Saving for the future vs you only live once

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betterfinances
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Saving for the future vs you only live once

Post by betterfinances » Tue Jan 12, 2016 2:13 pm

I'm curious about something here....Some folks have a YOLO (you only live once) philosophy and others have a SFTF (save for the future) mentality regarding personal finances.

I'm wondering at what point in a person's life does a SFTF philosophy start to reap rewards, i.e., the SFTF philosophy pays off and the SFTF philosophy starts living a larger lifestyle than the SFTF philosophy?

I'm a diligent saver, and we do not engage in a lot of luxuries in life. My wife and I make good money at our jobs.

Before we had kids, I thought that fact that we were diligent savers in our twenties and early thirties meant that we'd be able to provide a larger lifestyle for our kids than perhaps others who splurged a lot more. Now that we have kids, I've discovered that most all parents provide well for their kids and ensure their kids do standard kid type activities, whether the parents have lots of money or little money. I think it is in our programming as kids.

So at one point in life will the fact that I've diligently saved for the future allow me to engage in luxuries that perhaps those who lived for the moment aren't able to experience?

My belief is, due to the magic of compound interest, saving heavily during 20's and 30's should mean big differences when a guy is in their 40's, 50's, and beyond...but I haven't seen the payoff from the magic of compound interest yet. We're still having to watch our pennies every month to make ends meet and random car repair bills are big hits to our budget.

Curious to hear your thoughts on you only live once versus saving for the future.

awval999
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Re: Saving for the future vs you only live once

Post by awval999 » Tue Jan 12, 2016 2:15 pm

There has to be balance.

On this forum you see huge savers, but there is also huge incomes on this forum which make it much easier.

You, do, only live once. Tomorrow is guaranteed to no one.

ResearchMed
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Re: Saving for the future vs you only live once

Post by ResearchMed » Tue Jan 12, 2016 2:26 pm

betterfinances wrote:I'm curious about something here....Some folks have a YOLO (you only live once) philosophy and others have a SFTF (save for the future) mentality regarding personal finances.

I'm wondering at what point in a person's life does a SFTF philosophy start to reap rewards, i.e., the SFTF philosophy pays off and the SFTF philosophy starts living a larger lifestyle than the SFTF philosophy?

I'm a diligent saver, and we do not engage in a lot of luxuries in life. My wife and I make good money at our jobs.

Before we had kids, I thought that fact that we were diligent savers in our twenties and early thirties meant that we'd be able to provide a larger lifestyle for our kids than perhaps others who splurged a lot more. Now that we have kids, I've discovered that most all parents provide well for their kids and ensure their kids do standard kid type activities, whether the parents have lots of money or little money. I think it is in our programming as kids.

So at one point in life will the fact that I've diligently saved for the future allow me to engage in luxuries that perhaps those who lived for the moment aren't able to experience?

My belief is, due to the magic of compound interest, saving heavily during 20's and 30's should mean big differences when a guy is in their 40's, 50's, and beyond...but I haven't seen the payoff from the magic of compound interest yet. We're still having to watch our pennies every month to make ends meet and random car repair bills are big hits to our budget.

Curious to hear your thoughts on you only live once versus saving for the future.
There have been some lengthy discussions on this important "choice".

Try searching for BH author Protagonist, several months ago.
That should pull up a link to that thread.

An unexpected heart attack was the thing that triggered his initial post.

There was a great discussion on this issue.

RM
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FelixTheCat
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Re: Saving for the future vs you only live once

Post by FelixTheCat » Tue Jan 12, 2016 2:28 pm

I know a lot of people that live for today by spending their $$$ on wants with no concerns for the future. What will they do when their source of income starts to dry up?

Then I think about the extreme savers I know. They never go out to dinner, vacations, etc. I feel sorry for them because they have no life.

You have to have balance.
Felix is a wonderful, wonderful cat.

LearningtheRopes
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Re: Saving for the future vs you only live once

Post by LearningtheRopes » Tue Jan 12, 2016 2:29 pm

Too many variables to make any kind of blanket statement, other than it depends on your choices and preferences. Some of the factors that influence such choices are:

Amounts saved to date
Debt
Income, both present and anticipated future (including but not limited to workplace security)
Spending preferences, including one-time splurges
Age
Health
Childrens' needs in the future that you may want/must help with (help with first home down payment, 529, a trust to take care of illness/special needs, paying for weddings, etc.)
Desire to leave an estate, and if so, how much.

You need to think about all of these (and more) factors and then decide what fits *your* comfort zone. There are very few right or wrong answers, other than ensuring that while your children are still grade/middle/high school you cover all of their needs. After that?

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Re: Saving for the future vs you only live once

Post by joebh » Tue Jan 12, 2016 2:36 pm

betterfinances wrote:Curious to hear your thoughts on you only live once versus saving for the future.
You do indeed only live once. And if we knew how long that "once" would last, we could plan to live it optimally.
Since we cannot, we must balance living well enough now against being able to live well enough for a long time.

