Finding a Balance–Savings & Spending

[JanieD]

How do you find the right balance between the two? We tend to save & avoid spending. Sure we buy the occasional want, but we keep the amount low. It can add up, but we still save quite a bit. Our savings goal for the past 10 years or so, early retirement. We do not have plans through work (not offered & new jobs w/those kinds of benefits really aren’t available). Plus, most plans allow withdrawals after a certain age & we want to retirement before then. I know it will be hard to reach this goal. Actually, I’m not sure we can truly save enough. However, holding onto every nickel & dime can make you miserable. IMO Everyone needs some fun money to spend. Any suggestions on how you find a balance? Recommended reading?

We are struggling a bit since this is such a long term goal. Also, the pressure to spend never ends. Honestly, though spending some money to have fun seems important. Not only because we have been saving & will continue saving for years, but life is uncertain. Any thoughts? How about those paying off mortgages earlier or anyone trying to juggle saving long term with spending to enjoy today?

[peanut]

How do you find the right balance between the two?
First we determine what we value (there's often conflicts we have to work through), then we set priorities, and then we set goals. Goals get broken down into baby steps, complete with motivational incentives along the way.

Plus, most plans allow withdrawals after a certain age & we want to retirement before then. I know it will be hard to reach this goal. Actually, I’m not sure we can truly save enough. However, holding onto every nickel & dime can make you miserable. IMO Everyone needs some fun money to spend. Any suggestions on how you find a balance? Recommended reading?

Watch the material you read on retirement. You don't need millions of dollars unless you plan to live the high life in retirement. Reality is most people don't have the energy or health to live that lifestyle...or the desire. Your lifestyle isn't likely to change dramatically when you retire. If you think it will, enumerate how, and then cost out those changes.

One thing for sure...health costs will go up. You will probably not be covered by company/employer plans anymore, and as you age you need more drugs, etc. this is where Canadians have it all over Americans. Our health care is paid for as seniors. We still have to cover drugs and other 'non-traditional' medicine, but surgeries and doctor's visits are all free in this country (unless we go outside 'the system' to an independent specialist).

Honestly, though spending some money to have fun seems important.

It is. More so because it can act as a reward for reaching a small goal or completing a baby step in your plan, and thereby motivate you to work diligently on the next step. But also for the reasons you claim. But fun does not have to cost a lot of money. Check the archives for threads on "Frugal Luxuries" or "Frugal Date Nights", or "Frugal Family Fun".

How about those paying off mortgages earlier or anyone trying to juggle saving long term with spending to enjoy today?

We did pay our mortgage out six years early, on one income. We simply determined how little we could actually live on and then allowed a couple hundred extra for 'other stuff'.

When we first started being frugal I found it worked best if I viewed it as a game. If it wasn't fun I wouldn't do it. For me that meant I had to have the occasional luxury or treat. I also needed visual reminders of where we were and where we were going...I needed goals.

This meant analysing why I spent money on the things I did, and asking myself if there were another way to get the same "wow" factor (as Amy D. calls it) for less. Often there were a lot of ways to find fun things to do cheaply. Examples:

~ I really missed going to the symphony (my sister and I used to go in university...it was $5 a pop for students). I found the local symphony gave free or next to free concerts periodically. And we found their chamber music series was half the price of the regular series.

~ I love live theatre. I used to go to the Citadel when we lived in Edmonton making over $30K in the early 80s. Now I attend the Little Theatre (amateur theatre) and occasionally some university theatre (the drama dept. has cheap productions usually).

~ I used to go to first run movies. Now I go to second run movies. I can catch avant garde movies for free at the local library. I can borrow DVDs from the library for the $5 cost of the library card.

Those are just three examples. There's tons of ways to treat yourself and still be frugal. Dining out used to be a big one for me. I discovered breakfast, lunch and tea were much cheaper than dinner meals. Sometimes, for a treat, DH and I would just go for dessert! I had just as much fun with DH at the cafe for afternoon tea as I did at the restaurant for an evening meal.

