Striking a Balance Between Saving and Spending

Hi J.-

It sounds to me like you and your husband are doing very well financially and have a great safety net in the event that something like a job loss should happen. I agree with another poster that said that you should look at your insurance (life and home) to make sure that you are adequately covered. Aside from that I would put a little more than $100 per month for education expenses (if you can) as the cost of education rises at a much higher rate than most other expenses.

I struggle with the same issue that you do regarding the present living versus future security. I've always learned to put money away now for the future but I don't feel completely comfortable "waiting" to enjoy life until I can afford it. What I find is that you may never have enough money to feel completely secure. That being said, I think that it's all about balance. You definitely don't want to spend like there's NO tomorrow especially during these very uncertain times but we don't know for sure what is in store for us healthwise in the future either. I tend to spend money more on experiences (travel, classes, workshops) than I do on materialistic things. I've read that realtionships and experiences bring much more happiness than do objects. Occasionally I do treat myself to something impractical but it is pretty rare. When I see people driving $50,000 + cars or living in mansions I guess I think about what could that money have been better spent on? I guess I'm just too practical by nature and I couldn't bring myself to over spend on status symbol like items but everyone deserves a treat or special gift every so often. I hope that helps. Good luck with everything.

Puchase the things you NEED and save the EXTRAS spending for holidays (to limit yourself). Holidays meaning Valentines, Sweetest Day, Anniversaries etc. Then there's always Thanksgiving and most important GODS day for giving you these blessings. Stick to the putting $s away per child. College can run $200k per child by then. Save, save, save. Find a hobby other than shopping to keep you out of the malls and stores.

Great job! If more Americans were like you, we would not be in this financial crisis!

I feel the same way. Our cars are paid for, we overpay our mortgage, save for college, max out retirement and materialism gets to me too.

I follow the advice I received in financial planning courses and from professionals. Most professionals recommend that you have one year's savings for emergencies. This does not mean one year's salary, but one year's expenses (closer to take home pay).

Once we have decided on big goals, we don't look at them too often, maybe once a month, every other month. I look at finances/receipts weekly. If there are changes, we discuss them (can't contribute as much to an investment at work, etc). The biggest thing with goals is setting a timeline "in six months we'll be back up to our savings plan".

Each month we each get $20 or so of free money to do whatever we want, no strings.

Motivated to save? The desire to be independent. If my husband lost is job, I want to be able to rely on ourselves, not others. My brother has been out of work for over a month and is doing fine-I want to be like that.

I'm also a sale shopper, when I shop, I rarely pay full price. I also try to see where the item will fit in my home, where will I put it, sometimes that stops me too.

Again, great job! Good luck!

Sounds like you guys are great savers! Good for you. I like to think I'm a pretty good saver too. Recently I have increased the search for a good deal. I have an almost always rule of "buy on sale". In this economy, everything eventually goes on sale. If there is something I want, I will not buy it right away. I'll go home without it, and if it keeps haunting me for the next couple of days I'll go back and get it. Most of the time I find I didn't REALLY need/want it. And the things I do go back for I'm usually really happy with and use all the time.

If you do a lot of online shopping, you can always look for coupon codes and promo codes before purchasing. This also goes for dining and entertainment. I was about to buy tickets to a play at the Shakespeare Theater and found a half-price coupon on a Chicago entertainment site. Saved $50!

Another thing that helps—out of sight, out of mind. Try and limit the trips to the shops and malls. Even going to Target, I always end up spending lots of $$. So maybe going to Walgreens where the prices might be a bit more expensive for the occasional toiletries, would still be better than heading to Target where one can get caught up on all the great deals cuz you end up spending more by the time you've gotten to the checkout.

Don't get me wrong, I do my share of shopping and spending. I just make the hunt for bargains part of the fun of it. That way you don't have to sacrifice not getting the latest and greatest.

It's good to remember, saving a little more now is much better for your mental health than stressing out later about now having enough or draining savings that you had planned for something else. Good luck!

Dear J.,

It sounds like you and your husband are in pretty good shape in comparison to the majority of Americans. However, your husband is right to be concerned. The future is more uncertain than ever. Our government is openly and systematically devaluing the dollar which undercuts efforts to save. This is not Obama bashing -- this has been our government's policy since Nixon took the dollar off the gold standard. I highly recommend that you and your husband watch The Crash Course at www.chrismartenson.com. This may help you decide how better to save/spend your hard earned money and protect your children and their future. I try to have all my family members and close friends watch this. I takes ab out 3 hours in all, but it is broken into 10 minute segments so you can split it up.

Good luck,
J.

