Those with high savings rate: why?

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EGARCH
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Those with high savings rate: why?

Post by EGARCH » Thu Mar 15, 2018 7:25 pm

  • Is it because you want to retire early, or
  • You are not sure what the future holds, e.g. low job security, or
  • You want to leave money to others, e.g. kids, grand kids, charity, or
  • You have no interest in increasing your consumption now, including giving more money to charity
  • etc.
Any insights?

John Doe 123
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Re: Those with high savings rate: why?

Post by John Doe 123 » Thu Mar 15, 2018 7:29 pm

I save so that I will have future gratification instead of immediate gratification.

J295
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Re: Those with high savings rate: why?

Post by J295 » Thu Mar 15, 2018 7:30 pm

We saved so that we could transition to a new existence without me working around age 50, which we did.

b.lock
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Re: Those with high savings rate: why?

Post by b.lock » Thu Mar 15, 2018 7:33 pm

All of the above. Plus I like saving money, it's a fun game. Even though I save a lot compared to people around me I don't feel like I'm missing out on anything. I also have pretty cheap tastes, most of the time, which makes it easier.

KlangFool
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Re: Those with high savings rate: why?

Post by KlangFool » Thu Mar 15, 2018 7:34 pm

OP,

1) I have high saving rate but I am not frugal. I spend about 60K per year. I save about 1 year of expense every year. I believe it is a good balance between saving and spending.

2) I save because I want to be rich. Rich to me means that I am Financially Independence.

KlangFool
Last edited by KlangFool on Thu Mar 15, 2018 8:34 pm, edited 1 time in total.

Sunrise
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Re: Those with high savings rate: why?

Post by Sunrise » Thu Mar 15, 2018 7:37 pm

Pretty much yes to all. I want to retire before age 60. I have a pension, but not sure if all promised will be delivered. Just want the freedom and options that a large retirement account balance provides.

mac808
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Re: Those with high savings rate: why?

Post by mac808 » Thu Mar 15, 2018 7:38 pm

I don't even think of it as saving most the time. I think of it as spending. I would just rather buy more stock than a nicer car. I enjoy owning dividend producing things of all kinds.
Last edited by mac808 on Thu Mar 15, 2018 7:40 pm, edited 1 time in total.

Dottie57
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Re: Those with high savings rate: why?

Post by Dottie57 » Thu Mar 15, 2018 7:39 pm

I saved to have adequate income in retirement.

I like saving and investing. And I don't feel a need to keep spending.

ThePrince
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Re: Those with high savings rate: why?

Post by ThePrince » Thu Mar 15, 2018 7:40 pm

EGARCH wrote:
Thu Mar 15, 2018 7:25 pm
  • Is it because you want to retire early, or
  • You are not sure what the future holds, e.g. low job security, or
  • You want to leave money to others, e.g. kids, grand kids, charity, or
  • You have no interest in increasing your consumption now, including giving more money to charity
  • etc.
Yes.

thangngo
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Re: Those with high savings rate: why?

Post by thangngo » Thu Mar 15, 2018 7:42 pm

EGARCH wrote:
Thu Mar 15, 2018 7:25 pm
  • Is it because you want to retire early, or
  • You are not sure what the future holds, e.g. low job security, or
  • You want to leave money to others, e.g. kids, grand kids, charity, or
  • You have no interest in increasing your consumption now, including giving more money to charity
  • etc.
Any insights?
1) My wife and I are frugal by nature.
2) We have a goal to slow down or stop working completely in our 40s or 50s and become financial independent.
Last edited by thangngo on Thu Mar 15, 2018 7:43 pm, edited 1 time in total.

blinx77
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Re: Those with high savings rate: why?

Post by blinx77 » Thu Mar 15, 2018 7:43 pm

To become financially independent as soon as reasonably possible (without depriving myself or my family).

To have extra funds for kids school, early retirement, capital for a business or real estate investment.

Because I don't really love my job but it pays decent and I want to make hay while the sun shines.

Because its fun to see my accounts grow and to strategize about taxes, returns, etc.

