Are you saving enough?

By Caitlin Kelly


A recent piece in The Wall Street Journal asserts that Americans spend way too much money:

You may overspend because you’re bored, you have no budget or you want to keep up with your neighbors.

Or you might be letting your emotions dictate your financial decisions.

Whatever the reason, you may be setting yourself up for a financial disaster.

But fear not: There are a few ways you can rein in your spending before it’s too late.

Tracking your cash flow and tapping into your feelings are two things financial advisers say you can do to curb your urge to spend.

“The spending choices you make now will greatly impact your quality of life later on,” says Patrick McDowell, a Miramar Beach, Fla., financial adviser.

Here’s an honest post by a new Broadside follower (welcome!), a college student, making minimum wage and struggling financially with college costs:

Although it can be annoying, I understand this is making me a better person.  It’s not just about the money all the time, it’s about a learning experience.

And here’s a dense and dry blog post, recently chosen for Freshly Pressed, about behavioral economics — written by a professor:

Certainly the evidence that people don’t typically behave rationally is quite compelling.  It’s easy to find examples of behavior which conflicts with economic theory.  The problem is that it’s not clear that these examples help us much. I’m pretty much obsessed by when, why, how and where we choose to spend our money. Or save it.

Given how little money most Americans save — here’s a blog post from The Economist about that — it’s a tough decision to postpone immediate pleasures (let alone the daily grind of needs), for groceries, housing and medical care in the future, possibly decades away. What if we never get there?

But what if we do live to be 80, 90 or beyond — and find ourselves broke and scared?

Here’s a frightening post from one of my favorite writers, Guardian journo Heidi Moore, about how older women — because we earn less and live longer — end up in poverty:

17.8 million women lived in poverty in 2012, 44% of whom lived in extreme poverty. Extreme poverty means “income at or below 50% of the federal poverty level”, which amounts to less than $5,500 a year…

What is surprising is that the slide into deep poverty is happening so soon, and in such massive numbers, among the elderly. It’s not clear what could have changed between 2011 and 2012 to cause it.

My mother went into a nursing home three years ago, paying — for a small room — $5,000 a month. Yes, really. That certainly made clear to me the very real cost of getting old, ill and needing costly care every single day. She saved, lifelong and ferociously, so she has the funds for it.

Most of us will not.

Our parents and grand-parents, and a few fortunate folk in specific industries, could look forward to a company pension; Jose will receive one from The New York Times, thank heaven. A few lucky people also get a company match to their 401(k) retirement savings from their employers.

But most of us are now expected and required to save and save and save and save, praying our investments retain and grow in value. I’ve been saving 15 percent of my income every year for a while; it’s finally adding up to a sum that makes me feel like the sacrifice is worth it.

It’s also simplistic to shame people who “spend too much” when millions have lost their jobs, often repeatedly, and have run through whatever savings they might once have had. Millions are also now earning far less than they once expected or hoped to.

Wages are stagnant or falling while the cost of living rises each year — and we’re still human beings who actually want to leave our homes and have some fun!

I splurge on four categories: 1) items or improvements for our home; 2) travel; 3) entertaining friends; 4) fresh flowers.


How about you?

What do you splurge  on — and where do you keep your wallet closed?

27 thoughts on “Are you saving enough?

  1. These days I’m always looking for ways to save. I only spend money on bills, rent, groceries, and tuition lately. It’s difficult, but somehow I’m getting by. Though my dad thinks maybe getting a credit card might be a good idea right about now. The idea of me doing that actually scares me a little.
    Well, maybe things will change. You never know what opportunity lies around the corner.

    1. Beware a credit card! It’s too easy to spend a lot and get caught in debt. But your Dad is right on one point — by having one, and paying it off every month, you will be establishing a credit history, which you will need moving forward.

      1. Just be hyper-aware of all the details — your APR (fixed?); the date your payment is due each month (and the time of day!) to avoid late fees…Being responsible with credit is a terrific thing to do. But you can’t zone out. 🙂

        My friend Beverly Blair Harzog has a brand new book out on this topic…

  2. I grew up very conscious of money, and mostly of the lack of it. No doubt that’s why my career was in investment management. I worked with an awful lot of people who were wealthy because they worked hard, earned a middle-class income or somewhat better, and consistently spent less than they earned. They invested the rest. These days many people don’t realistically have that option. They hardly make what used to be considered a middle-class income. Investing for retirement doesn’t seem plausible when today’s expenses are hard to meet.