I commend you for your honesty and open dialogue with your spouse. What a wonderful place to be!

I have close people in my life whose husbands are out of work with no end in sight. I am sure they would change a few things if they had the opportunity to go back and save vs. spend. One might say "it's not what you make but rather what you keep".

Wishing you luck in finding the right answer for you and your family.

Keeping up with the Jones is only a state of mind. You are an individual person with an individual goals and ideas, why do you really care what everyone else has or does not have.
When our son was young it was the age of PS, PSP, gameboy, etc. coming into play. All his friends had all this fluff and all his friends did was sit in front of the TV gaming. It was the big thing. My husband put his foot down and said no. He does not not need this at his age, let him use his brain for something useful, when he can pay for it himself he can have one. Our son got his first game system in 8th grade and it was a N64, which was truly out dated by that time. He loved it at first but we soon found he was more interested in thing that were going on out side the gaming world like camping, sports, etc. My husband said now do you see why I did not want to spend the money on a game system that would end up in a box collecting dust.
We are parents have to take a look at what is more important, keeping up with the Jones and make sure our kids have every game, every toy, every luxury or good morals and values that will sustain them into their our marriages.
Our son is now out of high school and he went on to discipleship school where there is no TV or fluff because there is no time. They learned that it is more important to give of their time then give up their time. He drives a 1989 Chevy Pickup, started his stock portfolio when he was 16 with Ameritrade, he is not embarrassed to buy something off the clearance, he knows he will still look great even if the items are on sale.
I truly believe that what you do today will live on in your children. Sit down with your husband and look at each individual item you have purchased and say did we really need this? Why did we buy this? And when you go to the store, stop before you buy. Look at the item you want to purchase, say to yourself can I pay cash for this or will I have to charge it? Then walk away to think about how much you really need that item, you can always go back to get it. Say to yourself will I get by with out this fancy item? How have I gotten along without it up til now? Then decide should I buy it or not.
You ask what keeps you motivated to save. You do not necessarily have to save your money in a bank, you can invest your money in something that will later make you money. That gives a feel of ownership.
Good Luck....
S.

Make sure you are properly insured. Talk to a Financial Advisor to make sure you have enough Life and Disability insurance for both of you. I have a great one.

My husband and I take so much money a week for our expenses. If one of wants something that we don't really need we save out of that money until we have it. Like right now I am putting money a side each week for a new entertainment center for our living room. We really don't need one but the one we have now is 10 years old and I am tired of it. We saved together for new pipes for the Harley. Home repair, car repairs etc.. comes out of savings. It is harder to get caught up in the material world when you have to save for what you want and you just don't run out and purchase it. We also put money a side for college each month.
You have to find a balance between saving for later and now. My husband and I decided we were going to live comfortably now and save a little less for retirement. My husband is 12 years older then me plus alzheimers runs in his family and heart disease in my family. Retirement time is just not a sure thing for anyone.

It sounds like you are doing great. I know from talking to financial planners that if you have to choose between retirement versus education, you should first fund retirement as you can't get a loan for it. That being said, a lot of good schools are getting realy expensive. A relatively expensive school when my daughter is ready to go will be around $450k (she is 2 now). that means saving $10k per year from now till then. The Illinois 529 Brightstar website has a great calculator. Life insurance and even more important disability insurance are very important. I would make sure you have enough. If you need a good financial planner, I know one at Northwest Mutual - her name is Kathy McDonald and she is a mom whose kids are now grown and she gets it and isn't pushy. Good luck.

I would suggest you sit down with a financial planner if you have not done so. It helps a lot to get an outsider's perspective. I believe in saving but I live in the present also. Unfortunately I lost two dear friends in their early 30's. They will never have the opportunity to enjoy their savings. It changed my perspective A LOT. I believe in a safety net for the future but also believe you need to enjoy the present. The only way for us to really get to that point was to use our financial planner who helped us both feel comfortable with our long range plan. If you don't have anyone you are comfortable with let me know. P. ____@____.com

While I think that it's great that you are planning ahead and trying to be practical, I have to say that you don't seem to have any real issues here financially compared to most everyone that I know. It's great that you must both make enough money to have paid off all your debt, have IRAs and 401Ks that are still valid etc.

Many families are struggling just to pay mortgages and have used ALL their savings on unexpected health care or job loss, etc. so I think you need to keep your personal concern in perspective a little.
We are CONSTANTLY monitoring our financial situation, lol, because it is not good. We are able to pay our mortgage, insurance and all of our bills, but have no savings at this point (raccoons in the roof, hole in the roof, new boiler, new car tires, replacement of furnace. See how stuff comes up??).

