How did you decide how much to save?

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richard
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How did you decide how much to save?

Post by richard » Thu Mar 13, 2014 1:31 pm

How did you decide have much to save?

Popular alternatives range from saving 10% - 15% to maxing a 401(k) to projecting rates of return and saving enough to generate a chosen level of spending if the projections prove accurate.

Save too much and you're denying yourself in the present, save too little and your future won't be very bright.

dad2000
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Re: How did you decide how much to save?

Post by dad2000 » Thu Mar 13, 2014 1:52 pm

I never decided how much to save because my income is variable.

I budget what to spend, ensuring that it is less than my base salary. Then I save everything else. Long term average is about 20% of gross, or 28% of net.

Were my income more predictable, I'd probably try to save 15%.

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Clark & Addison
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Re: How did you decide how much to save?

Post by Clark & Addison » Thu Mar 13, 2014 1:57 pm

We save 15% in our retirement accounts. We got this number from listening/reading Dave Ramsey's advice when we were married at age 23/24. At that time we focused the extra on paying off our mortgage. Now that that is done, our extra savings goes towards our kids' 529s and our next vehicles and our dream home. Once we build our home in the next few year, I expect our retirement savings to jump to upwards of 35%.

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Re: How did you decide how much to save?

Post by John3754 » Thu Mar 13, 2014 2:14 pm

We did not decide how much to save, we decided how much we need to spend, and then what was left over after taxes gets saved.

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Re: How did you decide how much to save?

Post by terrabiped » Thu Mar 13, 2014 2:21 pm

I'm frugal by nature and saving comes easy for me as I've been spending less than I make for years. I do not think of this as denying myself in the present as I enjoy living simply, and I enjoy having plenty of money in reserve. I currently save 30% using payroll deductions. 15% goes to an ESPP. 15% goes to my 401k.

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Re: How did you decide how much to save?

Post by gkaplan » Thu Mar 13, 2014 2:33 pm

I decided to save as much as possible.
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Re: How did you decide how much to save?

Post by englishgirl » Thu Mar 13, 2014 2:36 pm

I didn't really decide. I have always started with a small amount per month or per paycheck, and just kept bumping it up to whatever is tolerable. And then seeing if I can bump it past the tolerable level. And then when that gets tolerable, rinsing and repeating.

I generally don't feel TOO deprived, but I did find that post-2008, when my income dropped, I wasn't doing things like taking longer vacations (as opposed to short weekend trips) because in my head I was thinking "I can't afford that" just because I didn't have enough left over in my checking account, and it wasn't an expense that I felt I should take out of my emergency fund. So, given that I decided that vacations are important, I just opened a new savings account, called it "vacation", and I save some money every month into that account. That way, I've always got a plan for the big expenses, and don't feel guilty spending it.

I also choose to spend more on certain things than others. I figured out where my priorities lie - for me, that included making space in the budget for yoga classes, which can get pricey. And ditching things like expensive dinners with too much wine. I can spend money on anything I want, just not everything I want.
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pennstater2005
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Re: How did you decide how much to save?

Post by pennstater2005 » Thu Mar 13, 2014 2:41 pm

John3754 wrote:We did not decide how much to save, we decided how much we need to spend, and then what was left over after taxes gets saved.
This sums it up for me.
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Gecko10x
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Re: How did you decide how much to save?

Post by Gecko10x » Thu Mar 13, 2014 2:43 pm

Currently I don't feel we save enough. This is based on future goals and growth projections (both income & investments). So, right now it's "save as much as possible while maintaining standard of living".

If we ever reach a point where I think we're saving "enough", I imagine I will save a bit more and then allow a little lifestyle creep.

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Re: How did you decide how much to save?

Post by mnvalue » Thu Mar 13, 2014 2:59 pm

A combination of repeating these things in any order: Save until it starts to hurt at least a little. Review your expenses to see what's really important to you, where you can save, etc. When you get a raise or windfall, plan to save all of it; it's easy to back off the saving later, if needed.