Nobody ever said life was simple.

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Re: Saving for the future vs you only live once

Post by 123 » Tue Jan 12, 2016 2:48 pm

There hasn't been much magic in compound interest since 2008. There's been more magic in equities. It's hard to tell where the magic will be working so the key is a diversified portfolio.

People tend to be either "spenders" or "savers" and it's difficult to change. Your kids will tend to follow your lead/behavior. I've always been a saver and I don't think I've ever worried about money at all. Along the way of life I've had things happen, gotten laid off etc, and it just hasn't bothered me at all since I've had the savings to fall back on. A few years out of college the company I worked for shut down suddenly and a friend of mine wondered why I was so calm about it, he said he's be "sweating bullets" if that sort of thing happened to him. I suspect he was a spender.
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JDCarpenter
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Re: Saving for the future vs you only live once

Post by JDCarpenter » Tue Jan 12, 2016 2:49 pm

betterfinances wrote:....[YOLO v. Saving .... Kids cost mucho $$....]

So at one point in life will the fact that I've diligently saved for the future allow me to engage in luxuries that perhaps those who lived for the moment aren't able to experience?

My belief is, due to the magic of compound interest, saving heavily during 20's and 30's should mean big differences when a guy is in their 40's, 50's, and beyond...but I haven't seen the payoff from the magic of compound interest yet. We're still having to watch our pennies every month to make ends meet and random car repair bills are big hits to our budget.

Curious to hear your thoughts on you only live once versus saving for the future.
We've walked the line between the two: splurged on travel, one of our houses (ouch), SAHParent, and kids education. But, maxed retirement accounts every year from the beginning. We will be retiring in mid-50s, 25 years after DW finished her residency and 30 years after we finished grad school.

The earlier savings and equity returns are paying dividends now--the early retirement is by far the biggest luxury that we'll ever have and the one that we've been focused on since before kids. The anticipated travel will also (we hope) make up for all the trips that our jobs prevented us from taking. Then again, I could drop dead tomorrow and DW would have to find a new sherpa for her travels... :-)

So yeah, you only live once, and you have to save for the future! :beer
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Toons
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Re: Saving for the future vs you only live once

Post by Toons » Tue Jan 12, 2016 2:50 pm

Rather save and invest during your working years so that you might have some gold in your "golden years"if that is, you make it to your golden years. :happy
Last edited by Toons on Tue Jan 12, 2016 6:09 pm, edited 1 time in total.
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

knowsnothing
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Re: Saving for the future vs you only live once

Post by knowsnothing » Tue Jan 12, 2016 2:51 pm

First max your retirement accounts, then spend on things that bring you the most happiness, then save whatever is left in taxable accounts.

If you really stop and think about that middle step you'll probably have plenty leftover to save.

Traveller
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Re: Saving for the future vs you only live once

Post by Traveller » Tue Jan 12, 2016 2:53 pm

betterfinances wrote: I'm wondering at what point in a person's life does a SFTF philosophy start to reap rewards, i.e., the SFTF philosophy pays off and the SFTF philosophy starts living a larger lifestyle than the SFTF philosophy?
Balance is the key, but to answer your question of "at what point does it reap rewards" I'll say this: it mostly builds up over time. The larger my NW number becomes, the less stress I feel. Not worried about a job loss, not worried about a roof leak, not worried about providing for my family now or in the future, not worried about paying for kids college, etc. etc. This feeling builds slowly, not at a single point.

There have been specific events that caused me to see the benefits as well, such as when my teenage son totaled my wife's Toyota Sienna months after I dropped collision on it. :oops: Bought a replacement vehicle that afternoon for cash, and our life never skipped a beat.

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Re: Saving for the future vs you only live once

Post by zimmer0 » Tue Jan 12, 2016 3:05 pm

subscribed for more insight/opinion :sharebeer

J295
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Re: Saving for the future vs you only live once

Post by J295 » Tue Jan 12, 2016 3:16 pm

You will find your balance if you keep searching. Some good financial behavior and good fortune helped us put three kids through college and be in a position to make life choices unrelated to money at age 53. I choose to (mostly) retire.

A personal health care analogy .... when I was at Mayo for cancer surgery did I wish I had been less disciplined with my nutrition and exercise since I got cancer anyway ..... no, i enjoyed the process of good nutrition and exercise within reason and felt being in good shape helped my surgical team and my recovery .... same for financial health ......

Best of luck

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Re: Saving for the future vs you only live once

Post by SGM » Tue Jan 12, 2016 3:21 pm

Strike a balance and don't compare yourself to others.

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Re: Saving for the future vs you only live once

Post by Hikes_With_Dogs » Tue Jan 12, 2016 4:00 pm

knowsnothing wrote:First max your retirement accounts, then spend on things that bring you the most happiness, then save whatever is left in taxable accounts.

