A couple of my friends who are my age (late 20′s) find it hilarious that I’d rather put my money into a pension then go out 3x a week. They remind me time and time again that “I’ll only be young once” and why worry about retirement when eventually I’ll have an inheritance that will provide me with “retirement”. I think this is wrong on many many levels – for example there are hundreds of thousands of older people who have lost their pensions in the pension crisis, people live longer and therefore need the funds from their homes to pay for care and finally with house prices going down, I sit in the camp that that banking on inheritance to provide for retirement is a very risky option and not one I’ll ever consider.
What I find funny is that both friends earn similar to me (perhaps about £200 a month less) but have 1/2 my rent and pay 1/2 of the bills I do. By my recollection they have after all bills approx £900 a month left…that’s a lot of money to blow on “having fun in your 20′s”. What I find interesting is the fact that while they may enjoy eating out several times a week, visits to bars after work, serious nights out once a week, girly spa weekends and international travel a few times a year, whenever they tell me they don’t know how they are going to make it to the next paycheck, I can see their lifestyle certainly isn’t bringing them peace and I’d argue not knowing how you are going to pay your bills isn’t “having fun in your 20′s”.
The point of what I’m doing is about searching for both financial and life peace. One thing I really like about plonkee’s blog is the fact that she has her emergency fund, she is saving a decent % of her income for retirement and when money comes her way she can focus on other specific goals, for example learning the oboe! Right now, despite all the positive changes, I do still feel very uneasy about my finances, I do still have “what if I lost my job” run through my head and there are days it creates great worry and stress. Yes, this is helpful in keeping me on track, but, it isn’t a nice feeling. What I’m searching for isn’t grand, I’m not after a new car or a 4/5 bedroom house, I’m not after a timeshare or a second home, I’m after the peace that comes with knowing I have a decent amount of money earmarked for the “what if”, monthly savings for retirement, no debt and being able to save towards & afford certain life goals including travel, a home & a family. Knowing the day will come where this is possible, gives me more peace than make-up, clothing, nights out, theatre trips and frivolous spends ever will.
I think my generation needs to wake up, I know too many people in their 20′s and 30′s who are in significant debt and yet continuing to buy, with the very naive view that the Government or family will take care of them. I feel sad that I see more and more people around me whose fantasy is crashing and desperately wish we as a society re-defined what we view as “fun”. My draconian side wishes pensions through work were mandatory so that people would begin to see the peace that comes with savings!
The reality is, right now I don’t have financial peace. I’m trying to be easier on myself and remember the fact that it takes time to build an emergency fund on 1 income, but I’d love to hear what gives you financial peace and any tips you might have?
I think it’s very wise to be save for your retirement as early as possible,many people end up in stife after unexpected events like job loss or illness.
I would stop using the term “saving for retirement” most people even my age can’t think that way. Instead try this.
I don’t want to be broke and working my fingers to the bone in the corporate rat race when I’m 40.
-or-
I want to buy a house with a down payment next year.
-or-
If I get laid off (rumors abounding) I want to be able to take a month or two off
People can relate to that.
Second point is you want to be careful not the cross the line from frugal to stingy and cheap. Being stringy is no different than being a spendthrift and in some ways worse. I have several family members who are the very definition of stingy, they stretch a penny till it screams, yet inspite that they have no wealth or money to speak of. When you over spend at some point you hit a brick wall and change, stingy people never do that so they never change.
good luck anyways
rob in Madrid
I “had a good time” during my twenties and although yes, I do look back on some very good memories, I’m paying the price now. No savings, debt, no retirement fund… nothing! Absolutely jack s**t.
If I had my time over again, I’d go for a blend of the two. A little less fun (a lot?) and a lot more saving. I wasted money on all sorts of things and never gave a thought to anything like budgeting. Disgraceful, really.
I do believe we should live for today because it’s all we can be certain of but that doesn’t mean we shouldn’t plan for the future too. As you’ve shown, it’s perfectly possible to enjoy life without having to throw money around all the time.
Thankfully, by my 30s I’d started to learn – unfortunately I was hooked up with a man who hadn’t. Never again!
I would enjoy the lifestyle that your friends have, but there’s no way that I can afford to pay for it. So I don’t do it.
I definitely could be being a lot more frugal, I still (like you) enjoy travelling, I spend more than I need to on food, I think nothing of going out for drinks with friends at the drop of a hat. But, spend relatively little on clothes, cars, video games, books and other possessions. Not because I’m good, but because I don’t care about those things enough.
