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In this highlight, we discuss how to effectively balance your finances with your life.
Next up, we’ve got a question from HJS (64). He asks, “How do I balance savings and fun? I save about 30 percent, but my wife sometimes thinks I have too tight a grip on our spending. Do you guys have any advice for him?”
Well, the first question I’d ask HJS is if he fights with his wife when she wants to spend money. Saving at a 30% rate is quite strong, considering we don’t know his goals, age, or portfolio. We recommend a 25% savings rate to provide financial freedom and allow for spending and experiences. HJS should reflect on this and discuss goals with his wife. If their current savings rate aligns with their goals, they can loosen up their spending. Finding a balance is important.
Age also factors into savings targets. In your 20s, a 25% savings and investment rate is aspirational, while in your 30s, it’s outstanding. Knowing your “why” is crucial, as it impacts the savings needed to reach specific goals. If HJS plans to retire traditionally around 60 to 65, a 20-25% savings rate will serve them well. However, if they aim to retire earlier, say between 45 and 55, they’ll need to save more to achieve those goals.
The “why” has a significant impact, and we provide tools and resources to accelerate the financial journey. Our courses and tools, available at learn.moneyguy.com, help couples navigate this process and determine their current position. Once you know where you are, you can make informed decisions together.
If HJS is already saving around 25% or 30%, they might be okay. They can explore how to better utilize the additional 5% to create memories and improve their lifestyle. Taking the course and using the tool will provide clarity. It’s not about being overly frugal like Ebenezer Scrooge, but rather incorporating savings into the budget and enjoying life responsibly.
I’ve personally experienced creating great memories on a limited budget. My wife and I traveled through Europe when we were financially strained, and despite some challenges, it created unforgettable moments. Instagram-worthy accommodations weren’t a priority back then. Memories blossom regardless of the circumstances. It’s important to strike a balance and not wake up one day at 50, wondering what you missed out on in your younger years. We aim to provide you with tools and resources to navigate this journey effectively.
For more information check out our free resources here.