Because I was biologically wired this way.

bloom2708
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Re: Those with high savings rate: why?

Post by bloom2708 » Thu Mar 15, 2018 7:45 pm

Your 50 year old future self does not want to work 15 or 20 years.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

CFK
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Re: Those with high savings rate: why?

Post by CFK » Thu Mar 15, 2018 7:47 pm

My wife and I (early 30s) currently save a little more than we spend each month ($5-6k).

We take nice vacations, eat out, do many of the things you aren't supposed to do. I don't feel like I've given up anything living "frugally" (or at least, more frugally than we could). We've managed with one car (paid off), live in a small apartment (you can only be in one room at a time anyways), and have done our best to avoid lifestyle creep.

We both work in fairly high stress jobs - the only thing that would make them more high stress would be knowing we had to spend the rest of our lives working them.

We are trying to procreate, so better to save now, and enjoy flexibility later.

I get extreme satisfaction when I calculate our net worth at the end of each month and see the line moving upwards.

CFK
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Re: Those with high savings rate: why?

Post by CFK » Thu Mar 15, 2018 7:48 pm

blinx77 wrote:
Thu Mar 15, 2018 7:43 pm
To become financially independent as soon as reasonably possible (without depriving myself or my family).

To have extra funds for kids school, early retirement, capital for a business or real estate investment.

Because I don't really love my job but it pays decent and I want to make hay while the sun shines.

Because its fun to see my accounts grow and to strategize about taxes, returns, etc.

Because I was biologically wired this way.
I probably could have just repeated what blinx77 said.
Last edited by CFK on Thu Mar 15, 2018 7:50 pm, edited 1 time in total.

Halicar
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Re: Those with high savings rate: why?

Post by Halicar » Thu Mar 15, 2018 7:50 pm

So that I can survive when I am no longer able to work.

I find it interesting that this wasn't even on your list.

blinx77
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Re: Those with high savings rate: why?

Post by blinx77 » Thu Mar 15, 2018 7:50 pm

bloom2708 wrote:
Thu Mar 15, 2018 7:45 pm
Your 50 year old future self does not want to work 15 or 20 years.
Some days my 33 year old self doesn't want to work 15 or 20 years either! :twisted:

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rocket354
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Re: Those with high savings rate: why?

Post by rocket354 » Thu Mar 15, 2018 7:54 pm

EGARCH wrote:
Thu Mar 15, 2018 7:25 pm
  • Is it because you want to retire early, or
  • You are not sure what the future holds, e.g. low job security, or
  • You want to leave money to others, e.g. kids, grand kids, charity, or
  • You have no interest in increasing your consumption now, including giving more money to charity
  • etc.
Any insights?
A, B, and D, more or less in that order.

I had a very, very rough experience in the great recession and so I still live every day as if I'm going to get fired tomorrow and the markets tank at the same time.

ThriftyPhD
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Re: Those with high savings rate: why?

Post by ThriftyPhD » Thu Mar 15, 2018 7:55 pm

EGARCH wrote:
Thu Mar 15, 2018 7:25 pm
  • Is it because you want to retire early, or
  • You are not sure what the future holds, e.g. low job security, or
Mix of these. It's not so much to specifically retire early, but to reach financial independence early. Then it's not a monetary choice to stop working, but a decision based on what we want to do and what we enjoy.

We also don't know what the future holds. If I knew what salary I would make for each year and what return I would get on savings, I could adjust my savings rate to meet my 'number'. If I know how long I will live and what expenses will come up, then I know exactly what 'number' is needed. I don't know any of this. So I save more in case income decreases (job loss, pay cuts, etc), returns are low (markets down), or unexpected expenses (health, long term care, etc).

Trapper
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Re: Those with high savings rate: why?

Post by Trapper » Thu Mar 15, 2018 7:57 pm

I save, because by having savings, I have more choices in my life.

jehovasfitness
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Re: Those with high savings rate: why?

Post by jehovasfitness » Thu Mar 15, 2018 8:02 pm

Fear.

Sarah Saverdink
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Re: Those with high savings rate: why?

