Every now and again, I receive criticism from folks who believe saving 50% of one’s after-tax income is too onerous. With such little income left, one turns into an impecunious soul who doesn’t have enough “fun.” While I do appreciate my critics elegiac responses, rest assured my heterodoxy is not without merit.
For the past three years I’ve taken six weeks off. Five of the six weeks are spent traveling abroad and going to Hawaii and Lake Tahoe. Trust me when I tell you that taking two-week cruises in the Mediterranean and snowboarding off 11,000 feet mountains is a blast!
The remaining days are spent taking a day off here and there to enjoy insouciant San Francisco. I could go on about the other fun things I’ve experienced with only 50% of my income, but won’t because that’s just annoying.
Everybody’s definition of fun is different, which is why opinions about how others should have fun are meaningless. I think being able to wake up every other morning in a different country by ship is a blast. Others can’t stand the abundance of good food, night time activity, and romantic moments on a deck overlooking a shining sea. Crazy, I know!
I’m not criticizing you for saving less than 50% of your after-tax income because it’s your money to do what you wish. So, why am I being criticized for my savings habits? Everybody’s circumstances are different. I just take the positive viewpoint that if you are saving a small percentage, it must mean that you love your job and plan to work for a very long time!
Related: How To Trick An Employer Into Hiring You
YOU CAN HAVE FUN WHILE SAVING TONS OF MONEY
Trust me when I tell you that you can still have fun while saving 50% or more of your after-tax income. To not believe is to deny my very existence and the existence of countless other people who save a good portion of their income as well.
* We get used to living within our means. After 5 years of living on 45% of my after tax income I decided to raise my after-tax savings rate to 70%+ for the last five years of work. It felt a little tight for the first couple of months, but then I got used to it.
* Most of us make more money over time. If you maintain a constant savings rate of 50%, if you get a 20% raise, you suddenly have 10% more to spend while still saving 50%! Not only do you save more, you get to spend more as well.
* Happiness stays pretty consistent. I was ecstatic studying abroad for six months with only $200 a month in spending money and I’m just as happy spending $10,000 a month. Given I am just as happy spending way less a month, I might as well save that money for a rainy day!
* Fun is cheap. I have the most fun going with friends to the beach or going on a hike. Last week, I laid out on Baker Beach for 3 hours and it didn’t cost me a dollar. In Hawaii, the beaches and parks are all free. Costs are minimal and Hawaii have the happiest people in America, surprise, surprise!
* Spending too much money feels bad. If I start spending more than a certain amount, I start actually feeling BAD. Everybody has the bad inflexion point, otherwise, we’d all be spending beyond our means and be broke. People don’t eat forever because their body eventually tells them they feel full. Same goes with spending.
WHAT’S THE REAL REASON FOR THIS NONSENSE?
The real reason why there are critics against those who save aggressively is because these critics don’t have the will power or ability to save. Whenever you see someone doing something you want to do but can’t, you make up picayune excuses.
“Oh, he’s not having a lot of fun”
“Live life now!”
“What a boring person.”
“Such a cheap bastard!”
“Way too frugal for my taste.“
etc.
Heard these criticisms before dear super savers? I have, and every time I do, I either smile or write a post to understand why others would want to impose their definition of fun on me. Whenever the critics are the loudest, you know they are going through their worst spending moments. It’s like blaming McDonald’s for losing your four-pack abs, or blaming Wall St. for buying too much house. Let’s ridicule them to make ourselves feel better.
What I recommend is for you to empathize with those who try and make you feel overly spendthrift. Forgive their mild peccadillo for they do not know better. Just ask them about their current financial problems or worries, and you’ll see why they are bothering you. They might be taking an expensive vacation which is giving them spending guilt deep down. They might be nervous about losing their jobs, or at least frustrated about being underpaid.
There is a story behind every critic. You just have to go find out. For those who like to criticize, just focus on saving more while bolstering your income. Doing both slowly overtime will lead to great results and a much more critical you.
Related: Savings By Age Guide For A Healthy Financial Future
Photo: Windmills of Mykonos, 2011. Eating frutti di mare on the coast and watching the sunset was a blast. Try it! SD.
