Saving for the future vs you only live once

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
randomguy
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Re: Saving for the future vs you only live once

Post by randomguy »

Sconie wrote: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.
And no one wants to run out of life not having enjoyed it.

Saving for the future does not and should not mean live a cheap as possible. It means save enough to meet your future goals. Realistically you set a reasonable savings rate (somewhere between 15-30% works for most people depending on desired career lengths, pensions, overall pay, ....) and then spend the rest if there are things that will make you happy. No you will not have as big of pile of money as the people that save 50% but at some point who cares. Giving up 30 years of spending to retire at 50 instead of 60 might not be worth it to you. And you occasionally have to make adjustments as life happens (poor returns, great returns, maybe you get a big raise and don't having anything that is worth buying,..)
tphp99
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Re: Saving for the future vs you only live once

Post by tphp99 »

betterfinances wrote: I'm a diligent saver, ..... My wife and I make good money at our jobs.

....allow me to engage in luxuries

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.
Not trying to be critical here. Seems like there are gaps in what you're saying.
If you are making good money and are saving diligently (+10%), how could random expenses like car care be a big hit?
cherijoh
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Re: Saving for the future vs you only live once

Post by cherijoh »

123 wrote: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.
When the company where I worked decided to relocate my job out of state, I was able to decline the offer to relocate because I had been diligently saving for the future. Many of my colleagues had no reasonable option but to move.

I also know people who are not happy in their jobs but they are stuck due to poor planning. As you get older, it is often more difficult to get an equivalently paying job - so those that live for today may not be happy with the choices with which they are faced in the future.
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betterfinances
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Re: Saving for the future vs you only live once

Post by betterfinances »

tphp99 wrote:
betterfinances wrote: I'm a diligent saver, ..... My wife and I make good money at our jobs.

....allow me to engage in luxuries

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.
Not trying to be critical here. Seems like there are gaps in what you're saying.
If you are making good money and are saving diligently (+10%), how could random expenses like car care be a big hit?
When I move money into long term savings, it says there and is not spent. I treat the money as if it does not exist. (I used money from long term savings to buy a car a year and a half ago, this was the first time in a decade that I spent long term savings).

So I got hit with a big car repair bill and it's due now, so that has to come out of my regular checking. I have enough to pay for the big car repair bill out of my cash account, but am working overtime to try to replenish the money. And I'm going to get hit with putting a new roof on my house. Again I can pay for that our of my cash account but that will really draw it down so it's back to overtime to try to replenish my accounts.

I guess I shouldn't say we are big savers at the moment. We had our second child about 18 months ago, and now that we have 2 kids in daycare, we aren't big savers anymore...we stash a lot away for retirement but most of our income is spent on taxes, mortgage payment, and daycare bills. I'm trying hard to be a big saver again but it might be a couple years until our childcare costs go down that we can resume being big savers with regards to our non-retirement savings accounts.

Things like surprise car repair bills and new roofs are causing us to struggle a lot at the moment.
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dbCooperAir
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Re: Saving for the future vs you only live once

Post by dbCooperAir »

cherijoh wrote:As you get older, it is often more difficult to get an equivalently paying job - so those that live for today may not be happy with the choices with which they are faced in the future.
As in age 50 :wink:
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-
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ResearchMed
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"PRIORITIES", started by Protagonist

Post by ResearchMed »

Exige wrote:I know I am reviving this old thread however I noticed a comment in a new one directing to find it and it simply is amazing to me I think more people need to read it and think twice about everything.
(Quote posted on the other thread.)

viewtopic.php?f=2&t=170562

Thanks to Exige to finding this thread, started by Protagonist...

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

Post by steve roy »

Save as you can. Spend enough to enjoy your day to day existence. (You really need a new Mercedes? How about a used Caddy instead?)

And understand that we, all of us, dance on a tired old cobweb as regards our lives. (Hat tip: Raymond Chandler.)
cherijoh
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Re: Saving for the future vs you only live once

Post by cherijoh »

dbCooperAir wrote:
cherijoh wrote:As you get older, it is often more difficult to get an equivalently paying job - so those that live for today may not be happy with the choices with which they are faced in the future.
As in age 50 :wink:
Yes, I have quite a few friends and acquaintances who were hit by the perfect storm in 2008-09:
  • - ~ 50 years old
    - kids in college or soon to enter college
    - recently unemployed
    - significant losses in home equity due to the real estate bubble
Those who started saving for retirement later in life were the ones who really got hit hard.
boglegirl
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Re: Saving for the future vs you only live once

Post by boglegirl »

123 wrote:...
People tend to be either "spenders" or "savers" and it's difficult to change. Your kids will tend to follow your lead/behavior...
I agree with your the first sentence above. The second sentence contradicts it and I do not agree with it... :-?