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Re: How did you decide how much to save?

Post by berntson » Thu Mar 13, 2014 3:17 pm

We save about 50% of our after-tax income. I would be happy to save less, but find that it's actually hard to find things to spend money on that would make us much happier. If we had more income, we would just save more. If we had less income, we would save less.

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Re: How did you decide how much to save?

Post by mhc » Thu Mar 13, 2014 3:28 pm

I have goals. For example, I want to be able to retire at age XX. I balance that goal with living a reasonable life now. How much I save falls out from that. Basically, I save whatever I don't spend.

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Re: How did you decide how much to save?

Post by IlliniDave » Thu Mar 13, 2014 3:33 pm

richard wrote:How did you decide have much to save?

Popular alternatives range from saving 10% - 15% to maxing a 401(k) to projecting rates of return and saving enough to generate a chosen level of spending if the projections prove accurate.

Save too much and you're denying yourself in the present, save too little and your future won't be very bright.
When I was younger with family constraints I saved as much as I could in light of what I had to do to support my family. Now in mid life I decide what to spend and save the rest. For those interested in percentages, during most of my working years that was around 12% of gross. Now it's about 55% of gross. If I die prematurely I don't think I'll spend my deathbed moments worrying about not having spent more money. It's probably not possible for me to "over-save". Almost everything I look back on in my life that I accomplished and take pride in involved some degree of self-denial, and I've learned to find enjoyment and satisfaction in many simple things. I'm probably an outlier in that regard.

Bottom line is everyone needs to decide what works for themselves. At this point in my life I place a high value on financial independence sooner rather than later, and it has had immense impacts on my spending habits without me ever feeling deprived of anything. Others may be driven by other priorities, and my way wouldn't work for them.
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Re: How did you decide how much to save?

Post by Clever_Username » Thu Mar 13, 2014 3:46 pm

I do the opposite, pretty much -- I figure out what I want to spend, and then I save the rest.

Fortunately for me, I really enjoyed my life when I was in graduate school, and I continue to live a similar life. Sure, I'll play golf a bit more often now, and go to upscale courses a bit more often, and head out to Phoenix periodically for a football game (can't wait for the home opener, even though I can't make it this year). Still, even on a teacher salary, I'm able to max out my tax-advantaged accounts, live the life I want to live, and have leftovers.

If anything, the hard thing for me is forcing myself to spend my budget -- if I didn't say "I'm spending $X/month on entertainment," I'd probably talk myself out of some things that I'm glad I do. For that matter, my first post here was something to the tune of "help me figure out what I should spend money on."
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Re: How did you decide how much to save?

Post by technovelist » Thu Mar 13, 2014 4:05 pm

mhc wrote:I have goals. For example, I want to be able to retire at age XX. I balance that goal with living a reasonable life now. How much I save falls out from that. Basically, I save whatever I don't spend.
You want to be able to retire at 20? Wow! That is very aggressive indeed!
In theory, theory and practice are identical. In practice, they often differ.

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Re: How did you decide how much to save?

Post by whomever » Thu Mar 13, 2014 4:05 pm

How did you decide have much to save?
One way to think about it is the traditional model: 'we want to retire at age XX, expect to have expenses not covered by pension/SS of $DD, and therefore we need to save P%'. Everyone should do that exercise and make sure that are on track in that way, and if not, figure out what to do (cut expenditures, increase income, whatever).

But what about saving more than P%? That's a decision about lowering consumption now to support more consumption later. There are two reasons to do that:

1)One's best laid plans about retiring at age XX may be subject to change (just had a friend told by her employer she's retiring now, at age XX-4). You could get laid off in the depths of a recession and have a huge income drop, etc. Frontloading the contributions will be a Godsend if those kinds of things happen.
2)If nothing bad happens, you get to retire early. Maybe quite early. For example if Alan saves $1000 a year from age 25 to 45, then stops contributing and just lets it accumulate, and Bob saves $1000 from 45 to 65, with a 5% annual return Alan has $92K at age 65 while Bob has $34K - Alan has three times as much, even though they both saved $20K. Starting savings when you're still used to the starving student lifestyle can have a big payoff.

