Are you saving 20-25% for the future? It may be time to take your foot off the gas and make sure you're enjoying your life.
Saving a little bit of today for a great, big, beautiful tomorrow is a core tenant for The Money Guy family. The power your army of dollar bills holds, especially while you're young, warrants mastering the art of deferred gratification. (See how much your money can grow at each age in this free PDF: "How Powerful Are Your Dollars?")
But making memories, prioritizing what's important, and being generous are also big factors in our definition of success.
So, how do you know when it's time to transition from super-saver to comfortable spender?
Are you saving 25% or more of your gross income? This is our benchmark savings rate. This rate of saving for the future should allow you to replace enough of your income in retirement to be comfortable. If you're automating your savings and consistently hitting this goal, it's ok to prioritize more spending on things you enjoy and create lasting memories.
Are you automating your savings? If you are paying yourself first - automatically - you're far more likely to keep your savings on track, even as you let up the gas and give yourself permission to spend.
Where are you in the FOO? Another indicator is found in our Financial Order of Operations (FOO). Which of the nine steps are you on, currently? It often makes sense to be tight with your money when you're young and/or working through the first few steps. Once you reach Steps 6-9, it may be time to reassess and free yourself up to consider future dreams and expenses. You can download a free copy here or sign up for our course to get a deep dive and be part of the FOO community!
In the video below, Brian shares his personal journey of saving aggressively to turning in his "tightwad" card and feeling comfortable with spending more money on the things that matter.
When is a Good Time to Stop Saving so Aggressively for Retirement? (Highlight - 5:06)