If you really stop and think about that middle step you'll probably have plenty leftover to save.
+1

Save what you are 'supposed' to, and then feel free to blow the rest.

If you are saving a good amount, don't deprive yourself from wonderful experiences that make your life worth living.

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Re: Saving for the future vs you only live once

Post by pennywise » Tue Jan 12, 2016 4:16 pm

Traveller wrote:
betterfinances wrote: I'm wondering at what point in a person's life does a SFTF philosophy start to reap rewards, i.e., the SFTF philosophy pays off and the SFTF philosophy starts living a larger lifestyle than the SFTF philosophy?
Balance is the key, but to answer your question of "at what point does it reap rewards" I'll say this: it mostly builds up over time. The larger my NW number becomes, the less stress I feel. Not worried about a job loss, not worried about a roof leak, not worried about providing for my family now or in the future, not worried about paying for kids college, etc. etc. This feeling builds slowly, not at a single point.
This.

For my husband and I too, at 62 and 58 YO respectively, the rewards of the SFTF perspective have become increasingly obvious now that the high spending years of raising children are completed.

We are entirely debt free with a very comfortable mortgage-free home and substantial financial assets in several different 'pots' (ie vested pensions, 403b, cash etc). Net effect of this is freedom; my husband works in a rather unpleasant work environment, and often tells people that he can retire anytime. Although he hasn't decided to leave his job yet, knowing he could is extremely reassuring. The peace of mind in knowing that we have the financial resources to live out the rest of our lives at the same level we do now (with jobs and dual salaries) even if we both walked away and never worked for pay again feels better than I can possibly describe.

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Re: Saving for the future vs you only live once

Post by crake » Tue Jan 12, 2016 4:19 pm

Hikes_With_Dogs wrote:
knowsnothing wrote:First max your retirement accounts, then spend on things that bring you the most happiness, then save whatever is left in taxable accounts.

If you really stop and think about that middle step you'll probably have plenty leftover to save.
+1

Save what you are 'supposed' to, and then feel free to blow the rest.

If you are saving a good amount, don't deprive yourself from wonderful experiences that make your life worth living.
I think you might be missing knowsnothing's point. Knowsnothing did not "recommend blowing the rest", instead he suggested thinking carefully on what brings you the most happiness and spending there. In my mind there is a huge difference between the two.

What gives me the greatest amount of happiness is traveling, good food, being with family/friends, and enjoying nature. A 40,000 dollar car would not bring me more enjoyment than a 17,000 dollar, therefore, I do not buy 40,000 dollar cars. A "blow the rest" strategy might suggest that someone should purchase the 40,000 dollar car just because they can afford it without considering whether or not that purchase will truly bring them joy.

My interpretation of what knowsnothing is saying is that if you focus intently on making sure your purchases are focused towards what makes you truly happy, you may end up being pleasantly surprised at how much money is left over.

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Re: Saving for the future vs you only live once

Post by dbCooperAir » Tue Jan 12, 2016 4:22 pm

pennywise wrote: now that the high spending years of raising children are completed.
When does this happen :wink:
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knpstr
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Re: Saving for the future vs you only live once

Post by knpstr » Tue Jan 12, 2016 4:23 pm

If you may die tomorrow why save anything? It would be a shame to have anything other than $0 in your accounts... (sarcasm)

It is essentially unknowable in terms of how long one will live. It is reasonable, in my opinion, to expect you will live to an "average age", for most people. Obviously this will be wrong in both directions (die young, die old)... but it is a reasonable starting point.

Also some want to have financial security for their spouse or children, in dying young it would still be wise to save barring life insurance does not payout more than what you consider enough.
So at one point in life will the fact that I've diligently saved for the future allow me to engage in luxuries that perhaps those who lived for the moment aren't able to experience?
In my opinion when you are independently wealthy. Meaning you have enough money or passive income to last you the rest of your life, given reasonable assumptions. At this point you've already "bought" the greatest luxury of all, your time. You are now free to not work if you choose. Any additional money earned in work can be spent on whatever frivolous item so long as it does not jeopardize your financial independence. It seems from my reading, many find as you reach financial independence the "appeal" of luxury loses much of its luster.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

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Re: Saving for the future vs you only live once

Post by tennisplyr » Tue Jan 12, 2016 4:25 pm

Retired, 66 here. I've always believed in life balance and that has worked well for us. Now I see people around us getting ill and some passing away which has convinced me more to live in the moment. The advantage that you have is time....time to save, time to take some risks, and time to plan for the future. I've seen people with tons of $ pass away young, so there are no guarantees. Generally if it feels right, do it.
Those who move forward with a happy spirit will find that things always work out.