All that said, our objective wasn't to live in penury while young. We took vacations, funded hobbies, and so on. We just tried to keep an eye on the idea that spending more now meant less later, so I kept the clunkers going, we bought a sweat equity house, and so on. Whenever we came into money - a tax refund, a raise, or whatever - we tried hard to put half of it into savings. As time went on (house paid off and so on) a raise would go 100% to savings, because we had all we wanted. Anyway, my only wisdom is, when considering a discretionary purchase, think of two things: how many days did I work, after taxes and savings, to earn the purchase price, and if I invested the money instead, how much sooner could I retire. Then decide which option you want more.

This is not to imply the answer is always 'save'. For example, we love to hike. We took off large blocks of time to do that when young, because old knees and 2 week backpacking trips don't always mix :-). Just realize the tradeoff you're making.

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Re: How did you decide how much to save?

Post by cjg » Thu Mar 13, 2014 4:06 pm

Same as the other posters who say that they decided how much they wanted to spend and save the rest. We spend $40k - $45k per year and will probably spend about the same as long as our combined after-tax income is in the $65k -$250k range.

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Hub
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Re: How did you decide how much to save?

Post by Hub » Thu Mar 13, 2014 5:26 pm

We spend about $60k and save the rest. This would remain true almost no matter what we make (well, $1000/mo in childcare will go away in a few years). The only difference is the date that we are able to quit working the day jobs. 2014 savings rate is over 50%.

We arrived at this savings plan when we decided that we didn't want to have to go to work any more after we hit age 40.

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cfs
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Re: How did you decide how much to save?

Post by cfs » Thu Mar 13, 2014 7:02 pm

I have a military pension, plus we are both working (because we want to and not because we have to) and maxing out our work retirement plans.

As far as the "take home money" this is what we show, based on my excel spreadsheet (saving/investing):

2011 - 78% of take home money
2012 - 61% of take home money
2013 - 71% of take home money
2014 - YTD 100% of take home money

Investing slowly and for the long run via our boring SWAN (sleep well at night) portfolio.

break
break

Oh by the way -- where have all the "100% in equities" and the "why bonds at all" conversations gone?

Thanks for reading.
~ Member of the Active Retired Force since 2014 ~

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Re: How did you decide how much to save?

Post by JonnyDVM » Thu Mar 13, 2014 7:13 pm

When I started work in 2008 I was proud that I was putting 10% in my SIMPLE IRA and I saved enough to contribute a few grand to a Roth after living with my parents for a few months while waiting for my house to close. I upped my IRA contribution to 15% when the market was in the tank in 09 and I was making a lot more money. My boss at the time actually tried to talk me out of it!??? Looking back that wasn't enough. Most sources I've read recommend 20%, so that's what I shoot for now, I hope it's enough. Retirement calculators give me all sorts of different answers. Repaying student loans has been the biggest barrier to saving since graduation. Once those are gone our savings rate will be way over 20%. Truthfully though we make more than enough to live comfortably so saving the extra isn't too hard for us,
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

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Re: How did you decide how much to save?

Post by bobbun » Thu Mar 13, 2014 7:25 pm

terrabiped wrote:I'm frugal by nature and saving comes easy for me as I've been spending less than I make for years. I do not think of this as denying myself in the present as I enjoy living simply, and I enjoy having plenty of money in reserve.
This. I didn't really "decide how much to save".

When I was growing up, money was scarce, and I simply never found a need to develop luxury habits. As a consequence, I find saving to be pretty effortless, and I don't really plan for it. I maximize my retirement plan at work, and even with automatic taxable investments withdrawn from my bank account, I still find myself making 2-3 unscheduled investments each year as checking balances grow larger than I intend. My savings rate is in the range of 40-50% of pre-tax earnings, and I don't feel I'm depriving myself at all. For reference, I'm single, living on an upper five-figure salary in a low cost of living area.