Regards,
Sam
I’m the same way, I feel bad for spending more money than I should, knowing that I could probably spend less for it. I feel better when I can spend less and still have fun. You just have to be a bit more creative and resourceful. I am currently averaging about saving 21% of my income every month. I know it will be more once I get my raise, which I have been waiting on for 4 months. :(
I haven’t agreed with every post here, but I’m with you on saving 50% of after-tax, or at least, saving as much as is feasible without cutting into basic living.
So where’s that Bloomberg poker feature? I love poker (or used to love it — play far less often these days) so am curious. :)
I hope you are right but in marcu ,things are so different.
I have known a lots of businessman who are gamblers with bad luck,but they always have their way to get back to rich.well,carpe diem.
On the “other” side of the fence, I can see how difficult it is to cut some of life’s little pleasures. By that, I’m referring to choices of if one were to cut something completely, which would it be: Satellite/Cable or Internet
For me, it would be the Sat/Cable, for DW it would be Internet. I guess I’m bored with most of the stuff on TV nowadays (especially since the Olypics are off).
Great post as usual sir!
Thanks Chris. I hope the majority of us don’t have to get down to the level of cutting of cable and/or internet to save some money. Maybe cable, but I couldn’t live without internet, and I feel others feel the same way.
Best to earn more, to save more!
I agree that much fun can be had with relatively small sums of money.
One of my favorite quotes is from Ralph Waldo Emerson: “Give me health and a day, and I’ll make the pomp of emperors ridiculous.”
Most long-lasting value comes from experiences, and the majority of good experiences are inexpensive. I don’t keep a formal budget but I save the majority of my income.
For people that don’t have much income, saving 50% would be quite difficult, but for those that make a substantial amounts of income, it shouldn’t be too hard. But they don’t have to if they want to have to work for a long time, as you say!
Great quote! I’ll have to think about what it means.
50% is my figure. Perhaps it’s 25% for others. Saving just 10-15% of your income every year will NOT get people to financial stability imo.
I always remind myself that even if I did everything the person who’s judging me really wanted, they still wouldn’t be happy with me.
Good reminder Joe. I enjoy being judged b/c it provides so much good content to publish and talk about!
Sometimes expensive things can be fun. Oftentimes I’ve discovered that they aren’t. More and more I’m realizing that the inexpensive things are the ones that generate the most fond memories. Not to mention, debt slavery or living paycheck to paycheck creates way too much long-term anxiety, and that certainly isn’t fun.
True that. To live well is the best rebuttal.
I’m not sure why anybody would find this post insulting. This post is a rebuttal to insults hurled my way! :)
Say hello to Usain Next time you are in Jamaica!
I’m going to create an emotional trapezoid!
It’s so true that people’s definition of fun is incredibly personal. While I do love free hikes and naps on the beach, I also love being on the computer for eight hours straight organizing my photo library lol.
I’ve also tried to keep my cost of living expenses about the same even after earning more money over the years. I don’t want to be spending more money just because I have more money.
HAHAHAHAHAHA! Oh my goodness. You are too funny Sydney. 8 hours?! That must mean you have a backup drive for your backup drive too.
I totally agree with being happy spending $200 a month or $10,000 a month, so why not spend $200 and save the rest. I think when you are fortunate enough to earn a higher income, people assume you will have more things and spend more money. It is easy to get caught up in that. Just because you can afford something doesn’t mean you should have it. My husband and I were just giddy when we were broke students, then we got caught up in the spending cycle. We are trying to get back to simpler ways. It’s wonderful finding like minded people.
Good stuff Kim. It makes a lot of sense and I’m happy you’ve found your happy medium.
That’s what happens when you attempt to study for the GRE. 25 point words that nobody uses in day to day life that graduate schools will test you on!
The thing that stuck with me most about this post is our disagreement over the insouciance of San Francisco. It may not have the pathetic appearance-based self-consciousness of LA, but I would argue the city cares about many things, not the least of which is its own intellectual image.
As for the rest of it, I can say that I watched my father save like a fiend to provide for himself later in life and, although wealthy by the age of 50, he still has never been able to transition from a saver to spender. Therefore, his retirement is spent not enjoying the fruits of his labor but instead fretting the decline of his income. He still, at age 68, won’t bust the nut and has not been happy for many years.
