and free. At least I do.

      I really just enjoy spending money on vacations and adventures. They are so fun and so worth it!

  33. Kyle Steiner says

    I really appreciate your point about having too much money when you die. Too many people I know died with millions of dollars but were not happy at all. You really need a balance in life.

    My website is http://www.envend.com/. Could you comment on a few of my articles too?

    Thank you,
    Kyle Steiner

  34. Buck Inspire says

    Great post. Balance is key. I admit saving and find great deals is a lot of fun, but if you go overboard, what’s the point? You can’t take it to the grave. Happy medium, people!

  35. Darwin's Money says

    I like to think we have a good mix of saving ans spending. Sometimes, I worry a bit that we should be saving more, but we’re hitting over 20% in retirement and we’re on track to have 529 plans fully funded for 4 year degrees for each kid by 17. But, if I face a layoff, the whole picture changes, so you’ve gotta balance risk with saving for a rainy day with actually enjoying the product of your hard work!

    We PF bloggers have a bit of an edge over others in that we could help support ourselves somewhat with freelance and blog income in the event of an emergency.

  36. Get Happy Life says

    One should also not forget that saving money saves you from working for it – freeing up your time much earlier. So on the other hand, there is not much point in being free when you are old, too.

    I say, make a lot of money so you can spend to afford good vacation and save to become financially independent!

  37. Leigh says

    I have been out of college for almost 2 years now and will have a net worth of $100,000 by the end of the year (markets-willing). I graduated with a net worth of $30,000 and I have grossed 6 figures for the 2 years since I graduated.

    During university, I was pretty cheap and miserly with my money. My parents paid for a lot of my expenses while I was on campus and I did internships each year. One of my goals after graduating was to keep the lifestyle inflation down, but still feel happy about what I’m spending money on. I now spend about $3,000 per month, but I am on track to save about $55,000 for the year. I’ve been banking my vacation time so that I can take a 4-week vacation next year. I just haven’t decided where I’m going yet!

    Part of it is that I’ve just never been very good at spending money and part of it is that I really don’t know how to spend the amount of money that I earn each year. I just have no emotional or physical need to do so. Last year, I bought a brand-new car with cash for just over $20,000. I’m saving up for a down payment on a house, but I don’t know if that’s really what I want to be doing in a few years. I’m investing 20% of my gross income towards retirement, including maxing out my 401(k). I enjoy what I do for work, for the most part, but ideally, after working for a few more years, I would spend a year or two traveling the world using my down payment savings.

    I’m at a point where money isn’t the limiting reagent in what I’m doing – me deciding what I want to do is the problem. So until I come up with a better plan than what I’m doing right now, I will continue working at the career that I enjoy and saving money. I try to not work too much more than 40 hours per work so that I can enjoy my time outside of work as well.

  38. Moo says

    I’m considering three variables that you might not be here:

    1. What if nothing you buy or spend toward ever makes you happy? What if misery and regret plague EVERY decision you make? Do I work and make more? Okay, still unhappy. Do I spend on this great ? Okay, still unhappy. When there is no happiness, there is no need to blow money. Sadness is free.

    2. What if you’re putting away money so your descendants will do better? I know they’ll generally just blow it, but real wealth is built on relentless saving early on (and by “Early on,” I’m talking decades) followed by an eternity of wealth through prudent long-term investing. This is a reasonable sacrifice to make IMO. Give me suffering today so that someday, someone might be happy. Depressing, but what else is there?

    3. What if you’re building wealth because you aren’t going to die? If you were immortal, would your way of life change?

    If I may ask, how is it “a dime a dozen” to get a six-figure job? I’ve never made that much. I’ve never broken the $50k barrier thus far.

    • Financial Samurai says

      I write from the perspective that I’ve been saving a lot, and remind myself and others that we should spend too. I’ve saved 50%+ of my after tax income for 13 years, and 70%+ for the past 5 years. But, nut I am retired at 35 and loving it to be frank!

      If you just look up the median pay for the top 20 MBA graduates, you will see thousands of 29 year olds make over $100,000 for example. If you want to make $100K+, just got to go work in the fields that pay such levels.

  39. Michael says

    What about a strategy of “splitting” raises? Half to increased savings, half to “lifestyle inflation?” Wouldn’t that give the best of both worlds? You still accumulate wealth, with an eye toward financial independence, but get to have some fun along the way?

      • Michael says

        *chuckles* I hang out on the fringes of the PF world. I believe that it’s actually through comments you left on MMM’s site that lead me here. Yours is one of many feeds in my Google reader that I check in on occasionally. Here, I tend to read the newer posts, and “link surf” back into older things, commenting when I find something to which I think I can contribute.

      • Michael says

        Oh, and when it comes to my vice, big and horrifically overpriced computer hardware, there’s always some newer, bigger, better, faster, whateverer…

        I don’t anticipate inflating out of the fun of that any time soon… ;)

  40. ap999 says

    I agree that yes you should enjoy it, but like others said there is a balance. I will continue to save, invest and do all the right things and keep learning about money.

    The right thing to do is if you want to take that 15 thousand dollar safari trip of example. Set aside some money for it every pay check. If your earning 100k plus its probably not hard to do. But if it takes you 2 or 3 years to save for it and then go on that vacation its not that bad as you still have contributed to all your retirement accounts first.

    But say your expenses are way too high or your earning way too little, then yes you need to consider things. You can enjoy things but you may be limited to what you can actually do. Bottom line could be you may need to simply earn more money to enjoy new things in life.

    I also think people hoard money because of that’s how they grew up. They started making little and did everything they could to save every dollar. But when incomes grew people still have those old habits in them that hold them back.

Leave a Reply

Your email address will not be published. Required fields are marked *