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Re: How did you decide how much to save?

Post by cherijoh » Thu Mar 13, 2014 7:32 pm

When I started work, I had access to a 401k with a 1:1 match up to 5% of my income. So I thought it was a no brainer to save 5% and get another 5% as a match. I got promoted a few times in the next 10 years, so I upped my contribution until I hit the maximum for the 401k (which was 15% plus the 5% match). I stayed at that rate except for about a year when I bought my house (when I dropped back to 5% to just get the match). Then I bumped it back up, plus did some after tax investing - I think my maximum was to save 25 -30% of my salary (not including the 5% match).

I definitely had a goal to retire early, plus it gave me piece of mind to know that I could survive most of the potential bumps in the road because I was ahead in saving for retirement and had a nice rainy day fund. IMO, too many people end up working longer than they intended or don't have the retirement they dreamed about because its all about what they want NOW!

IMO it's easier to dial the savings back later than to ramp it up and play catch up. I certainly didn't live like an impoverished grad student, but I always made sure not to overspend on stuff with long term consequences. My house cost less than half of the amount for which I could have qualified and I kept my cars a lot longer than most people in my income bracket. But I took some really cool vacations - which was more important to me than a fancy car or a "McMansion" house.

Only you can prioritize what is important to you. Just realize the decisions you make now can impact you long into the future.

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Re: How did you decide how much to save?

Post by obgyn65 » Thu Mar 13, 2014 7:42 pm

I have never decided how much to save. I spend what I need, and save the rest.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell

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Re: How did you decide how much to save?

Post by Crimsontide » Thu Mar 13, 2014 7:44 pm

gkaplan wrote:I decided to save as much as possible.
+1 We have always been above average savers I would say. But since the kid is grown and gone, the house is paid for and the goal line is in sight, we are currently saving ~ 70%. Are we "denying" ourselves at this point? Probably but I can't really think of anything I "want" more than a secure early retirement :happy

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Re: How did you decide how much to save?

Post by shipwreck » Thu Mar 13, 2014 7:47 pm

Currently, I decided 9% + company 3% match was a good starting point for the 401k. I am striving
for adding 1% a year with each raise. Well that's the plan.

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Re: How did you decide how much to save?

Post by Achelois » Thu Mar 13, 2014 7:49 pm

I maxed out 403b, then taxes and insurance come out. Then I live on half the net and invest the other half in taxable accts.

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Re: How did you decide how much to save?

Post by travellight » Thu Mar 13, 2014 7:53 pm

I also spend according to my priorities and do not feel deprived; and saved the rest. I save about 85%.

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obgyn65
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Re: How did you decide how much to save?

Post by obgyn65 » Thu Mar 13, 2014 8:08 pm

This number sounds about right.
travellight wrote:I save about 85%.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell

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Re: How did you decide how much to save?

Post by JonnyDVM » Thu Mar 13, 2014 8:46 pm

obgyn65 wrote:This number sounds about right.
travellight wrote:I save about 85%.
I assume that's sarcasm. You may not feel deprived but obviously no one needs to save 85%. I don't get the people on this forum sometimes.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

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Re: How did you decide how much to save?

Post by leonard » Thu Mar 13, 2014 8:55 pm

richard wrote:Save too much and you're denying yourself in the present
This is an assertion that is assumed by many - but never justified.

Casual observation says people would be "denying themselves" things like a new car every 2 years, every piece of electronics known to man, a $100+ per month smartphone plan, daily Starbucks, endless toys that never get used, clothes that get donated to goodwill in a year, etc. To me, much "denying oneself" would come at almost no opportunity cost by giving up a lot this garbage.

Rather than rationalizing a savings rate - I think people would learn a lot by rationalizing their spending rate instead.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

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Re: How did you decide how much to save?