You sure he isn’t happy as a clam?
i have seen lots of folks who spend $4-500 a month eating out at restaurants, but then complain that they have no money left for fun… obviously, eating huge portions without having to clean up after yourself is their definition of fun, and what they choose to invest in.
my idea of fun is getting away and traveling.. but i have had to learn to properly save up for a vacation ahead of time…
All is good until complaining happens.
I’m not going to lie and say that shopping isn’t fun for me-it is, but part of the joy of learning to live with less is learning how to have fun on it too.
True. And good on you for shopping! If that makes you happy, great!
So when you tell me to spend my “millions”, you are imposing your definition of fun or is it just guilt? I think you are really trying to tell yourself to spend more! A little amateur psychology on my part. :)
I am very careful about what influences me and even more careful what influences my spending habits. After all, I have to deal with the consequences and that is never fun. I have a great life and money has very little to do with it. I know, easy for me to say since I achieved the nest egg which gives me that comfort.
Perhaps! If I still have millions of dollars at age 65-70, with high certainty I will not run out of money, I am definitely going to do my best to spend more!
It is very hard to change from a lifetime of saving to suddenly change. I expect I must change a little as I enter retirement, but that is 5 years away.
Perhaps start increasing spending by 20% a year for 5 years, so that in 5 years, you will be spending 100% more?
I have a very similar problem to you, however, my future is more uncertain, hence why I am conservative.
Good example. It’s funny how we project our definition of fun and spending money on others.
@retirebyforty
I agree with Joe. The work hard / play hard connection to spending a lot of money is foolish. You don’t need to spend a lot of money to have fun. I think saving 70% is pretty impressive. I’m shooting for 50% for 2013.
I just got back from a 9-day vacation in Ireland and BOY do they have different spending habits. Most people I met live paycheck to paycheck and the only thing they save for is the pubs. My brother in law had to plan his own bachelor party & pay for the guys’ suits. No one could chip in a few bucks but they can drop 100 euro at the bar in one night.
Ha! Awesome perspective Jessica! Helps the image of the Irish and alcohol!
I’d love to read a post about your trip if you haven’t done one already. Paycheck to paycheck to drink. I’m sure they are enjoying the pubs though!
I just saw your response back! You can read about how our spending went and see 300+ pictures!
Funny post!
I get this all the time because I choose to go out, and rather hang out at home and have fun. It’s not cheap eating dinner out every night, when I can make an equally good steak (two usually) at home every night for the price of one at the restaurant. I pick and choose my what activities I do, and don’t do. For example, physical fitness, organized sports, and golf are good “mind rests” and perfect for me to recharge. So, I adequate most of my “fun” income towards there.
Fun is a very broad term, and usually is only a temporary feeling of excitement. Much like buying a new car, it feels awesome the first month, and then afterwards it’s like any other car on the road…..unless you drive a Porsche 911 GT4, and can afford to rip it open on the track every weekend.
Ah yes, a Porsche 911 GT4 would be sweeeeet! All the new 911’s are so sweet. They’ve become more beautiful… and MORE expensive too!
I’d enjoy one for a couple months, but then would start feeling guilty and stressed, not being able to park it anywhere and not think about its safety.
Why do some “super savers” feel the need to villify those that do not save > 50% of their after-tax income? Perhaps because deep down they realize that there is a risk they may never get to spend this saved money and all those years of saving were for not?
“There is a story behind every critic.” So true, regardless of who is doing the critiquing.
True. I’ve definitely wondered at times whether I was saving too much at times. But now that I’m retired, I definitely no longer wonder, b/c my savings is front and center to being fully utilized now!
But first, I’ve got to spend all my online income and passive income that comes from savings! That might be tough!
I hope I’m not the only one that googled “picayune”.
Come on, everybody knows the definition of my favorite word, Picayune! Like Pikachu, but not really!
What a fund word to use :)
Fun is such a relative word.
I know generalizing here, but spending money for ‘fun’ usually tends to be finite sum. ‘Cheap’ fun or ‘spend no money’ fun tends to last longer (spending time with friends versus buying the latest thing).
