Why Do We Save?

This year is shaping up to be a great one, financially speaking.

Our income is the highest it’s ever been, and we’ve managed to put about 25% of that away into savings and investments.  We’ve also nearly doubled-up on our monthly mortgage payments and so we’re on track to pay off our house in 10 to 12 years.

Related: Our Fast Track To Financial Freedom

I know we’re making sacrifices today so we can have a better tomorrow, but while we continue the long and slow march towards financial independence, sometimes I wonder if the sacrifice will be worth the payoff in the end.

YOLO?

“You only live once” is the rally cry of today’s youth.  Why sacrifice and save for tomorrow when you can live like the Kardashians today?

The savers believe it will all catch up with the spenders eventually and they’ll be forced to work for the rest of their lives to repay the debts they’ve built up in their youth.  But that’s not always the case.

It’s not always fair

I heard a story the other day about two sisters, Tina and Cindy.

Tina and her husband live mortgage-free in the same home they bought 25 years ago.  They work hard, live frugally and save a portion of their income every month.  They’ve put their two kids through University, but at the expense of their own retirement, which has been pushed back a few years to 60.

Related: How To Choose Your Retirement Date

Cindy and her husband are spenders.  They make a decent income but they spend much more than they earn and have racked up a huge amount of debt on their credit cards and line of credit.

But when Cindy gets in over her head, she asks her dad to bail her out.  Over the past 10 years, Cindy has borrowed over $50,000 from her dad.  The first $10,000 paid off her credit card, but Cindy quickly maxed it out again when she decided to upgrade her kitchen.

The next $25,000 was to buy a new vehicle because their gas-guzzling truck was costing too much to drive.  But instead of selling the truck, they kept it so they could pull their trailer when they go camping in the summer.

Finally, Cindy asked her dad for another $15,000 so they could pay down their line of credit.  A few months later they posted pictures of their recent Caribbean vacation on Facebook.

Tina is understandably upset about how Cindy is taking advantage of their dad.  Is it fair that she sacrificed and saved for decades in order to retire comfortably and set her kids up for success while her sister spends like an investment banker and continues to get bailed out?

Related: Bailing Out Your Adult Children

Why Do We Save?

Perhaps a better rallying cry should be the one coined by Paula Pant at Afford Anything – “You can afford anything, but you can’t afford everything.”

We save because we want to become financially independent, and the sooner the better.  We’ll be financially independent when we’re debt free, and when the income from our investments can cover our monthly expenses.

But saving is not about deprivation.  It’s not about living like paupers today so we can live like kings tomorrow.  It’s about finding a balance between saving, investing, and paying off debt while still having some fun.

Related: How Young Adults Can Still Thrive Financially

I can honestly say we’re not missing out on anything by saving a quarter of our income.  If there’s something we really want to do, we’ll add it into our household budget or plan for it far in advance and pay for it in cash.

After all, you only live once – it shouldn’t be in constant debt, dependence or servitude.


13 Responses to Why Do We Save?

  1. Nice spin on the YOLO at the end there :) While I think we need some “carpe diem” in our lives, I agree with your point about needing balance. IMHO, “you only live once” shouldn’t be a justification for hurting others or yourself — and hurt is what inevitably happens when you greatly outspend your means.

    • My least favourite commercial ever was the Mazda one that went something like, “I will never sacrifice joy in the name of practicality.”

      Really? What happened to zoom, zoom?

  2. I’m a big believer in doing it all. By being more savvy than the average Joe you can do a lot of “luxury” things while still spending less than you earn and saving for retirement.

    I try to teach other people how to do it too without a lot of extra work!

    • @SavingMentor – yes, and your site is definitely an authority on how to spend less on both the necessities and the luxuries.

      I loved all the cheap hotel stays you’ve managed to get over the years – fantastic!

  3. You make a very interesting point about parental money going to irresponsible children. It would be interesting to find out how widespread this effect is, but I have no idea how you would get the data.

    • @Michael James – I suspect it’s more common than we think. The money exchange likely occurs without the other sibling even knowing about it.

  4. “After all, you only live once – it shouldn’t be in constant debt, dependence or servitude.” Well said.

    I like Paula Pant’s motto and strongly agree with @SavingMentor. One of my hobbies is looking for ways to introduce the “extras” into my family’s life at a frugal cost. Credit card bonuses are an awesome example of this (not the kind you need to pay a $699 fee for, either).

    In the end, an attitude of entitlement to things one hasn’t earned doesn’t serve a person well (whether their life works out or not; the Canadian economy is filled with these folks, just look at the housing bubble and all the granite countertops). Cindy’s Dad very well might be remembering the loans in his will…

  5. Saving is always my number one priority, but I never felt deprived. I live really well spending money on the things that matter. We take trips, live in a nice home and drive nice cars. My mortgae is low and will be paid off in less than 5 years. I own one car and the other has a 1.99% loan. I am paying it off sooner than I havve to.

  6. Great point on balancing the present and the future.

    I don’t feel like I’m missing out on anything by saving half of my net income and all of my bonuses. My sibling has always told me that saving so much of my income means I’m missing out on life, but I’m enjoying life. I have been to seven cities so far this year on my own dime and will go to one more before the year is up, but I’ve also maxed out my 401(k), bought a condo with 20% down, and paid my mortgage down aggressively. I drive a car that I bought new, but I paid for it with cash instead of buying a luxury car with a loan.

    I feel for Cindy’s dad. I hope he doesn’t make that mistake again.

  7. I see this live now ideal all over, from the credit card debt and the many other issues that face people today, to the pop songs that the kids listen to (Last Friday Night by Katy Perry or Tick Tock by Kesha). I too sometimes fall into the trap of get it and enjoy it immediately. I wanted an SUV but we ended up with a minivan (which I really like). We could have stretched our budget to get the SUV but thankfully my wife said no. As for the sisters. . . My grandmother recently passed and had a considerable fortune. She kept meticulous records of the money she gave each child. She requested that the money be split equally after individual debts had been accounted for. My one aunt was shocked, speechless, and finally very upset by this since she was left with very little in comparison. Enjoy what you have, and stop wishing for more, if you want the most from life.

  8. I am the responsible sibling, and my brother has been sucking my parents for money (many thousands of dollars) his whole life. Do I think it’s unfair? Yes. But it’s their money and their choice, so I just shrug my shoulders and go on. I can at least feel proud that I don’t need my parents’ help to stand on my own two feet.

  9. Great article.

    Pay yourself first. Do what works for you, something like save half your pay cheque, spend the other half.
    Like you say its all about balance.

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