What does give me some financial peace is the knowledge that I am doing ok. I’m not on course to retire particularly early, but I am on course to retire. I don’t have oodles and oodles of savings, but I have a reasonable amount. Even more importantly I know that I’m heading in the right direction, which is a lot more important to me than how quickly I’m getting there.
you are very lucky that you came to the realizations that you have at the time that you did- when you are still so young. after a long stint in graduate school of extreme frugality and borrowing (6 years!), both my husband and I sort of saw the “promised land” of a real paycheck as an excuse to ignore all financial responsibility. We put ourselves in a bit of a hole over two years before we woke up and made some important realizations of our own. financial peace for me isn’t even associated with an emergency fund. it’s just about getting the cards/ educational debt paid off. Of course we will build an emergency fund when that is done but really it’s just having positive net worth that would bring much more comfort with our situation
Financial security is a more psychological than financial, I think. I have friends who feel quite secure despite having debt.
I think it helps to realize that you can’t change the things you have no control over (ie, acts of God), so the best you can do is prepare (ie, insurance) and then stop worrying. KWIM?
It also helps to think about what you need to feel secure. I don’t need an emergency fund, but I do need lack of debt. So I work towards that and feel more secure.
(Hi from Canada)
I found you through Gail’s blog and I been reading you for a while now.
The mentality is the same here — Spend now , worry later — and most peole I know subscribe to that! They think SOMEONE will take care of them somehow when they are old (or the ones that are convinced they won’t live that long!). Who do they think is going to die and leave them money? Most people I know don’t think of life insurance, and they spend like there are no consequences! Scary!
I have never had a job that offered benefits in any form, (and now I am self-employed so I even have to be organized enough to save for the income taxes). Maybe that is a good thing, it forced me to be disciplined right from the beginning.
I would rather plan for the worst and expect the best…. a Gail-ism. I just pay my future first and the budget works around whats left. Its surprisingly easy to get used to. I am not without luxuries, they are bought with extras (birthday money, cash-hobby, whatever…) I know in my heart that the modest saving I have now will grow with time, maybe it will cushion me in time of crisis, maybe it will serve it’s intended purpose and take care of me in my old age, maybe (heaven forbid) it will ease the burden of raising my kids for someone else. The point is that it is there, like a financial guardian angel.
Keep it up! I am thoroughly enjoying your mission for a full frugal life. I am cheering your successes and sharing your quest….
- from the frugal beach here on the west coast of Canada
Louise you are right! I can’t wait to get back into the “retirement” swing of things!
Rob you are probably right about personalizing it so that people can relate to savings!
Oh Sharon, well done you for learning but poor you for being stuck with someone who didn’t!
Plonkee I think your attitude is wise! I can relate, I have no interest in those things either!
Neiman that sounds really smart, just shows how everyones financial peace comes with different aspects of their finances. Clearing my debt helped but I by no means feel “peace”.
Deepali you are right on, it is psychological!
Tracy welcome! I like your Gail-isms!! And what I would do to be on the beach on the west coast of Canada….sigh!
Hi FT,
I agree with neimanmarxist and have to say that you’re really lucky you came to this realization now, instead of doing what I think the majority of people do, and “live like there’s no tomorrow”, “he who dies with the most stuff wins”, etc. All I can say is if I knew then what I know now…
I’m fortunate to have found people who understand my new way of thinking of spending and saving, and who, in some cases, are doing way better than me and I can learn from. I’m finding it useful while cleaning up my financial clutter, to read books about cleaning up my physical clutter, too. Keeping your home and office tidy makes it easier to think, to find stuff and you feel better which impacts every aspect of your life. Like deepali said, it’s all psychological.
(and yes, please add me to your blogroll, although I’m not sure how exciting my blog will be while I’m getting up to speed on things. Thanks!).
Thanks Annie. I keep imagining what the situation would have been like had I waited another 10 years….SCARY!
You have really clear priorities which you have articulated plainly without ‘dressing up the truth’.
One of our ways is to buy ‘big’ things – it is not a spendthrift act to save up & make purchases of worthwhile goods. This may mean organic foods, good quality warm clothing or bedding, water &/or energy efficient appliances, a bicycle etc.
Your spend-free days afford you the luxury of time to consider the validity of your proposed purchases.
Too many of our counterparts buy in ‘haste and repent at leisure’, either throwing out their thoughtless purchases or staging monthly garage sales to clear the cheap commercial clutter from their lives.
i’m 24 and after working for 3 years, i’ve now managed to get all the things i “need” (fridge, microwave, tv, nice dvd collection), so i’ve started getting 5% of my pay taken out and put into superannuation (i’m from Australia: not sure about how things around the world work).
my theory being if i supplement this little bit now, that little bit can grow and over the next 30/40 years i know i’ll be able to retire much more comfortably than if i spent that 5% now.
opportunity cost scenario really
and you don’t notice 5% much