    But I also know where waste is in many household budgets. I grew up with frugality, and “splurge” was not a word with which I was familiar. Once my professional career kicked off and we actually did have excess, we were more inclined to save than spend. It’s, frankly, been hard to find the balance. Only in the last few years have we felt more comfortable to go ahead, buy something if we want it.

    Even so, we aren’t profligate. So what do we splurge on? Well, I guess the big splurges of the last few years have been to actually pay for our son’s college education, with his increasing help through awards, stipends, etc. He has no college debt, and neither do we. And I bought a 4 year-old car last year to replace my 13 yr-old Camry with 176k miles on it. Son drives that car now. And… I have a long-arm quilting machine, which cost as much as many people would pay for a used car.

    None of those are things we would have done if not able to afford it, and easily. We are the lucky ones, much like the clients with whom I used to work.

    1. Interesting. I agree that costs are high and wages low to stagnant — so exhorting people to SAVE (which we need to), even when squeezed between insufficient income and higher costs — creates a lot of stress.

      I also hear you on balancing spending/saving. My first impulse is to save. I wonder how many people think that way…when so few Americans have any $$$ put away for retirement.

  3. I wish I could save more. Alas, as a college student on a small budget, it’s difficult to save a lot at the moment. I do my best by being as frugal as I can — I rarely go on nights out and I hardly ever buy luxuries. When I buy new clothes, I make sure they’re made by quality brands which will last. Yes, they cost more than, say, H&M but they last a lot longer! My main expenditure right now is my car’s finance plan. I would like to pay it off sooner and I’m saving towards that at the moment. I don’t know what the future holds but I agree with you that it is important to save as much as possible.

    1. It’s impressive that you even think about this — while still in college. My sense is that few do, certainly if others are paying their way.

      I agree with buying better quality that lasts; we had a 23-yr-old friend over yesterday and I was wearing a pair of shoes I bought (on sale) in 1996…almost as old as she…but such quality they’ve lasted and look great. It’s an interesting exercise to define “luxuries”; I bet many people would consider a cellphone, tablet and smartphone as “necessities” when I consider all three as luxuries, even though I need a computer for my work and would not be as efficient professionally without a cellphone.

      In my 20s, living alone, I did not own a TV so did not have a cable bill or a car. My costs were rent, food, phone, electricity. I liked that simplicity and try to keep it as simple as that; today we additionally pay for a garage and several storage lockers. STUFF. 😦

  4. Caitlin, you often mention money. Or rather the making of it. As do I. Mainly because the last few years have seen me devoid of it [money]. Why? That’s another story.

    Never have I been a reckless shopper. Stuff doesn’t interest me (though, like you, am deliriously happy when I can afford the odd stem of, say, a gerbera). The concept of ‘saving’ is unworkable this minute. That’s what’s wonderful about having no cash: Not only can’t you shop if you were inclined, interest rates too are of no interest to you. I wouldn’t call it a ‘win win’ but still … there is beauty when in the gutter looking at the stars. And that’s before Oscar Wilde went to his gaol.

    As to old age: I have instructed the Angel (my son) to surreptitiously (I don’t want him to be imprisoned for assisted suicide) dislodge a roof tile to hit me on the head when the time comes. He doesn’t find it remotely funny. But it is practical.


    1. It is easier to not think about $ if you have enough to survive, but not much beyond that.

      I do focus on it. I think people need to talk about it more, and more openly. I weary of consumerism and materialism when so many people are really struggling.

  5. mylifeinfocusblog

    Surely you must realize that we non-consumers have created our own problems?

    Radio Shack is closing 1100 stores. Staples is closing 225 stores. J.C. Penney is closing 33 locations and laying off 2,000 people. Sears is closing its Chicago flagship stores as well as 500 more stores, including K Mart. Macy’s is closing 5 stores. Office Depot is closing an unknown amount of stores in the very near future. Sbarro, a premium pizza chain has filed for bankruptcy this Monday morning (the second time in 3 years). Quizno will also be filing bankruptcy in the immediate future. Men’s Wearhouse and Jos. A Bank (men clothing outlets) will be closing several stores after they merge.