I guess what I'm saying is that saving for retirement, paying out a mortgage, and being frugal are not mutually exclusive. They can all be done. You just have to get creative! One of our favourite forms of entertainment has been local festivals. They are fairly cheap and a lot of fun. We often meet neighbors and friends at them too.

Okay, I'm rambling...just check the archives and you'll find lots of threads on these subjects. {{{Hugs}}} I've been where you've been. And I know it seems like you're at the wrong end of a long tunnel. But the day will come when that mortgage will be burned. And the day will come when your DH and you are able to say good-bye to your workplace. And, yes, you're right, you do need to have some fun along the way.

[fixer]

You hit upon a very tough question. If you deny yourself too much, then you end up hating what you are doing. It is hard when you first start saving. Sometimes it seems as though for every one step forward, you take two steps back. Early on, faith in your plan is a must. As the years go by, you can start to see the reward for all of your hard work.

[elphie]

My general philosophy is that today and tomorrow are of equal importance... I shouldn't sacrifice either one for the other.

I have a living, breathing budget that I adjust on a regular basis. That budget has specific savings goals- the minimum amount I'm comfortable with in my EF and the amount I want to contribute each pay period. My budget also has a specific amount each pay period I mark as "misc." from this money I buy everything from haircuts to oil changes. The amount is comfortable enough for dh and I both to have about $15 per week to spend however we want. That doesn't sound like much but $60 a month is quite a bit. And its amazing the deals you can find or the things you decide just aren't worth it when you know that when the cash is gone, its gone.

[Thevail]

DH and I have had this discussion a thousand times. And the right balance of save vs. spend changes every time.
Because new situations, or expenses, or worries about finances (is a lay off immanent? are food prices going up or down? what can we afford in the "replacing the furnace adventure"?) crop up all the time.

Also, while we'd love to have a fully funded 3 month EF (and we're working on it) we also know that these first few years of our mortgage are like golden sand slipping through our fingers (right this minute $7000 will buy 5 years of my mortgage back...that's $90,000 we WON'T EVER have to pay) and making the same payment directly to principle in later years won't be worth nearly as much.

But as we sit together in our rocking chairs 30 years from now..I just can't see us looking at each other and smiling...remembering how we saved that $4000 way back in 2009..and didn't go to Europe.

A cautionary tale...my parents were frugal, and did the right things. My dad retired three years ago, and my mom retires next year. My mom has thrombosis in her legs now though, and can never go hike the scottish highlands like they always wanted to. Really think about what you defer until retirement, even early retirement, because the road has a lot of twists between now and then.

On the other hand, they did the right things, and now they can retire... so it's six of one and half a dozen of the other.

[peanut]

.A cautionary tale...my parents were frugal, and did the right things. My dad retired three years ago, and my mom retires next year. My mom has thrombosis in her legs now though, and can never go hike the scottish highlands like they always wanted to. Really think about what you defer until retirement, even early retirement, because the road has a lot of twists between now and then.

AMEN! My health has gone downhill since I turned 40. There are some things I'm not wanting to put off anymore. And I'll take a lower lifestyle in retirement to be able to do them now.

[MomToTwoBoys]

We have that struggle all of the time. Our best weapon in the fight to find the balance between spending and saving is to make sure that we're actually really dead set on either buying the item or not buying the item. We get our spur-of-the-moment purchases that we may regret later, but that's all part of the learning process.

DH and I have plans to pay off the debt, get a savings fund for education started for DS5 and to put money into retirement. All of this is what we're hoping to start within the next five years. Our debt payoff plan is happening within the next two years. We want to start saving for DS5's college education by the time he's 7 (that'll give us ten years' worth of CDs and education funds to look into) and at the same time we're doing the education thing, we want to put money into retirement before DH is 35 (which is May 2011).

Our mortgage is already on the right track to be paid off early (about 20 years instead of 25).