Post by leonard » Thu Mar 13, 2014 8:58 pm

JonnyDVM wrote:
obgyn65 wrote:This number sounds about right.
travellight wrote:I save about 85%.
I assume that's sarcasm. You may not feel deprived but obviously no one needs to save 85%. I don't get the people on this forum sometimes.
Why not? Why spend money just to spend money, when it's not truly needed or wanted?
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

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Re: How did you decide how much to save?

Post by travellight » Thu Mar 13, 2014 9:00 pm

by JonnyDVM » Thu Mar 13, 2014 4:46 pm

obgyn65 wrote:
This number sounds about right.
travellight wrote:
I save about 85%.


I assume that's sarcasm. You may not feel deprived but obviously no one needs to save 85%. I don't get the people on this forum sometimes.
I don't think that was sarcasm. I think obgyn saves about the same rate.

I don't need to spend more than 70k per year; I am really not depriving myself.

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Re: How did you decide how much to save?

Post by villars » Thu Mar 13, 2014 9:08 pm

I used to save whatever was left over. But that led to lifestyle creep as my income went up..

So i read and asked on the forum and settled on 30% of gross for my income range and age

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Re: How did you decide how much to save?

Post by SC Hoosier » Thu Mar 13, 2014 9:18 pm

I don't make enough to get much benefit from the Traditional IRA deduction, so I am really excited about the Roth. I chose a retirement savings amount that would stretch me a little bit. Not that we are denying ourselves more than we choose to. I just push myself to budget well and not waste anything. It's a fun game for me, personally. I am going to spend $450 on a round of golf at TPC Sawgrass in May, only 3 days after The Players Championship. I am so excited.

See? I can loosen the purse strings up a bit.
I live in No Payment Land. It is wonderful, and I'd love for you to live here too.

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Re: How did you decide how much to save?

Post by joe8d » Thu Mar 13, 2014 9:28 pm

obgyn65 wrote:I have never decided how much to save. I spend what I need, and save the rest.
Same here.
All the Best, | Joe

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Re: How did you decide how much to save?

Post by LifeLearner » Thu Mar 13, 2014 9:34 pm

I decided to max out 401k, HSA, IRA, and contribute the maximum to ESPP. From the ESPP, I will save the principal, and use the rest freely. For my bonuses, if any, I save half and spend the rest. I am fortunate to have landed a well-paying job after graduation; I paid off the little loans I had and have no debt to my name. I continue to live pretty frugally as I had in school. I eat out more frequently, but that's mostly it.

I feel good about it this way because I am forced to consider whether I really want to make big purchases (like a different car), and things will only get better from here! Or so I'm told...

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Re: How did you decide how much to save?

Post by Johm221122 » Thu Mar 13, 2014 9:41 pm

gkaplan wrote:I decided to save as much as possible.
+1 the thing I want most is financial freedom

John

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Re: How did you decide how much to save?

Post by bhsince87 » Thu Mar 13, 2014 9:43 pm

First, I set goals.

What do I want out of life? Kids? Early retirement? A house? A trophy house? Nice cars? Security? Whatever….

Then I tried to figure out how much money it would take to reach those goals.

Then I tried to figure out how I could earn enough money to reach those goals, balancing that desire with job satisfaction.

Once I had a handle on that stuff, I just saved everything above that amount.

There were periods when I saved nothing, and periods when I saved 70%.
BH87

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Re: How did you decide how much to save?

Post by Clever_Username » Thu Mar 13, 2014 10:03 pm

JonnyDVM wrote:
obgyn65 wrote:This number sounds about right.
travellight wrote:I save about 85%.
I assume that's sarcasm. You may not feel deprived but obviously no one needs to save 85%. I don't get the people on this forum sometimes.
It's not just them. I've heard many people say that Carson Palmer has a savings rate over 85%. I doubt he'll have financial trouble after he retires.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_

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Re: How did you decide how much to save?

Post by gator15 » Thu Mar 13, 2014 10:11 pm

I have a hope for the best, plan for the worst mentality. As a result, I save aggressively as possible. Probably not the best mentality to have, but it has given me financial flexibility. I don't deprive myself too much. You still have to live today while saving for the future.