We have 2 young adult children living at home (20 & 22, college student and recent college grad) who have each earned about 18k total over the last 3 years. One child has a net worth as of today of about $800. He spends almost everything he makes despite our constant entreaties for a budget, a retirement plan, etc. Other child has a net worth of over $10k. She doesn't spend a cent unless she has to! She'll happily pack a PBJ and an apple for her lunch, while younger brother spends $10 for his lunch at Chipotle. So despite being raised in the same somewhat frugal househould, one turned out to be a saver and the other a spender.
SQRT
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Re: Saving for the future vs you only live once

Post by SQRT »

Some good comments so far so I'm not sure I can add much. 65, retired about 10 years. Very high net worth and commensurate current spending levels. Balance is certainly key since you don't know how long you have, that is, better to take a middle of the road approach. I view this as a bit of "life diversification" . We saved extensively when I was working which lead to sudden and early FI. Now that we are retired we want the most out of however long we have left. No one would call us frugal at this point, but obviously we spend our money rationally and try to get the most "bang for our buck". But even at these spending levels we will very likely leave a large legacy. That is fine with us.

What I don't understand are the retired people who hoard money. That is, they derive the most happiness (or utility) by seeing their net worth increase. This seems odd to me. What is the point of saving if not to eventually spend it (I view gifting as another form of spending)

So what you want to do is maximize you satisfaction or enjoyment over you lifespan. This is certainly complicated by the uncertainty relating to the length of such lifespan. But you have to start somewhere so take your actuarial lifespan and make adjustments for your individual health circumstances, then add a cushion for safety. Aim for reasonable middle ground. Outliers will just be lucky or unlucky. Sorry if this is a little rambling or disjointed.
humbledinvestor
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Re: Saving for the future vs you only live once

Post by humbledinvestor »

tic wrote: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.
Agree on the line item idea. I have a "crap happens" line item. If "crap" doesn't happened it is saved, but if "crap" does happen, I am prepared to mentally deal with it.
Flashes1
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Re: Saving for the future vs you only live once

Post by Flashes1 »

My wife and I were diligent savers in our 20's and 30's---borderline cheap----our net worth increased a lot in our early 40's----had a couple kids, and now we're starting to spend some of it on luxuries. We still max out 401k's, HSA, IRA, and big mortgage paydown annually.....but we just built a big house and I bought a S550.....and I have to say it's been FUN.

The 2008 market crash taught me that your money can be taken away in an instant. You save and save....and then it's gone. I learned that you have to enjoy the fruits of your labor....go out and buy some things that they can't take away.
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Bustoff
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Re: Saving for the future vs you only live once

Post by Bustoff »

betterfinances wrote:Curious to hear your thoughts on you only live once versus saving for the future.
Back in the day, YOLO was my lame excuse for spending money I didn't have or splurging on things I could not afford.
likegarden
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Re: Saving for the future vs you only live once

Post by likegarden »

Probably many go through a time of spending, followed by a time of saving. After college I had to spend to furnish an apartment, get a car, for example. After many years getting educated I went on trips to foreign countries in vacations in the first 2 years. After I met my wife and married her we saved for downpayment and then bought a house, furnished the house and had a child, a lot of spending. So the first years after college there was only saving to spend right then, little only for retirement. But thereafter saving for retirement was automatic. Now retired we have money at Vanguard, SS and pension and no debts.
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Epsilon Delta
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Re: Saving for the future vs you only live once

Post by Epsilon Delta »

SQRT wrote: What I don't understand are the retired people who hoard money. That is, they derive the most happiness (or utility) by seeing their net worth increase. This seems odd to me. What is the point of saving if not to eventually spend it (I view gifting as another form of spending)
For at least some people your looking at it wrong. It's not that they get the most satisfaction by seeing their net worth increase, it's that they get no satisfaction from additional spending. It's not love of money, it's indifference to stuff. They have enough and are satisfied with that.
SQRT
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Re: Saving for the future vs you only live once

Post by SQRT »

Epsilon Delta wrote:
SQRT wrote: What I don't understand are the retired people who hoard money. That is, they derive the most happiness (or utility) by seeing their net worth increase. This seems odd to me. What is the point of saving if not to eventually spend it (I view gifting as another form of spending)
For at least some people your looking at it wrong. It's not that they get the most satisfaction by seeing their net worth increase, it's that they get no satisfaction from additional spending. It's not love of money, it's indifference to stuff. They have enough and are satisfied with that.
Then why save so much to begin with?
hnzw rui
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Re: Saving for the future vs you only live once

Post by hnzw rui »

SQRT wrote:
Epsilon Delta wrote:
SQRT wrote: What I don't understand are the retired people who hoard money. That is, they derive the most happiness (or utility) by seeing their net worth increase. This seems odd to me. What is the point of saving if not to eventually spend it (I view gifting as another form of spending)
For at least some people your looking at it wrong. It's not that they get the most satisfaction by seeing their net worth increase, it's that they get no satisfaction from additional spending. It's not love of money, it's indifference to stuff. They have enough and are satisfied with that.
Then why save so much to begin with?
Security and peace of mind.
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jadd806
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Re: Saving for the future vs you only live once