Post by Sarah Saverdink » Thu Mar 15, 2018 8:03 pm

We currently live a very enjoyable and comfortable lifestyle on less than half our income. Spending more would not increase our happiness in a meaningful way, so we save with the hope that it will provide flexibility in our future life choices (ie early retirement). As our income has grown over the years, we've spent more on vacations and some hobbies, but we don't have a desire to spend the money just for the sake of it.

delamer
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Re: Those with high savings rate: why?

Post by delamer » Thu Mar 15, 2018 8:09 pm

To pay for our kids’ college educations, and to greater or lesser degrees the items that you listed.

Bacchus01
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Re: Those with high savings rate: why?

Post by Bacchus01 » Thu Mar 15, 2018 8:10 pm

Yes
Yes
No
No

blessed
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Re: Those with high savings rate: why?

Post by blessed » Thu Mar 15, 2018 8:13 pm

I save aggressively because I'm trying to make up for not saving as well as I should have early on and I want to retire at 55 at the latest.

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Phineas J. Whoopee
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Re: Those with high savings rate: why?

Post by Phineas J. Whoopee » Thu Mar 15, 2018 8:14 pm

Economic equivalent of biological r-strategy. In my life income has been unreliable and ephemeral. I have to save while I can.
PJW

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Tycoon
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Re: Those with high savings rate: why?

Post by Tycoon » Thu Mar 15, 2018 8:19 pm

To retire early.
...I might be just beginning | I might be near the end. Enya | | C'est la vie

Iliketoridemybike
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Re: Those with high savings rate: why?

Post by Iliketoridemybike » Thu Mar 15, 2018 8:22 pm

From the moment I got my first “real” check at 22, I set my sights on retiring early. Over the years I worked myself up to a 50% savings rate. I am now 55, have millions tucked away and on the runway to a near term retirement. So I save a lot so I can live the life I want, financially free.

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corn18
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Re: Those with high savings rate: why?

Post by corn18 » Thu Mar 15, 2018 8:25 pm

blessed wrote:
Thu Mar 15, 2018 8:13 pm
I save aggressively because I'm trying to make up for not saving as well as I should have early on and I want to retire at 55 at the latest.
Same for me.

Katietsu
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Re: Those with high savings rate: why?

Post by Katietsu » Thu Mar 15, 2018 8:28 pm

Duplicate
Last edited by Katietsu on Thu Mar 15, 2018 8:32 pm, edited 1 time in total.

Katietsu
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Re: Those with high savings rate: why?

Post by Katietsu » Thu Mar 15, 2018 8:30 pm

I grew up in the Rust Belt. As I child I watched families all with stay at home Mom’s and Dad’s who just barely made it out of high school living what was considered a solid middle class life style. This was made possible by the union jobs in the steel mills and manufacturing plants. Then, when I was in high school everything changed. Think Billy Joel’s “Allentown.”

I saw 50 year old men who had been proud of their jobs and the lifestyle it provided working minimum wage jobs and selling their houses. I saw happily married couples who were parents’ of my friends get divorced from financial strain. Most never recovered and many died before 70 yrs old.

Looking around as a teenager, I said to myself that the ability to handle job adversity seemed to be much worse as one approached or moved past 50. So I set that as a goal. Not to retire by 50 but to be able to handle a career upheaval by 50.

heyyou
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Re: Those with high savings rate: why?

Post by heyyou » Thu Mar 15, 2018 8:35 pm

By age 25, I could see that I only needed to work until I could afford to not work. I then worked 30 years and a month, 50-55 hours per week, until retiring. Completely unexpected, the next decade was the best years of my life. Others should do whatever suits them. I know what I like and it does not involve anything to do with paid employment.

honduranhurricane
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Re: Those with high savings rate: why?

Post by honduranhurricane » Thu Mar 15, 2018 8:37 pm

To increase my options in the future. For me that is to get to FI, then decide how I want to allocate time and $.

Alice Ranch
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Re: Those with high savings rate: why?