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Re: How did you decide how much to save?

Post by bogleblitz » Thu Mar 13, 2014 10:19 pm

pennstater2005 wrote:
John3754 wrote:We did not decide how much to save, we decided how much we need to spend, and then what was left over after taxes gets saved.
This sums it up for me.
This sums it for me too. The first few years out of college, nothing much was saved because everything goes to student loans and expensive luxury items I buy when I was 20-25.

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JonnyDVM
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Re: How did you decide how much to save?

Post by JonnyDVM » Thu Mar 13, 2014 10:20 pm

Clever_Username wrote:
JonnyDVM wrote:
obgyn65 wrote:This number sounds about right.
travellight wrote:I save about 85%.
I assume that's sarcasm. You may not feel deprived but obviously no one needs to save 85%. I don't get the people on this forum sometimes.
It's not just them. I've heard many people say that Carson Palmer has a savings rate over 85%. I doubt he'll have financial trouble after he retires.
Funny you brought up an athlete, I was going to add that only someone like an athlete that makes a large amount of money in a very finite career needs to save a high percentage like 50%. It's no surprise of course that the majority of pro athletes go broke. I think it's great if you are content living a spartan lifestyle and saving 85%. For the rest of us that savings rate is obviously way more than what the average person needs to save over an average length career to retire comfortably.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

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Re: How did you decide how much to save?

Post by Nukeboilermaker » Thu Mar 13, 2014 10:36 pm

I realized that I was fortunate enough to earn an income capable of maxing out tax advantaged accounts so I decided to do that. We live comfortably and I would rather save now and adjust later, pay myself (and family) first then live on the rest. Currently I max out a 401k, 2 IRAs, and ESPP and have a 15 yr mortgage. The accounts plus a little to the efund means we save about 35-40% of my income. Saving what you can and feel like you are not missing out life is what matters.

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Re: How did you decide how much to save?

Post by zaboomafoozarg » Thu Mar 13, 2014 10:38 pm

I try to save till it hurts a little. I let myself do a few special fun things per year, but other than that I'm saving as much as I can and mostly just spending for necessities. Luckily the things I like to do often are pretty cheap.

After tax, I save about 50% in a normal year, more in a bonus year.

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Re: How did you decide how much to save?

Post by HomerJ » Thu Mar 13, 2014 10:48 pm

Every time you get a raise save half of it...

Say you're making 40k now.

When you get a raise to 43k, start saving to 1500...

When you get to 50k, you'll be saving 5000 a year, and living a 45k lifestyle... So your lifestyle does get better, but your savings rate grows fast...

When you're making 70k, you'll be saving 15k a year and living a 55k lifestyle.

Note if both you and your spouse are working, this could be 100k, saving 25k a year, and living a 75k lifestyle...

Someday if you're really lucky, you'll get to the point where you have "enough", and ALL raises will go to savings...

My wife and I got to a combined 140k, where we were saving 40k and living a 100k lifestyle, and realized that we really didn't need anymore... so then all raises after that went to savings... (okay, our vacations became a LITTLE nicer, so we spent some of it, but not much!)
Last edited by HomerJ on Fri Mar 14, 2014 12:17 am, edited 2 times in total.

Workaholic
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Re: How did you decide how much to save?

Post by Workaholic » Thu Mar 13, 2014 10:50 pm

I joined this board a few months ago and learned tons from many members. Instead of having just a flat percentage that I aim to shoot for, I simply decided I wanted to max out both my 401k and ROTH IRA as well as contribute about $5000/ year to my taxable Vanguard account. Whatever that percentage is...probably about 40% of my gross, is what I decided was adequate for an ambitious 23 year old. If I can get used to living on less now, it'll be much easier to not let lifestyle creep set in as I get older. Sure maybe next year ill buy a new Corvette Z51 Stingray but beforehand, I'll make sure my finances can support a luxury purchase. After all...you do have to live a little in the present.

