One of the most difficult things for people is how much do I save for the future and how much do I spend now? It’s difficult because we want to enjoy life today and have fun today. Part of having fun is spending money today. Happy hour with friends, travelling and spending on the most current trends are part of our normal lives. If I stop spending money in these areas will my life become boring?
There is a balance of being happy today with your lifestyle and preparing yourself not to be broke in the future. Take a look at your parents, grandparents or any other older family members that you have. How is their life in retirement? Do they need financial help? Do they need financial help from you or someone else? Do you want to be where they are when you’re retired?
It’s hard to think about yourself 30 years from now but it’s easier to take a look at those close to us and how their current financial life is. Most of our parents and grandparents need financial help and they likely made less money than we do. There is not an exact answer to how much to save for the future compared to how much you should spend. Everyone’s situation is different depending on income and lifestyle but below is a basic template to use and customize.
- Debt – Pay it all off except Real Estate loans or debt used to grow your business or assets.
- Future Savings – At bare minimum if your company provides a 401k with matching make sure to take advantage of the full match. After that, aim to save and invest 15% of your income for retirement.
- Today’s spending – Spend on the things you enjoy the most. Think about the things you really enjoy and create a spending plan for those items and prioritize them. Happy hour, nice dinners, or clothing. Don’t buy a bunch of cheap trendy clothes. Buy high quality. You will enjoy them more, take better care of them and not feel the need to buy everything you see on Instagram.
- Do it – Don’t hesitate. Just make the changes. Preferably work with a financial advisor to help you put it all together.
Do both. Enjoy life today and prepare for the future.