Spending Or Saving?

Working in the financial industry, I’m very aware of the fact that saving is important. It’s important to start as early as possible and to increase whatever you can set aside every year. Why? There are a hundred different reasons. The main one is that the biggest factor in finding out how much you’ll have to retire on is how long you’ve been invested. It’s called the compounding effect. The math is simple to understand. Assuming a few things, saving $5000/year can be much better if you start by age 20 then saving twice that amount starting 15 years later.

It’s Not About “Stuff”

Obviously, I’m not talking about buying stuff

Therefore, The Logical Thing To Do

You would think that it makes a lot of sense to save a significant amount of money. The most basic rule is that we should save 10% of all income every year. Some say it should be more. The reality though is that we live in an era where the average savings rate is much closer to 0%. It’s simple. Live below your means in order to be able to enjoy life later on as you reach retirement, etc.

Life Is Short Though

I had already been thinking about this in recent months when I found out that a friend of mine had been diagnosed with cancer. He’s 34 year old and has 2 kids. Then I think of my grandparents who saved all of their lives in order to be able to travel once they retired. Then once they were able to stop working, my grandma turned sick and they were never really able to enjoy their savings.

Trying To Find A Balance

I am personally trying to find some kind of balance. Being able to save money every year into my retirement accounts is critical but I’m also trying to make sure I have enough to live a few dreams with my wife and baby. I’ve discussed some of my trips (Africa, Russia-Spain, etc.) and I hope to continue to do more in the coming years.

How do you view this decision? Are you able to strike a balance between saving and spending?

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