Post by Alice Ranch » Thu Mar 15, 2018 8:48 pm

Was able to sustain 20% pretax savings rate for my last 10 working years after too many years of personal uncontrolled spending and little savings (no kids). Add to that, following BH guidelines. Result - financial independence. This is a big deal for me! Single senior woman, now retired.

leftcoaster
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Re: Those with high savings rate: why?

Post by leftcoaster » Thu Mar 15, 2018 8:49 pm

To pay for the luggage rack on the hearse at my funeral.

frugalecon
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Re: Those with high savings rate: why?

Post by frugalecon » Thu Mar 15, 2018 8:54 pm

jehovasfitness wrote:
Thu Mar 15, 2018 8:02 pm
Fear.
On this, I have witnessed a friend’s descent into poverty in old age. He didn’t prioritize savings and security, advocating following one’s “bliss,” and ignored advice about savings and investments. “I will work until I die,” he proclaimed. Except he was fired in his early sixties and was unable to maintain employment afterwards, mainly because he couldn’t navigate changing workplace environments. Now he is penniless, subsisting on Social Security and charity from friends. No thanks.

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Toons
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Re: Those with high savings rate: why?

Post by Toons » Thu Mar 15, 2018 8:57 pm

1.So that we could have some gold in our golden years.
2.When my open open in the morning,,,,I have options for that day,
One day at a time.






:idea:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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market timer
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Re: Those with high savings rate: why?

Post by market timer » Thu Mar 15, 2018 9:21 pm

All of the above.

Plus, I might want to start my own business. Having money will let me hire people.

jminv
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Re: Those with high savings rate: why?

Post by jminv » Thu Mar 15, 2018 9:23 pm

I enjoy accumulating and growing my money. I'm passionate about it. I think most people on here are like this.

I also like that I can quit working whenever I feel like it. I've experienced staying at a miserable job because I needed the money and and I never want to be in that position again. Ever.

crit
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Re: Those with high savings rate: why?

Post by crit » Thu Mar 15, 2018 9:29 pm

Because our income grew much, much more quickly than our spending habits, which, by this time in life, aren't that plastic.

HIinvestor
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Re: Those with high savings rate: why?

Post by HIinvestor » Thu Mar 15, 2018 9:32 pm

We enjoy living below our means and can and do buy what we need and much of what we want. We like having savings and investments, as it gives us and our kids more options. H retired when he was no longer enjoying his job and I am cutting back and doing more of what I enjoy and less of things I dislike. Life is good. :-)

Ron Ronnerson
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Re: Those with high savings rate: why?

Post by Ron Ronnerson » Thu Mar 15, 2018 9:38 pm

EGARCH wrote:
Thu Mar 15, 2018 7:25 pm
  • Is it because you want to retire early, or
  • You are not sure what the future holds, e.g. low job security, or
  • You want to leave money to others, e.g. kids, grand kids, charity, or
  • You have no interest in increasing your consumption now, including giving more money to charity
  • etc.
Any insights?
We're not extremely high in terms of our savings rate but I think we are at least decent savers (we save 33% of our gross income if mortgage principal is not included and 39% if it is).

I don't wish to retire early (I like my job) and have high job security (tenured teacher with relatively high seniority in a district facing a teacher shortage). However, anything can happen so it's good to have options and saving helps provide that.

I don't think about leaving money to heirs so that doesn't factor into the equation for me.

I wouldn't mind increasing consumption but my savings rate allows me to stay in the 12% federal tax bracket and I don't wish to pay more than that. So I save enough to stay in that bracket and spend the rest. We're in a VHCOL area (Bay Area) so it means being relatively frugal. However, we feel that we can live comfortably spending what we do so it isn't really all that bad.

PFInterest
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Re: Those with high savings rate: why?

Post by PFInterest » Thu Mar 15, 2018 9:47 pm

Yes etc....

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triceratop
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Re: Those with high savings rate: why?

Post by triceratop » Thu Mar 15, 2018 9:57 pm

I spend 100% of my income. Spending money on material possessions, apart from spending money on travel and my normal hobbies, brings me little pleasure. Instead I prefer to spend money on buying index funds which is a nice hobby, too.