I’m definitely no expert on this subject, but there’s a definite lure to buying things. It becomes more of a habit as you get less and less happiness from one object, it’s time to buy something else to compensate. Before long this ends up being your spending habit, as you try to keep up with your happiness. I’ve been there several times where I noticed an upward of spending only to catch myself thinking ‘do I really need this?’ and ‘does this really improve my life in anyway?’
Great questions to ask before spending on anything that causes some hesitation!
Great strategy sam – i’ve been working on getting out of debt, so lately that’s where the bulk of my earnings have gone, but that should be over in the next 6-12 months, and I’ve gotten a huge income boost by getting married, and my spouse and I should be easily able to save 50% of our income or more!
I think even with that savings level, there’s still room for fun, you just have to figure out what “fun” is. Some people may not find hiking or fossil hunting fun, but I like them and they are mostly free.
Hi Jeff, when you are out of debt, I think you are going to look back and see how much fun it was getting out of debt! It might be odd, but it could be true. You might long for that challenge again.
Combining incomes is great. It truly makes spending and saving so much easier. I would love to go hiking and fossil hunting with you. That is a blast!
Well maybe we can go out early morning sometime at fincon! Could be a bit of a drive, but it’ll be worth it
Hmm, could be good! Is it possible to just go to Denver, hang out after the conference and such instead of attend the presentations?
I’m saving 50% of my gross income, as sole wage earner of a married couple. We still golf all we want and enjoy our kids and grandkids. Every now and then, we dip into savings for a fun trip or cruise. That’s what our savings is for. But in a regular month, 50 percent of gross goes to savings.
When I learned that there wasn’t a correlation between happiness and consumerism it became a turning point in my life. Like you, I found that taking a walk or going on a bicycle ride with the wind in my hair or going to the beach and taking a dip in the water are all fun, free and make me really happy.
It does take discipline to live this way, which is not a bad thing. And I have plenty of friends who say “you only live once” or “you could die tomorrow” while they blow tons of dollars on frivolous things. Yet, they have been saying these things for years, are still alive, and some of them have zero dollars in their retirement account. Makes you think.
Well actually, if they are still alive and have been blowing tons of dollars on stuff, they are actually winning so long as they can keep it up!
And, if they die with tons of debt, they are still winning b/c they don’t have to pay it back! :)
Then there is the “when” in having fun. Wanna have a night out this week, or an Alaskan cruise some time down the road? Wanna have fun taking a hunting trip now and lose everything when you get laid off?
Better to forgo a few fun utils now for higher quality fun later… :)
True. I’m not sure if it’s possible to have fun all the time. Maybe, but not a sustainable high level of fun. After 3 weeks of traveling, I get tired for example. Still fun, but not as fun.
I was just going to write about the whole work hard/play hard BS that people try to shove down you throat. :)
I agree that fun is cheap. We have a ton of fun and we don’t spend that much money at all. Spending time with families and friends are the best way to have fun and build relationships. We went to a community building BBQ/concert last night and it was the most fun we’ve had in ages. Traveling does get expensive though.
I think the critics are set in their ways and couldn’t see a different point of view. They spend a lot of money to have fun and doesn’t understand how people can have fun without $$$.
Looking forward to reading the post. I’m of the belief that the accusations of not spending enough money stem from the guilt one has of spending too much money.
Well, for one, most people don’t make what you make, so it is a bit insulting chastising people for not saving 50% of their income. While human nature is to spend roughly what you make unless you force yourself to save via “paying yourself first”, someone living on a $40K salary is unlikely to put away $20K each year while living below the poverty line with their remaining post-tax income (assuming they pay federal income taxes, but of course there are payroll and state).
That aside, I very rarely do come across someone that seems so stingy and such a tightwad that they’re literally letting life pass them by. But that’s probably about 1 in 50. About half-3/4 the people I know spend way too much and justify it with similar concepts (having fun, looking good, you only live once, you can’t take it with you, etc.). Then there are the quarter or so who seem to have a decent balance. I like to think I’m in that balance mix. For me, much depends on future employment. If I stay employed at roughly the same salary in real terms through 55 or so, I’d be completely golden. But my industry is prone to layoffs, so it’s no guarantee. As such, I’m always a bit cautious with savings and emergency funds.
