21 thoughts to “Ask Not How Much You Should Save, Ask How Much You Should Spend”

  1. Yep, I’ve made some pretty dumb money mistakes and don’t make oddles now. Its easy to feel like the FIRE is being snuffed out before I even figured out where the heck the lighter is.

  2. I really don’t understand how one can budget medical expenses. Like when a medical emergency happens, you probably will be willing to through at it everything you got just to not be in pain, not die, etc…. And when it doesn’t, there is really not much medical spending going on. Like 2 months ago I had medical issues. I blew through all of my savings (Around 10k) on medical expenses. Before that, I spent $0 on health care. (Note: I live in a country where healthcare is supposedly “free”).

    1. I’m so sorry that’s happened to you. I also don’t understand the concept of budgeting for medical expenses (beyond regular medication and co-pays/insurance in the U.S.).

  3. I thought the Warren 50/30/20 rule was about fixed expenses/variable expenses/savings?

    So 30% wasn’t frivolous, just things that you could cut out in the event of a lengthy job-loss. And the 50% could be frivolous if they’re expenses that you have to pay and have a hard time getting out of (ex. yacht payments). And the 50% is a ceiling and the 20% a floor. The idea is to set your spending so you can weather a reasonable catastrophe like a long unemployment spell while still enjoying life up to your means. (So if your parents would love to have you move back and you’re renting month-to-month, that might be a variable rather than a fixed expense.)

    IIRC she does talk about situations in which rents are so high and wages so low that you can’t get under 50% fixed expenses.. you can see her future political career in that chapter. (I think that actually figures pretty large in the introduction, though it’s been about a decade since I read the book.)

  4. Sooo… I use a zero-based budget. And I love it. It made it possible to pay off the interest on my unsubsidized student loans before it capitalized after I graduated, and I also built what is at this point a 4.5 month emergency fund while I was in school! It’s amazing.

    Yes, I’ll admit I’m a person who enjoys rules. But I really dislike rigidity! I went back to school after a pretty large break, so I’m an older millennial, and for years I settled for just ineffectually tracking my spending because full-on budgeting spreadsheets made my eyes roll out of my head. In this era of fintech, though, I’d like to suggest that, actually, it’s totally possible to have a flexible budget with not too much effort!

    I swear I don’t work for them – I am just one of a horde of admirers – but I really encourage you to look into YNAB (You Need A Budget), a zero-based budgeting app. It has four basic budgeting rules that are the foundation of its budgeting system, and one of them is “roll with the punches” because no month is a “normal” month. The idea is that when you go over in one category, you just move money from another category, but you’re making the choices consciously and deliberately. Their software also tracks those money moves, so if I want to, I can adjust my budgeted amounts in future months based on what I can see I’ve done in the past. Or not. For example, I have a budget category called “budget flex” because I accept that every month will have some extras I don’t see coming. And there are other apps! (I think this is the best one, though, ngl.)

    And the rewards are totally worth it. The learning curve was a little steep, and it is a paid subscription (with a free year for students and a free month for everyone else to start), but these days I spent an hour or two on it per paycheck? Maybe? Along with less than ten seconds to manually record my spending every time I make a purchase, but that’s only because I use manual entry and don’t want to connect my accounts. Plus, after I started, random dollars started appearing out of nowhere – I have no idea what I would otherwise have spent them on, so obviously I’m not missing whatever it was! – and I made better decisions because I could see what decisions I was making. Transparency is gold!

    I really enjoy your posts, but I do wish you’d consider that there’s more than one way to budget, and rigid, spreadsheet-style “budgeting” isn’t the only option these days!

    1. I know a lot of people who swear by YNAB. If I ever decide to get over my dislike of budgeting and try a more flexible system, I’ll give them a shot!

  5. “Saving is passive. It’s an absence of action. To save money you just… do nothing to your money. You leave it alone.”

    This is the secret to my success. Saving has always come “naturally” to me, mostly because I’m just not that interested in shopping and buying things. It helps that I live under a rock and I’m not exposed to too much that I want to buy. I have found the more I am in stores, the more I want to buy. So I try to avoid it as much as possible and just let laziness help me save.

  6. Whoooo! I really needed this one.
    I’m about to turn 25 and I just paid off all my student debt, but even with a full time job and the side-hustle, I’m going to be living with my parents until I can save up to properly furnish an apartment/have an emergency fund (probably another year). I haven’t even begun to start my retirement savings because I want to have a strong foundation accessible to me, but GOD does it feel like I’m “running out of time” to start saving for retirement. It was nice to be reminded that it’s all still forward motion.

  7. Honestly, if more people took the info in this article to heart, we’d see a lot fewer disasters with personal finance!

    I always hated the 50/30/20 rule. Maybe it worked in a different time, or at certain incomes, but it has a lot of holes if you make less than the average or above $100,000 each year. For example, at $100k your mandatory expenses should be far less than 50% of your income unless you have a very large family or are in one of the highest cost of living areas. However, if your income is on the lower side, you might have to spend more than 50% on necessities and cut back on the discretionary spending. One size does NOT fit all when it comes to budgeting!

  8. Ratios for spending can be great rules of thumb, but they vary greatly depending on personal circumstances. Our family has experienced this as we’ve moved between the UK, Zambia and now Spain. Costs can differ significantly between geographic locations / and at different stages of life.

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