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whatusername?
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Re: Saving for the future vs you only live once

Post by whatusername? » Tue Jan 12, 2016 4:32 pm

I think it becomes a realization when you hit a sizeable event, good or bad, usually between 35-45. For some it's a health scare, others its a surprise calculation of their 401k balance, or buying a house, or paying off a house, or having a kid looking at colleges...

For the early savers, it can be a wakeup that they can and maybe should loosen the reins. For the spendthrifts, it can be the jarring realization that they will have to struggle in the future unless they choose to start sacrificing now. For those who have searched for balance all along, balancing needs and wants, it's reassurance that they can have anything they want, not everything they want, as they've practiced all along.

That said, it's admittedly much easier to save and get "ahead of the game" early when your income is greatly above subsistence levels. I'm a saver by nature and my financial life reflects this, but I don't have any regrets about things I haven't done that now I wish I had. That's pretty much my metric for success on this front.

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Re: Saving for the future vs you only live once

Post by surfstar » Tue Jan 12, 2016 4:35 pm

I should be leaving the office and running to the beach to catch some waves.
But YOLO, and you don't want to mess up that one life and be poor and destitute at some point.

Strike a balance. It is different for each person/couple/situation.

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Re: Saving for the future vs you only live once

Post by SamB » Tue Jan 12, 2016 4:35 pm

I am 68 and I can say without any reservation that I am thankful every day I get out of bed that I was a cheap SOB, and put every dime I ever had in the stock market beginning about 1978. The fact is your body is going to wear out on you. Eventually, you will have health problems or at least limitations you are going to have to deal with. And of course you will want to provide for your children and not be a burden in old age.

Trading off present for future consumption has been a life long balancing act every day I have gotten out of bed. And at this point, I am quite satisfied that I did what I did forty years ago. I look around me, and life could be a whole lot more difficult. Old age is not for wimps, and if you don't have a dime, you will realize that fact sooner rather than later.

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Re: Saving for the future vs you only live once

Post by blueblock » Tue Jan 12, 2016 4:38 pm

betterfinances wrote:So at one point in life will the fact that I've diligently saved for the future allow me to engage in luxuries that perhaps those who lived for the moment aren't able to experience?
Depends on what you mean by luxuries. It's always good to prioritize needs versus wants, and then further prioritize wants so that you're getting the most bang for your buck with your fun money.

In my own case, I "paid myself first" and then had a bit of fun with the rest (vacations, late-model cars bought for cash, etc.). But I was always careful to live well below my means, because my primary goal was to build enough of a portfolio to retire and live decently on that money for the rest of my life. So it never felt like I was depriving myself of anything. I was working toward a goal.

When you hit your number, believe me, THAT's the luxury.

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Re: Saving for the future vs you only live once

Post by Qtman » Tue Jan 12, 2016 5:01 pm

It is critical to save for the future, but there must be a balance between that and living. I find it fascinating when posts on this forum tell people not to spend too much money on a watch, stereo, car, etc, etc, etc., if something is important to you and you think it fits for your budget, I personally see no issue going for it.

I laugh at the commercial with the woman who says, " I just turned 65 and I have many good years ahead of me." Maybe, maybe not.

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Don’t wear yourself out trying to get rich; be wise enough to control yourself. | Wealth can vanish in the wink of an eye. It can seem to grow wings and fly away | like an eagle. - King Solomon

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Re: Saving for the future vs you only live once

Post by jridger2011 » Tue Jan 12, 2016 6:05 pm

I think most of us agree there has to be a balance. If you have goals it makes it easier to make decisions. We also change over time, it does not make sense to always apply the same rules.

BH forum folks know how to save and the value of time against savings. Find a savings rate that works for you and maximize your happiness with the rest through items, experiences, charity, etc.

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Re: Saving for the future vs you only live once

Post by Toons » Tue Jan 12, 2016 6:10 pm

tennisplyr wrote:Retired, 66 here. I've always believed in life balance and that has worked well for us. Now I see people around us getting ill and some passing away which has convinced me more to live in the moment. The advantage that you have is time....time to save, time to take some risks, and time to plan for the future. I've seen people with tons of $ pass away young, so there are no guarantees. Generally if it feels right, do it.
+1 :happy
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Re: Saving for the future vs you only live once

Post by gardemanger » Tue Jan 12, 2016 6:30 pm

Hmm. I think learning to enjoy yourself with what you have, and not continually focus on that thing you don't have (yet) that would theoretically make you happy if only you have it, is something that either happens along the way or doesn't. You don't reach that goal and THEN learn to enjoy yourself.

Chances are excellent that if you reach that goal feeling like you've "deprived yourself" all along the way, you're not going to be content at the goal. Either you'll find new rationales to continually "deprive yourself" no matter what your account statements say, or you'll spend in a sort of desperate, dysfunctional way rationalizing to yourself that this is "enjoyment," when what it really amounts to is an effort to get yourself, financially, back to the condition that feels "normal" to you.