Post by jadd806 »

SQRT wrote:
Epsilon Delta wrote:
SQRT wrote: What I don't understand are the retired people who hoard money. That is, they derive the most happiness (or utility) by seeing their net worth increase. This seems odd to me. What is the point of saving if not to eventually spend it (I view gifting as another form of spending)
For at least some people your looking at it wrong. It's not that they get the most satisfaction by seeing their net worth increase, it's that they get no satisfaction from additional spending. It's not love of money, it's indifference to stuff. They have enough and are satisfied with that.
Then why save so much to begin with?
To buy back my time such that one day I will no longer have to trade hours of my life for a paycheck.
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Epsilon Delta
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Re: Saving for the future vs you only live once

Post by Epsilon Delta »

SQRT wrote:
Epsilon Delta wrote:
SQRT wrote: What I don't understand are the retired people who hoard money. That is, they derive the most happiness (or utility) by seeing their net worth increase. This seems odd to me. What is the point of saving if not to eventually spend it (I view gifting as another form of spending)
For at least some people your looking at it wrong. It's not that they get the most satisfaction by seeing their net worth increase, it's that they get no satisfaction from additional spending. It's not love of money, it's indifference to stuff. They have enough and are satisfied with that.
Then why save so much to begin with?
They do what they want to do, people give them money for it. After they spend what they want to spend there is money left over.

Other people get a windfall (e.g. an inheritance or a rising stock market) after they have set themselves up. Even if you have a good idea of what enough stuff, it's quite a feat to hit that without going over.

Also because there is nothing they want at the moment doesn't mean they can't imagine a possibility they might want something in the future.
Rodc
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Re: Saving for the future vs you only live once

Post by Rodc »

Things like surprise car repair bills and new roofs are causing us to struggle a lot at the moment.
You have plenty of money it sounds like, but perhaps a somewhat unhealthy way of looking at it (because even though you have plenty you are struggling unnecessarily).

Easier than changing how you view money is to simply set up one more account - a liquid "sinking" account.

Most months money goes in and once in a while money goes out. It is specifically for normal but irregular bills. You know sooner or later you will need a car repair you just don't know when. Or a vacation, or a roof.

Figure out what you need to cover these non-emergency items. Say that is $6K per year averaged over 10 years or whatever.

Put in $6K and then every month put in $500 if you have no such bills. If you have such a bill and do not have money in your "checking" account (or whatever your regular bills get paid out of) pay it out of this fund. The balance will go up most months and down now and again.

This is PLANNED, so it will not feel like raiding your emergency fund.

If this fund is starting to run dry then $500 a month was too low so increase it.

If you do have a bill so high it wipes out this fund, well that is an emergency! :)

Tap your emergency fund - that is why you have it.
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.
stonerolled
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Re: Saving for the future vs you only live once

Post by stonerolled »

Achieving financial independence can be an adventure in 'you only live once'.

If the goal of 'you only live once' is to get the most out of life, I would pick the after 30 as the winner.

Before 30 - consumption, few lessons learned, impatience, speculation, lost trust, dissatisfaction, dramatic, etc.

After 30 - Many lessons learned, opportunities for generosity, security and significance, patience, trust, restraint, satisfaction, content, etc.
2tall4economy
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Re: Saving for the future vs you only live once

Post by 2tall4economy »

I've struggled with this and transitioned around my 30s, doing a complete 180 from spender to saver.

Travelled the world as an expat for many years and now back home, I've balanced. I enjoy many things (3,500 sq t home, s class, steakhouses, travel) but I'm also extremely cheap on other things (clothes, groceries, furniture, electronics, phone, no cable, etc).

What I've found works well now, and is convenient given my compensation structure, is to take my base pay/salary, maximize retirement ($6.7k hsa, 401k @ $53k, dual Roth IRA at $11k) then spend everything that's left on "life" pleasures, and use my bonuses (approx 50% of my comp, so it works well) to pay off investment property and put into taxable accounts.

I still end up saving 60% to 70% but don't really want for anything except lamborghinis and private jets.
You can do anything you want in life. The rub is that there are consequences.
TomS
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Re: Saving for the future vs you only live once

Post by TomS »

I've struggled a lot with this too. My wife and I both grew up without much money, but now have good paying jobs, and I think we've gradually let ourselves splurge on things like vacations but we still struggle with things like paying an extra dollar or two for the "good" ice cream :-)

One thing I've noticed over the past few years is that I always seem to blow a lot of money at the end of the year. Not so much on holiday gifts, but "toys" like a new TV, playstation, nice camera or guitar, etc. I think what happens is that I set aggressive savings goals during the year and hardly let myself spend money on that stuff, so after I hit those goals I feel free to blow the rest on whatever I want. I usually don't feel like I'm depriving myself, but it'd probably be healthier to figure out how to spread that across the year...
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