Just this month, in addition to the pay cuts we have both taken working full time, our health insurance premiums nearly DOUBLED and we have to replace the furnace. As for 'goals', well, we had those last year and any long-term goals MUST be deferred for right now. We can talk about them and plan all we want- the money is simply not there to implement them.

In fact, when you say you want to 'trim the fat' I think that is something different for every family. You don't say how old your children are or how many you have. How many cars do you have? Do you drive big fancy SUVs or smaller, more affordable and practical cars? How big is your house? Do you need a house that big or would one half the size work fine for you? Does your family eat out a lot, take big vacations, buy all the latest gaming systems, shoes, handbags, golf clubs or whatever? What do you spend the most money on and how important is it to you?

Any of those things could be considered places to trim fat IF you are indulging in them.
On the other hand, what is really important for your family? What do you REALLY value the most and what contributes to your health and well-being as a family?

For example, keeping a boat on a Lake Michigan slip is a tremendous expense. But if you are all avid sailors and it is a family tradition and you sail all summer long, etc. then even though it is an indulgence, it is valuable and worthwhile for you.

Same with something like a membership to an expensive golf club. It may cost a lot, but if your family all is involved and it is keeping you all healthy physically and mentally, then it is worthwhile. And- if you can afford it, then look at the benefits your family is getting from it right now. On the other hand, if your husband is the only one who golfs and his personal game is cutting into family time on the weekends, maybe the negatives outweigh the benefits. It all depends.

Everyone wants little, personal indulgences now and then. Mine is going once in a while to get a very cheap pedicure when I can, and saving up to get my hair cut by the stylist who has done it for years. I cannot do it regularly now, so when I can afford it, it is a huge treat. Everything is relative- for you an entire day at a spa might be a treat, because that is what you feel you can afford. It all depends on where your family is at financially.

There are lots of things to do without spending more money. One of the only upsides to paycuts and having no savings left is that you really do take a good hard look at everything you do and spend money on and really learn what you need to do and what you just can do without. We are planning a family vacation to Yosemite National Park because that is something my 9 year old son is realyl avid to do.

But he knows that we will not be able to take the trip soon and we are saving for it as we can ( in a jar) and making plans so that when things improve financially, we will be able to. I would love to pack up and just go- but learning to save for a goal and having something to look forward to and help plan is a valuable lesson in itself, so there is always an upside.

Look at your children's ages and personalities and think "What experiences are MOST important to them right now? What will they remember when they are parents themselves- family movie night with popcorn? Picking apples or raking leaves together? Taking a trip to a National Park?"

It's much more likely they will remember those things with you, than if you bought them a $300 ski jacket or drove an Esclalade. Pare down and 'cut the fat' based on what will be best and make YOUR family happier and closer together!

My husband and I want to change the way we spend.....we got too comfortable in the "immediate gratification" mentality and spent too much on credit. Now we will only spend with cash or debit and have decided that if there is something we truly want to buy, we will save for it a little at a time until we have the full amount to pay cash for it. This makes us so much more conscientious of what we actually are buying and spending all those dollars on. It has been easy to "trim the fat" now that we are just looking more closely like that. I keep track of how much I spend on groceries and make menus and shop with a list every month and that too helps me to save money by just making me pay more attention to what the weekly bill is and could be. So, basically, we've cut out impulse buying, like others have said they do. All that adds up to is junk and bills.

That's wonderful that you and your husband are comfortable discussing these things. With frequent conversations about financial matters, you'll both keep yourselves in check and on board with each other.

As others have suggested, meeting with a financial planner to make sure you're adequately covered is a good idea, particularly for life insurance, your kids' education, disability and retirement. Our financial advisor's approach is not to judge how and where we spend our money, but to build a retirement and education savings plan that will allow us to continue our current lifestyle. If we see that the amt we'd have to save to continue our current lifestyle is not achievable, then we have to look at our current expenses. We are financially comfortable, yet we do wonder if we spend too much money. We still try not to squander money: my husband researches things to death when we have to make a repair or a purchase, we tend not to pay full price on clothing since everything goes on sale usually within a month's time, we almost never pay shipping when shopping online, etc. If your savings for emergency funds and the future (retirement, education) is adequate, then don't feel so bad about your spending.

I thinks it's terrific that you are asking these questions and working on this with your husband! No matter what your situation, it's always better to be in control of your decisions rather than end up in a position you didn't plan for.