I have known people who get windfalls of various sizes and do *exactly* the cliched thing of spending themselves back to their previous condition, just like lottery winners are said to do. Whether or not they were really struggling financially before, the thing that sticks is the story they were used to telling themselves about their circumstances. That narrative becomes more powerful than the actual bank balance.

I think the really hard work one needs to do is change the self-description and the perception of your situation, not figure out how to set and reach financial goals. The financial goals and management are fairly easy in themselves.

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Re: Saving for the future vs you only live once

Post by bmelikia » Tue Jan 12, 2016 6:36 pm

I would say that since you only live once you should save for the future
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Re: Saving for the future vs you only live once

Post by pinecone » Tue Jan 12, 2016 6:39 pm

I believe in balance. One thing I am thankful for is that I listened to my father who advised me to "pay myself first" and save via payroll deduction and to do dollar cost averaging investing right from the time I had my first job in my teens. It was a good habit to get into right from the start, and I've never felt deprived since I don't know any other way.

I do have some expensive hobbies, and I've always economized where I can in order to maximize what I have available to spend on them. I love to ride and show horses. It is said that "You can make a small fortune in horses...if you start with a large one" :mrgreen: Well, I didn't start with a large one or even a small one, but I've been playing and winning in the big leagues just the same. I wasn't a "talent", but I worked at it enough that generous people were willing to give me access to some really good horses.

When I was young, I did all the work, grooming, tacking, cooling out, etc. As I've gotten older, my time has become more valuable, so it's cheaper to pay someone else to do those things if it means I can work another few hours. Plus the older I get, the less my body is able to do that sort of thing. I'd rather save my limited energy just to RIDE. So, the older I get, the less I economize on the things that really matter. I feel I have a good cushion, and it's time to loosen the purse strings a little. At the same time, I'm still saving, but I've come to realize that TIME is more valuable than money.

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Re: Saving for the future vs you only live once

Post by Leemiller » Tue Jan 12, 2016 6:56 pm

As someone in my early 40s, the only "dividend" I can think of is that retirement will be certainly comfortable when it happens and probably very comfortable assuming we continue to max out accounts. Part of that is due to a vested Federal pension. For my current lifestyle income is more important, although we were able to put 20% down on a home and cash flow some renovations. Eventually, I'm hoping if we stay this home the magic of inflation will work in our favor, even if our incomes don't go up much more, to increase disposable funds.

Otherwise, I believe in balance & even more so on increasing the income side of the equation in your 30s - 40s.

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Re: Saving for the future vs you only live once

Post by DonCamillo » Tue Jan 12, 2016 7:08 pm

If you are young, establish a savings strategy as a percent of income. Then as your income grows, split the increase between savings and consumption. Over a period of decades, this allowed me to get to the point where I was saving over 50% of income and still taking fabulous international vacations every year. But one of my main advantages was that I was under-housed. We spent far less on housing than most of our peers, and also controlled our spending on vehicles. Always spend less than you earn.

LBYM; Live below your means has 2 parts 1) "Live" and 2) "below your means." Part 1 is important as well as part 2. :beer
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Re: Saving for the future vs you only live once

Post by investingdad » Tue Jan 12, 2016 8:25 pm

Saving, investing, and living cheap in your 20s is the time to do it. If you're coming out of college it's not a stretch. If you keep it up, you don't have to 'Yolo' when you reach 35...you just go ahead and do it.

At 42 now, we have...options. :happy

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Re: Saving for the future vs you only live once

Post by HIinvestor » Tue Jan 12, 2016 8:37 pm

We also always tried to balance savings and spending. We did invest in travel, especially accompanying my husband if he was going somewhere for work, since his office would pay for his plane, car and hotel. Our kids flew with us from the time they were 6 months old. Airfare was one of the splurges we decided was worthwhile. To this day, the kids remember a significant number of our family trips, decades later and has influenced their love of nature and national parks.

We have also saved a signficant amount so that we have been more comfortable than we had hoped since H retired and can travel even more now and stay at nicer places. We also sometimes dine at nicer places and eat out more than in years past. ;)

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Re: Saving for the future vs you only live once

Post by delamer » Tue Jan 12, 2016 9:05 pm

There was a point about 10 years ago when we could say that if we spend money on a particular "want" we can still pay the mortgage off at our goal date, continue the contributions to our retirement accounts, fund the kids' 529 plans, and pay for other essentials like medical care and food. I would literally go through that list to be sure that we were on target for all those things. Given that, what was the reason not to enjoy the "want" (in our case, usually travel for the family or nicer cars)?

I will say that my husband and I both had unusually secure jobs (and good insurance of all types), so we didn't have the fears that many do of an extended period of unemployment or being forced into early retirement playing havoc with our plans.

Rodc
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Re: Saving for the future vs you only live once

Post by Rodc » Tue Jan 12, 2016 9:11 pm

betterfinances wrote:I'm curious about something here....Some folks have a YOLO (you only live once) philosophy and others have a SFTF (save for the future) mentality regarding personal finances.