    By not buying anything and turning from capitalism we have made our own poorer beds and must now lie in them.

    Sbarro’s has been in business since 1956 and many of their 600+ stores are located in shopping malls. Since no one is shopping anymore, no one is in the food courts buying pizza or anything else for that matter. Sbarro’s is now closing 300 stores after declaring bankruptcy this morning, and laying off thousands and thousands of workers. Tell me, what chance do these people have to save for retirement? Do you realize how ridiculous everything is right now?

    No one today can save for retirement and we can blame ourselves for our woes. Most of us are poorer now and any chance of retirement income might just come solely from Social Security. Mine and my husband’s does. And I prepared for it that way. I do have a savings account but that’s only for emergencies. Non-capitalistic ways have made us poorer not richer. Is this what we wanted? I’m certain that we thought we were doing the right thing.

    My luxury items today is being able to toss a special gourmet treat into my shopping cart every once in a while. Other than that, I re-use, re-cycle or retreat. Literally.

    Please don’t berate yourself if you are not saving enough for retirement. Regardless of what the media or politicians threaten us with, Social Security will be there for you, forever. Maybe not at the income level you may have thought (prepare for less benefits) but you’ll at least have something to supplement your meager savings account. We’re lost in a Catch-22 now because practically no one has the money nor the impulse to buy anything anymore. There’s no way back to what it was before.

    Think small. Live small and be content with your very small life.

    Everybody happy now?

    1. Interesting analysis.

      I disagree with your premise that because we’ve all stopped shopping and buying, these businesses are closing and firing people. Penneys, Macys and Kmart have been in deep trouble for years, even though Penney’s (I follow retail pretty closely, too) brought in an Apple guy at the top who was supposed to save them…and did not.

      The CEOs at the top of these major public companies are supposed to be super-smart, for which they all earn 200+ times the wages of their lowest-paid workers. They don’t have to close all those stores (maybe for the real estate costs) or fire everyone; they do it to protect their profits and “shareholder value.” i.e. to save their butts.

      I don’t see the direct causation between poorer Americans now being more frugal (or just plan broke!) and the collapse of these Fortune 500 companies. Who are not all disappearing but reducing their staff — which is what capitalism does.

      Americans love capitalism’s freedoms — until they bite us all on the ass. It’s a system. Every system has problems within it.


      1. mylifeinfocusblog

        Malcolm Gladwell (author of ‘Blink’) came to the conclusion that CEO’s are no smarter than kindergartners. In other words, their calculations and advice is really nothing more than a guess. If the CEO’s were paid less and that money shared amognst the workers etc. the stores will still be closing because no one is buying anymore. As in the malls, no one is there. So, what to do? Can’t go backwards. Only choice IMHO is to live less, live small and whatever else is reasonable. Unfortunately, or fortunately, from what position you stand at, more of us will be depending on a government to care for us. Truthfully, I don’t see that as a bad thing any more.

      2. Pretty gloomy outlook. Not sure if you’re wrong. If there is not some very significant income re-distribution, increased government aid and benefits and some policy shifts, I think we’ll see a much much more divided nation, economically. It’s certainly starting.

        Having grown up in Canada, where government aid is neither something to shun, fear or abhor, this prospect doesn’t bother me.

  6. The buying power of the middle class is ever shrinking…leave it to the anti-consumption, anti-capitalism, anti-work, income redistributionist, dependency class and our all knowing elites….we won’t have to worry about it soon. I have cleaned up two massive family hoards so I am not pro-over consumption or not planning for the future….but lectures on consumption seem to be driven by other agendas too beyond the earner’s welfare

  7. I splurge on:
    1: food
    2: fun like 5ks
    3: travel
    4: gym membership
    5; random junk – but this I have been cutting back on.

    I use an app to keep track of my spending & seeing the number grow monthly is a good reminder to be more conscience of my spends. The app also helps keep track of what I am spending on with categories.

  8. i tend to splurge on travel, home improvements, and experiences, such as concerts and performances of all kinds. other than that, i love to buy little special gifts for people and for art supplies for my collage projects. not into spending on extensive cable channels, cars, or clothes. just buy a special piece every now and then, otherwise i’m pretty easy on the clothing budget.

  9. Pingback: Money – randomandrhyme

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