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LowER
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Re: How did you decide how much to save?

Post by LowER » Thu Mar 13, 2014 11:03 pm

IlliniDave wrote:
richard wrote:How did you decide have much to save?

Popular alternatives range from saving 10% - 15% to maxing a 401(k) to projecting rates of return and saving enough to generate a chosen level of spending if the projections prove accurate.

Save too much and you're denying yourself in the present, save too little and your future won't be very bright.
When I was younger with family constraints I saved as much as I could in light of what I had to do to support my family. Now in mid life I decide what to spend and save the rest. For those interested in percentages, during most of my working years that was around 12% of gross. Now it's about 55% of gross. If I die prematurely I don't think I'll spend my deathbed moments worrying about not having spent more money. It's probably not possible for me to "over-save". Almost everything I look back on in my life that I accomplished and take pride in involved some degree of self-denial, and I've learned to find enjoyment and satisfaction in many simple things. I'm probably an outlier in that regard.

Bottom line is everyone needs to decide what works for themselves. At this point in my life I place a high value on financial independence sooner rather than later, and it has had immense impacts on my spending habits without me ever feeling deprived of anything. Others may be driven by other priorities, and my way wouldn't work for them.
DITTO!! But IlliniDave and I have somewhat unique and similar histories and similar urgencies (extrapolating only from prior open posts - no inside info so I could be very wrong). None of us know what's around life's next corner, and the more we think we do, the more bravado is allowed to bolster sometimes false confidence. If you spend 2 hours with me at my work, you'll know of what I speak.

Spend what feels right for you in the moment; the fact that you are here in this forum reassures me that you will be responsible re: how you decide how much to save.

I am in a corner of nearly 50, colleges to pay for, just coming out of massive divorce debt, and a somewhat newly discovered love of NOT having too many possessions, so I save like there's no tomorrow; that's how I decide how much to save.

Hopefully you are young and don't have a divorce in your future. If I would have known years in advance that a divorce was headed my way, I would have had many expensive hobbies and travel habits.

The bottom line: saving is probably best, but in some circumstances may not be - so live for you, for now, and for the unknowable future.

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Re: How did you decide how much to save?

Post by letsgobobby » Thu Mar 13, 2014 11:38 pm

It's always been around 30-50% of gross which just sort of feels right. I definitely don't use the approach advocated by some, of just saving what we don't spend. We've always done the opposite, determining in advance what we need to save (primarily for retirement and college, but also in the early years multiple 'sinking funds' for car repairs, vet bills, home repairs, buying new furniture, etc.). Early on we would have these budgets, oh we can't go out to eat this week, we're behind on the vet sinking fund, etc. Mrs. letsgobobby hated it. But she didn't leave me. Now we don't have to live that way. We still make it a priority to save 30-50% of gross which determines how much we can spend on vacations, whether we should buy a sofa this year, how much we should donate to charity, etc.

How did I land at 30%? The 403b max in residency was about 30% of my salary and I just stuck with it.

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HomerJ
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Re: How did you decide how much to save?

Post by HomerJ » Fri Mar 14, 2014 12:10 am

gkaplan wrote:I decided to save as much as possible.
So you eat nothing but rice then? and live in a cave? :)

Surely you made SOME decisions between spending some now and saving...

(The proper answer to that question is "Don't call me Shirley")

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HomerJ
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Re: How did you decide how much to save?

Post by HomerJ » Fri Mar 14, 2014 12:15 am

leonard wrote:
JonnyDVM wrote:
obgyn65 wrote:This number sounds about right.
travellight wrote:I save about 85%.
I assume that's sarcasm. You may not feel deprived but obviously no one needs to save 85%. I don't get the people on this forum sometimes.
Why not? Why spend money just to spend money, when it's not truly needed or wanted?
Except I believe travellight intends to spend a LOT of money in retirement... so I really don't understand why he doesn't spend SOME now... I hope he doesn't get hit by a bus before he retires... (I'm sure he hopes that too) :)

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