I'm wondering at what point in a person's life does a SFTF philosophy start to reap rewards, i.e., the SFTF philosophy pays off and the SFTF philosophy starts living a larger lifestyle than the SFTF philosophy?

I'm a diligent saver, and we do not engage in a lot of luxuries in life. My wife and I make good money at our jobs.

Before we had kids, I thought that fact that we were diligent savers in our twenties and early thirties meant that we'd be able to provide a larger lifestyle for our kids than perhaps others who splurged a lot more. Now that we have kids, I've discovered that most all parents provide well for their kids and ensure their kids do standard kid type activities, whether the parents have lots of money or little money. I think it is in our programming as kids.

So at one point in life will the fact that I've diligently saved for the future allow me to engage in luxuries that perhaps those who lived for the moment aren't able to experience?

My belief is, due to the magic of compound interest, saving heavily during 20's and 30's should mean big differences when a guy is in their 40's, 50's, and beyond...but I haven't seen the payoff from the magic of compound interest yet. We're still having to watch our pennies every month to make ends meet and random car repair bills are big hits to our budget.

Curious to hear your thoughts on you only live once versus saving for the future.
My life is going about as you imagine. Now late 50's.

But the transition was not over night.

More in the bank makes it easier to relax. More income too. Just keep the fixed costs down. That is don't keep buying more and more expensive cars and houses. Go do fun stuff.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: Saving for the future vs you only live once

Post by gilgamesh » Wed Jan 13, 2016 7:25 am

I lean towards YOLO, but always preparing for retirement as well. Recently having read "The life cycle Hypothesis", I realize that applies to my case very well.

"Value of a dollar is more when consumption is low, where as the value of a dollar is less when consumption is high". Therefore, you move dollars from high consumption periods of your life to low consumption periods of your life.

I have a career where I know I will always have a well paying job. I also know my wages will go higher and higher till it plateaus around the 40's (The raising wages should apply to most).

Therefore, when consumption was low soon after graduation, I borrowed form myself in my fourties (when consumtion will be higher). So, that allowed me to enjoy even my 30's as well as my 40's (although I didn't borrow as much, less than optimal, therefore one could say, within the life cycle hypothesis, I was more a saver).

I have also upped the savings now significantly to pay for myself in my 60's and older when consumption will be low.

It goes a bit beyond the 'human capital' concept. Which is also a factor in the The life cycle hypothesis, called 'Human wealth'.

This draws the right balance for me.
Last edited by gilgamesh on Wed Jan 13, 2016 7:38 am, edited 1 time in total.

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Re: Saving for the future vs you only live once

Post by gd » Wed Jan 13, 2016 7:38 am

betterfinances wrote: I'm wondering at what point in a person's life does a SFTF philosophy start to reap rewards, i.e., the SFTF philosophy pays off and the SFTF philosophy starts living a larger lifestyle than the SFTF philosophy?
age 55 to 60

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Re: Saving for the future vs you only live once

Post by Sconie » Wed Jan 13, 2016 8:06 am

As other posters have said, "Balance" it is!

I suspect that the "bottom line" is that none of us wants to run out of money before we run out of life.
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Re: Saving for the future vs you only live once

Post by pennywise » Wed Jan 13, 2016 8:24 am

dbCooperAir wrote:
pennywise wrote: now that the high spending years of raising children are completed.
When does this happen :wink:
Sometimes never! However in general I meant that once children are educated, employed, living away from the family manse and no longer on the family payroll for even miscellaneous costs such as cell phones, insurance etc....the high spending years are over.

That is our situation; both our children have jobs and support themselves financially. Granted there are often extenuating circumstances, and boomerang scenarios aren't uncommon. We are able to be generous in gifting our kids items or funds as we choose to do so, but by and large we are only paying for ourselves now v. supporting offspring.

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Re: Saving for the future vs you only live once

Post by fishmonger » Wed Jan 13, 2016 9:02 am

As some personal finance blogger once said, and I've found to be true, is you can afford anything, but you can't afford everything.

I try to apply this to travel, particularly with my kids getting older - we try to take a nice trip every year (Mexico, the Carribbean, national parks, etc). The extreme frugality crowd would look at how much we spend on this vs. what we save, what our net worth is, etc. and probably admonish us. I balance this out by living in a house that is well under what we could technically afford and driving a 12 year old truck.

As earlier posters said, you need a balance

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Re: Saving for the future vs you only live once

Post by Rodc » Wed Jan 13, 2016 9:21 am

fishmonger wrote:As some personal finance blogger once said, and I've found to be true, is you can afford anything, but you can't afford everything.