Our biggest obstacles right now are trying to find the money for home renovations, which I imagine will be easier to do once we get rid of the debt. I'd have to say, though, that our barrier between spending and saving on just about anything is the simple question of 'do we need this now? can we do without it?'.

[ma6791]

I agree with what everyone has said. I try to plan my monthly budget (and yearly) very realisitically. I know we are going to want to have some fun and make certain purchases that might not be absolutely necessary but we will want them. I think the key is to decide what is important to you and your family and eliminate those things that you might be doing just cause you think you have to or because others to it...it's about prioritizing and only you can know what your priorities ought to be. Things will change throughout life so it is important to be sensitive to the need to change your budget when they do. My dh and I have cut out many things we used to think were so important but we have also added in other expenses that we really need or want now.

[JanieD]

Fixer, the tough questions are meant to be group discussions, right? I thought if anyone could help me, it would be my friends at FV. The recent steps back (tanking investments) are hard to accept. I feel things will turn around, but its not easy see money disappear from retirement accounts right now.

I think Peanut has found part of my problem too... determining what we value. Early retirement is a huge goal & my DH really wants this. I think it sounds wonderful, but it feels so far away. Looks like I need to figure out how to break this into smaller steps. Perhaps find some smaller goals too. That way I won't have everything tied to one main goal. Maybe a plan B & C too, just in case. As for rewards, we have several splurges planned this year. I'm sort of excited about these except for the spending money part. I'll check out the threads you mentioned too.

I really like thinking of today & tomorrow as equally important. Thanks Elphie! I mean what good is it to only live for one or the other. I need to work on this kind of balance!

Ya'll have given me a lot to think about. I really appreciate everyone's post!

[mommy4ever]

This is such a hard thing to do.

In many ways it's like trying to decide when to have kids. If you do it young, you're full of energy and zest and have so many things you can offer, but no money. If you wait, you may have a paid off house, great career, lots of income to use to raise your kids, but you may have trouble conceiving, you may not have the energy to be as active with the kids.

Such is saving and spending. There has to be a balance, and in the end you and your partner are the only ones that can decide what the right balance is. It is important to have some money budgeted for fun. Don't make that little splurge a forbidden fruit. And as so many people mentioned, there are ways to do things cheaper.... just gotta put in the time.

[shoiji]

I have been thinking about this. This month I spent more money than usual on items that I have been wanting to buy. It finally dawned on me that I was constantly saving for items I needed or wanted and never buying anything. Only on the must save way of thinking. While I do set aside money each month to be able to purchase something, I have been trying to really save. Well it finally dawned on me that I have saved some but since I was constantly saving I was not buying anything. So, I did find some great bargains at the thrift store on items I have been saving to purchase. While I did feel some dread over purchasing the items and not saving, I told myself I was saving to buy these items. And when was I planning on buying the items anyway. Some of the items have been on my list for over a year.

One thing I do feel good about is that even though I bought the items I needed or wanted my desire to save has really helped to get me back on track. Before I would just keep on spending with out a care for saving.

[JanieD]

I have been thinking about this. This month I spent more money than usual on items that I have been wanting to buy. It finally dawned on me that I was constantly saving for items I needed or wanted and never buying anything.

This is me! The splurges I mentioned before are things we've saved for, but haven't purchased since I like having the money tucked away. Some items are needs to an extent, but we can do without them. So, I keep putting them off. Its like I get in a savings mode & can't enjoy buying items over $25. Sounds like a good problem to have, but not always. And those little goodies I enjoy purchasing add up in a month or 2 anyway. Its a little silly feeling guilty spending over $25. I am a little concerned once I make several larger purchases, I’ll continue spending though.

[joyofsix]

I struggle with this. My natural bent is to be like a squirrel and bury money in the yard in mason jars, LOL. I really don't have things I want to spend money on except some things for the kids. Dh on the other hand leans the other way and feels he 'deserves' rewards. I'm not sure there is an answer, I think it must be an ever shifting balance and you just have to stay on top of it.