Funny how people see different shades of green.
I’m not chastising people for not saving 50% of their income. People are chastising ME for saving 50%+ of my income, and accusing me for not living life or having fun. As far as I know, I’m having a blast, especially now that I’m retired!
Do you see the difference? I encourage people to increase their savings percentage until it hurts a little, then continue to increase.
I started as an apprentice Plumber in 2003. I would occasionally get laid off and would have to live on unemployment. Since then, I have always learned to be able to live of $400 / week. ( which was unemployment insurance at that time ) All these years later , even though My wife and I both worked, and we have three kids to feed. We still live off $600 / week. Darwin’s Money has a good point, in that the higher the earnings, the higher the savings, the higher the retirement income when you finally reach retirement. However. If you have a lower income, and lower savings, you probably also have lower expenses, and are closer than the rest of us to “kicking the Job habit”. I think the point of this post is that regardless of what amount of dough you are living off now. We are all working towards our own ~50% of pre retirement income. For some that number is higher than others. The jones’s are everywhere, and people are always trying to keep up to them. Stand guard.
For some people, eating out at O’Charley’s and going out to the local bar is their idea of fun. For others, it’s going on awesome vacations and enjoying truly unique experiences.
I would rather sacrifice small fun things in order to be able to afford the big fun stuff, personally. And yes, I have been called cheap many, many times! It’s hard for people to understand why you can’t afford to go out to dinner but can afford an exotic trip. They just don’t get it.
I agree! My husband and I have a great time just walking to the local rite-aid and buying a scoop of ice cream! (or sometimes we end up buying the whole carton because we feel guilty that it’s the same price for one scoop) I do feel like people spend their money without any regard to saving and being on a budget and expect help later. They throw themselves “pity” parties and often say things like “i worked hard for this” or “i deserve this” or “i deserve to have fun.” Give me a break! Fun is whatever you make it to be and it doesn’t require spending hundreds of dollars!!!
With the Olympics on and all the abbage, no ice cream for me. Only sit-ups and push-ups!!
I have heard that story too many times. ” I deserve it” etc. Once my brother in law tried to explain to me why it was saving him money to buy a forty thousand dollar truck. Reasoning; reduced renovation costs because he wouldn’t have to pay for delivery of supplies. Some people will tell themselves anything.
Wow, that is some crazy rationalization!
People who drive $40,000 trucks have $400,000 incomes based on my 1/10th rule for car buying!
That’s the thing. We each have our OWN ideas of what we VALUE.
I think they try to impose their definition because it is all they know. In order for them to have fun it always involves spending money. They haven’t discovered all of the fun things you can do for free or for low cost. Yes taking a nice trip is fun every one in a while but I don’t think having an interior room vs having a suite on a cruise ship will really make up the difference in cost in additional fun. How much time do you spend in your room on a cruise ship anyway? I’ll find out later this year as I have my cheap interior room booked!
I think they are making excuses for not saving but I don’t think they’re asking for handouts. They’re asking for you to be in the situation so they don’t feel quite so bad about it… too bad I won’t join that crowd.
Lance, an exterior room with a balcony rocks man! Just think, room service in the morning on the deck, hearing the waves, in a soft warm glow. It’s fun to just walk outside as we dock into port.
Once I went deck, I haven’t gone back. I do believe an interior room is just fine though. It forces you to explore the ship and enjoy its many outside decks. The ship is fantastic.
There’s a price point for where a deck is too much though. That price point is about $50/night. Anymore, and I’ll just go deckless.
Sam, it’s funny that you say that, because that’s how my wife and I feel.
Our first (and so far only) cruise that we went on for our honeymoon we had an outside deck. We made sure it was completely paid off before going, and it really did rock! I got to see some things happening on other decks, in addition to all the decks upstairs.
To just be able to sit on the balcony and have room service deliver a few drinks, or late night snacks whilst enjoying the beautiful ocean was at least a once-in-a-lifetime events that I want to repeat again!
It really is the best isn’t it? It’s worth it! I’ll be on a deck next week!