I try to apply this to travel, particularly with my kids getting older - we try to take a nice trip every year (Mexico, the Carribbean, national parks, etc). The extreme frugality crowd would look at how much we spend on this vs. what we save, what our net worth is, etc. and probably admonish us. I balance this out by living in a house that is well under what we could technically afford and driving a 12 year old truck.

As earlier posters said, you need a balance
Very similar here.

Decide what is important to you.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: Saving for the future vs you only live once

Post by tic » Wed Jan 13, 2016 9:44 am

You only live once, and if you're in your-mid thirties now, realize that more than half of your remaining life will likely be lived beyond age 60. That is, half of your one life will be lived as what you now probably consider "old". Don't totally neglect your 35 year old self in favor of your 80 year old self (you may not make it the long), but certainly don't do the reverse, either (you'll have regret in your last years). Keep it steady.

As an aside from your original post: Car repairs are an expected cost of car ownership. Look at the past several years of costs and the current condition of your cars and add a line for car repairs to your budget. That way, any "random" car bills become "expected" will be far less psychologically devastating. You can still put anything you don't spend in savings.

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Re: Saving for the future vs you only live once

Post by Hikes_With_Dogs » Wed Jan 13, 2016 11:15 am

crake wrote:
Hikes_With_Dogs wrote:
knowsnothing wrote:First max your retirement accounts, then spend on things that bring you the most happiness, then save whatever is left in taxable accounts.

If you really stop and think about that middle step you'll probably have plenty leftover to save.
+1

Save what you are 'supposed' to, and then feel free to blow the rest.

If you are saving a good amount, don't deprive yourself from wonderful experiences that make your life worth living.
I think you might be missing knowsnothing's point. Knowsnothing did not "recommend blowing the rest", instead he suggested thinking carefully on what brings you the most happiness and spending there. In my mind there is a huge difference between the two.

What gives me the greatest amount of happiness is traveling, good food, being with family/friends, and enjoying nature. A 40,000 dollar car would not bring me more enjoyment than a 17,000 dollar, therefore, I do not buy 40,000 dollar cars. A "blow the rest" strategy might suggest that someone should purchase the 40,000 dollar car just because they can afford it without considering whether or not that purchase will truly bring them joy.

My interpretation of what knowsnothing is saying is that if you focus intently on making sure your purchases are focused towards what makes you truly happy, you may end up being pleasantly surprised at how much money is left over.
"Blow the rest" was a simplification. If they really want to and that gives them the most happiness, as long as their bases are covered, they shouldn't sweat it TOO hard. If they want to leave a legacy, retire early, or have different objectives, obviously they shouldn't blow it. But that wasn't indicated from the OP. I should say "feel free to spend to make life worth it" I suppose. My next sentence also indicated spending on experiences, not fancy cars, as for most people, that has been shown to make people the most happy and get the most bang for their buck. But if you are maxing your retirement options and are humming and hawing over a simple purchase - just make it and move on. Everyone has their own balance line. What works for you might not work for OP or for me and vice versa. Even if they spend every red cent outside of their retirement contributions, they are still doing better than 75% of the rest of the US population and will likely retire in luxury.

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Re: Saving for the future vs you only live once

Post by Dulocracy » Wed Jan 13, 2016 2:01 pm

I think you are looking at it the wrong way.

YOLO = Blow all your money.

Saving for the future is a more prudent life choice, but it does not have to be a Mr. Money Mustache approach of saving every penny. My wife and I save as much as we can wherever we can... to an extent. I still take her on a weekly date where we go to a good restaurant. Also, we go on vacations. We do not buy $3 soft drinks, and we do not waste money on junk. We do not spend frivolously, but we do enjoy life. Saving for the future is not becoming Ebeneezer Scrooge. Saving for the future is the idea that you will enjoy a life of modest comfort now to ensure that your future has a minimum of modest comfort and not extreme discomfort. You may find that the "modest" part of the comfort is less modest depending on the markets, but you cannot predict those. You are, however, making relatively certain that you and your family are not in great stress or struggle.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.

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Re: Saving for the future vs you only live once

Post by Rodc » Wed Jan 13, 2016 2:21 pm

You could also use ESPLanner to figure out some estimate of what your constant level of discretionary spending might be. That would help frame some sort of mid-point balance between saving and spending.

Want to be careful in your assumptions, that is be cautious with this as most of us are better off being conservative, but at least you can gauge if you being wildly conservative.

The approach is called consumption smoothing. The biggest issue to using this approach when far from retirement is shocks can happen so you do not want to count too many of your eggs (future income or returns) before they hatch.

If you are good with a spreadsheet and your life is not too complicated a spreadsheet exercise might be just as good.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: Saving for the future vs you only live once

Post by ResearchMed » Wed Jan 13, 2016 2:26 pm

Dulocracy wrote:I think you are looking at it the wrong way.

YOLO = Blow all your money.