I was given an excellent perspective by a very wise, trusted friend of mine: Financial goals need to change, based upon the stage of life we're in. For instance, I have a 2 and 3 year old. As of this year, we are watching our annual expenses increase (medical needs, school, etc.) without any income growth. Perhaps this is NOT a time in which we can expect to save a lot of money. But in a few years when the kids are in school full time, I will go back to work and we can start saving like crazy. This, by no means, is a green light to tap into our savings and spend for now. But it helps us set a realistic expectation of what is actually possible for the situation we have chosen (for me to stay home, etc.)

The second piece of great advice I was given after my kids were born is to NOT put money away for the kid's college funds UNLESS we are meeting our contribution goals to our retirement funds (401k, ROTH, IRA, etc.) and emergency funds (cash, life insurance payments, etc.). I was told that the kids can always find money, loans, etc. for school. Would it be nice to be able to pay for my kids' college educations outright to avoid student loans...of course! But once we are retired and have no additional income, there is no means for finding money to pay for housing, grocery, medical expenses, etc. You must save for that now.

It's a huge decision how to balance quality of life now versus how we impact our quality of life for retirement. Where do I want to be able to live when we are retired? Will we have to downsize to something that won't make me happy? On the other hand, many of life's conveniences and "treats" have a measurable impact on my physical, mental and emotional state of mind -- which impacts my children too. Only you and your husband can decide how to define your standard of living for the present and then forecast how that impacts your standard of living during retirement.

Good luck!

You've already gotten some good advice (financial planner and insurance check). My experience has been that money issues can be hot button issues in a marriage. People pack a lot of baggage around the save vs. spend topics. Fortunately for you guys it sounds like you;ve got the lines of communication open and that's the most important thing.

As for what you are already doing it sounds great! You might want to look at your college savings plan with an advisor. I'm staring down college tuition now and realize we didn't save enough. Diversify diversify!

As for the larger issues....even tho I am a saver by nature life has also taught me that we are not guaranteed a future. I am not a big buyer of things but I want to take vacations (especially with expended family). These shared experiences and the memories they create are priceless. Good Luck!

No one wants to be a worry wart but, after going through finding out my father hadn't saved enough for his retirement, I would have to say save save save. You don't know what it's going to be like when you are ready to retire. He thought that his healthy lifestyle and and "good insurance" would be there during his retirement. After a heart attack and stroke, it took a lot of things away from him besides the dwindling of his savings. There is an uncertainty in this day and you need to stick to your budget and make smart choices. As far as staying away from the latest and greatest things, they may not make it to your retirement and if they do, they will be obsoloete as they are the day after you buy it :). Good luck!

I know you've received a ton of responses, but it's such an important topic that I thought I'd chime in too.

It does seem like you're doing better than the average person as far as avoiding debt, so kudos there. Personally, I think that you're in a very good position, but you're husband is right to think it's better to save more if you can. Someone suggested meeting with a financial advisor - definitely a good idea. I saw that you even got a specific referral to a Northwestern Mutual agent. I'll second that; it's a top-rated company with a long-standing commitment (150+ years) to maintaining financial security. Of course, I'm biased since I work there too :-)

I would suggest finding an NML agent in your area. If nothing else, he/she can do what's called a Personal Needs Analysis and give you and your husband a very clear picture of where you stand with regards to reaching the financial goals you've set for yourself (retirement, education, etc.) Any NML agent will do this for free, and the analysis will give you both some peace if you're on-track, and give you a reality check if you need to start saving more.

I don't want this to sound like a sales pitch, though if you decide you want to meet with someone, I'm happy to look up your local office for you. At the very minimum though, I strongly urge you to make sure you have enough life insurance in place, because if something happens to either of you, I doubt your 12mo savings will be enough to offset the funeral, mourning period, financial burden of being a single-income household, associated medical bills, etc. And employer-owned life insurance is NOT enough. You need to own your policies, so that you don't lose coverage if you retire, change jobs, etc. Bonus, if you're a healthy individual, owning your own policy is usually cheaper than investing in your employer policy. Crazy, but true.

Also, you're more likely to be disabled in your prime years than to die unexpectedly, so disability income insurance is vital. Since your children are still young, I assume you're not near the age when long-term care is a major concern, but it's something you'll at least want to think about for the future, especially if you've heard the reports in the news lately about what's happening to the baby-boomers and their parents that are in need of nursing home care, etc. My mom works in a nursing home and it breaks my heart to see what the bare-minimum and government assistance buys you.

Damn, I made this message a lot longer than I intended... Please take a moment to meet with a financial advisor of some sort though. Be sure he/she works with a company that's highly rated, has a good history, and takes the time to listen to your goals, rather than trying to push some kind of sale.

Best of luck, and if you have any general questions regarding insurance, retirement vehicles, etc., let me know.