Most of the articles we write here at the Quizzle Wire are focused on helping people save money – but have you ever wondered if there are times in your life when you’re better off not trying to save so much money?
A few years ago, there was a great interview on NPR with financial journalist, Tim Harford, who talked about how every time you save money, you are giving a loan to your future self. And every time you borrow money, you are taking a loan from your future self. The key is to make sure that both your current self and future self are happy with the deal.
There’s such a thing as saving too much. As Harford asks, “”How much do you want to sacrifice your income now for income later when you’re richer?”
While it’s always a good idea to save money, especially for “big-ticket” goals like retirement, college and emergency expenses, there are some times in life when you might not want to save as much. Is it ever okay not to save money at all? Perhaps, if you consider the long-term perspective of borrowing (or giving) to your future self – in some situations your future self might be happy to let you keep more money to spend today.
Here are three life stages where you might not want to save more money:
When you’re a college student.
If you’re a poor college student with just a few thousand dollars (or even less) in a savings account, you might be tempted to skip going out with friends in favor of saving more money from your $8 an hour campus job. But the fact is, over the course of your life, you’re going to be making a lot more money than you make today.
So when you’re young, maybe it’s OK to splurge a little – e.g. don’t miss a chance to go out for dinner with friends. Enjoy your life. In the NPR interview, Tim Harford talks about how when he was a college student, there were so many times where he decided not to go out with friends because he wanted to save the $20. Well, today Tim Harford is much richer than he was during his student days, and if he could, he would go back and time and tell his younger self, “Spend the $20. Have fun.”
When you’re a parent of young children.
Having kids changes everything in your life and your personal finances are no exception. If you’re a parent of young children, especially when one parent is home full-time with the kids, don’t feel like you have to save for the rest of your life during this rather stressful (and expensive) time. You’re going to have many more years to work and save, but your kids are only young once.
So don’t scrimp on holiday trips to grandma’s house just so you can try to save more for retirement. Invest in your relationship with your spouse – don’t give up hiring babysitters for date night because you’d rather save an extra $100 a month. Raising small children is hard, emotionally demanding work and moms and dads need to take time to recharge, rejuvenate, and remind each other of why you decided to do this. Splurging on some extra couple time can also help you avoid the huge financial costs of divorce.
When you lose your job.
We’ve written before about what to do with your money when you lose your job. Hopefully you have a decent amount of emergency savings in the bank to help tide you over until your next paycheck. When you find yourself unemployed, this is where those savings come into play. There’s no shame in not saving any money when you don’t have any income. There are times of life where you need to dip into the rainy day fund – and if you’re going through a rainy day, now is the time. Your future self won’t begrudge you a few months (or more) of living off of savings.
If you love to save money and be frugal with your finances, there’s nothing scarier than the prospect of not saving enough money. But sometimes in life, you need to let go of your ideal savings goals and be willing to live a bit closer to the edge of your means. As long as you and your future self are both happy with how you’re spending and saving money today, you have nothing to worry about.
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Thanks for this article! I am the stay-at-home mother of a 15 month old boy, and it feels good to have “permission” to relax on the savings a little bit. I would have been able to tell a college student and a recently unemployed worker to give themselves a break, but my own situation felt different. But you’re absolutely right that my husband and I need to reserve some money for sanity-saving breaks now, rather than putting it away for later.
Thanks for reading Emily! It’s always hard to strike the right balance between saving for the future and enjoying life today – too much of one is just as bad as the other. And unfortunately I’ve had some loved ones recently who died unexpectedly just short of retirement age – so no matter how much money you save, the “Golden Years” are not guaranteed. Thanks for the comment!