Saving for the future is a more prudent life choice, but it does not have to be a Mr. Money Mustache approach of saving every penny. My wife and I save as much as we can wherever we can... to an extent. I still take her on a weekly date where we go to a good restaurant. Also, we go on vacations. We do not buy $3 soft drinks, and we do not waste money on junk. We do not spend frivolously, but we do enjoy life. Saving for the future is not becoming Ebeneezer Scrooge. Saving for the future is the idea that you will enjoy a life of modest comfort now to ensure that your future has a minimum of modest comfort and not extreme discomfort. You may find that the "modest" part of the comfort is less modest depending on the markets, but you cannot predict those. You are, however, making relatively certain that you and your family are not in great stress or struggle.
YOLO doesn't need to be "Blow all your money".
Not at all.

As discussed at length in that thread started by Protagonist (and discussed elsewhere on BH also), it is often used to recognize that, not so much "you only live once", but it's more about "no one knows when they'll die OR when they will no longer be able to do/enjoy some/many of those things they've been saving for". (Not sure there's a handy acronym for that! :( )

I think of it as somewhat relevant to younger savers (don't splurge, but don't live so far below your means that you are miserable and long for even a few of life's extras).
But I think it's especially relevant to those who are further along, and especially those who are approaching retirement with "enough" - not necessarily enough to live the remaining life in luxury, but enough not to worry about eating the proverbial cat or dog food.

And it's even more relevant to those without heirs (or other significant bequest motives).

We each had a significant health scare, and with our entire "vacation destination bucket list" untouched.
And a best friend had just passed, and then a close colleague of our age dropped dead completely unexpectedly at his weekend home. Poof!!

So, in the past 2-3 years, we've taken 3 cruises (with several more planned) and taken two lengthy vacations to Italy.
Years ago, we enjoyed fine dining as our smaller "treats". Somehow, that's no longer our thing, except when traveling sometimes.
But we hadn't replaced that fine dining experiences with any other "treats", for far too many years.

What "YOLO" means to us is to front-load somewhat our luxury travel, while we *can* still travel, while still being prudent wrt the retirement savings/investments.
We almost lost that ability due to health conditions, and one of us almost didn't survive a horrendous surgical error, plus the regular, assorted infirmities due to aging (and we've been relatively fortunate in this regard, looking at our peers).
We assume this means at least somewhat fewer "treats" later... if we live that long...

RM
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Re: Saving for the future vs you only live once

Post by Dulocracy » Wed Jan 13, 2016 4:51 pm

ResearchMed wrote:
YOLO doesn't need to be "Blow all your money".
Not at all.

YOLO is an urban term that has meaning in society. It tends to encourage things like drug use, doing really stupid things, and buying things like flashy cars and jewelry. From Urban Dictionary:

Abbreviation for: you only live once
The dumbass's excuse for something stupid that they did
Also one of the most annoying abbreviations ever....
Guy 1: "Hey i heard u got that girl pregnant"

Dumbass 1: " Ya man but hey YOLO"

Guy 1: "Hey i heard that you broke ur leg falling off the balcony at that party"
Dumbass 1: "Ya but hey YOLO"


As discussed at length in that thread started by Protagonist I did not go to another thread to read it; I simply read this thread. However: The term YOLO means more than just that you live only once. That term has a specific cultural meaning. To say it did not have said cultural meaning would be like telling a hippy that "Peace" can also be interpreted to mean "Peace by superior force." While someone COULD use the term in that way, it is not the way that the term was used in culture at the time. This is a loose example, but you get what I mean. If someone uses the term "YOLO", they are evoking the cultural references that go with a term that came about for a very specific purpose: to excuse overly rash behavior.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.

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Re: Saving for the future vs you only live once

Post by am » Wed Jan 13, 2016 10:19 pm

Striking a balance is important. How would you feel if you knew today was the last day? Regrets of not going on that vacation or buying that car you dreamed about. As an MD I see a lot of lives cut short or infused with pain and suffering. If we knew the future planning would be so much easier. But, we should plan for the average outcome which is living into old age and wanting to retire at some point, hopefully earlier for many of us.

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Re: Saving for the future vs you only live once

Post by sambb » Wed Jan 13, 2016 10:25 pm

Saving is important
However, I am SO glad that i blew money in my 20s (went to europe, road trips with friends, dating, other spontaneous activities). I can't do those things now with the same care free spirit. But NO amount of money would replace the memories and experiences I had.

I don't get the "richest in the graveyard" mentality.

Now I save diligently, but I am so glad I didn't save everything when I was younger. Lot more fun going on a road trip at age 24 with my buddies, than doing it in my 40s... amongst several other experiences.

Some would rather have the few thousand dollars. Or tens of thousands. Not me. I'm glad I blew it in Europe or on dates, etc.

People say YOLO doesn't mean blow all your money. TO me YOLO doesn't have to do with money. It has to do with - "I'm 25 and doing this isn't the same at age 35". Simple.

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