How do I practice my hobby? I have fun about twice per month submitting limit orders and trying to get good execution on my investments. Oh yes, did I mention I'm really popular at parties? :wink:
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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jabberwockOG
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Re: Those with high savings rate: why?

Post by jabberwockOG » Thu Mar 15, 2018 9:59 pm

I grew up in small rented apartments with parents who were living mostly paycheck to paycheck. Security was nonexistent.

Early on in life I was lucky enough to become aware that I valued financial security and peace of mind way more than having "stuff". Was also lucky to be taught that pursuing high dollar things and/or experiences is a desperate chase for joy/fulfillment that this kind of stuff can never provide.

After a lifetime of LBYM and having fun doing it (with occasional well deserved splurges), and careful saving and investing, today we find that what we enjoy most in our life are usually simple inexpensive things and experiences.

One caveat - was lucky to never be unemployed and to earn a relatively high income for most of that time so saving a large part of my income was easier than most.

jadedfalcons
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Re: Those with high savings rate: why?

Post by jadedfalcons » Thu Mar 15, 2018 10:07 pm

Early retirement. In the last 16 years, the most time off I've had at once is a single 3 day weekend. I want to at least have the option of hanging up the proverbial hat by the time I turn 60. (let that be a warning to anybody thinking about going into business for themselves. Seriously.)

AlohaJoe
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Re: Those with high savings rate: why?

Post by AlohaJoe » Thu Mar 15, 2018 10:45 pm

EGARCH wrote:
Thu Mar 15, 2018 7:25 pm
  • Is it because you want to retire early, or
  • You are not sure what the future holds, e.g. low job security, or
  • You want to leave money to others, e.g. kids, grand kids, charity, or
  • You have no interest in increasing your consumption now, including giving more money to charity
  • etc.
Any insights?
Yes
Yes
No
No

"Not sure what the future holds" isn't exactly the same as "low job security". As an example, I moved to a new country to help a previous employer establish a new branch office. After 3 years they decided to shut down the branch office. I was more than welcome to keep my job and move back to the global HQ. There was no problem with job security. But -- because of a combination of good fortune and high savings -- I had the option to not move back to global HQ if I wanted to.

Mr. Money Mustache has a current blog about how money (can be) a substitute for confidence. He gives a few examples from his own life, including starting a carpentry business -- which turned out to make enough money to support his family but he was never brave enough to try it until he was already financially independent.

I know quite a few people who want to save enough money to "try something new". Found their own startup, become a freelancer, take a year off to travel the world before they have kids, etc. They need to have a high savings rate to get to their goal.

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Cycle
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Re: Those with high savings rate: why?

Post by Cycle » Thu Mar 15, 2018 10:48 pm

Currently at 2.7% SAWR at age 34/35 assuming we keep 17k rental income and continue to spend 40k per year. Income 300k+.

We'll have kids though which will kill our savings rate... Mainly from daycare. Kids could be special needs. I could hit my head and become special needs, who knows, we save for the unknown.

On leaving money, no. People need to make their own way.
Last edited by Cycle on Thu Mar 15, 2018 10:53 pm, edited 1 time in total.

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Pajamas
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Re: Those with high savings rate: why?

Post by Pajamas » Thu Mar 15, 2018 10:51 pm

No need to manufacture ways to spend money instead of investing it, which would lead to less satisfaction instead of more.

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El Greco
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Re: Those with high savings rate: why?

Post by El Greco » Thu Mar 15, 2018 10:54 pm

one word: Freedom

Amphian
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Re: Those with high savings rate: why?

Post by Amphian » Fri Mar 16, 2018 1:41 am

bloom2708 wrote:
Thu Mar 15, 2018 7:45 pm
Your 50 year old future self does not want to work 15 or 20 years.
My 50+ self does want to work 15 or 20 more years. I love what I do (software engineer), although I could be happy doing other things too.

Why do I save more than I spend? My 97 year old grandmother died last year. She survived financially the last decade or so because she had four children that stepped up to the plate when her husband's pension wasn't enough to cover rising care costs. I am childfree (by choice).

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