Some people are naturally inclined to save more for the future. These people are able to focus on delayed gratification rather than impulsive purchases. For the rest of you, here are a few ways to tell if you are not saving enough.
- If your kids' allowance is bigger than your monthly savings, you are not saving enough. (This is more common than many of you can imagine, seriously.)
- If spend more on cable/Internet each month than you save, you are not saving enough. Cable and Internet connection is a combined bill for many people. If it is or isn't doesn't matter if you have more services than you can afford. HD quality, multiple movie channels and speed fast enough for the neighborhood to stream movies at the same time are not actually necessities. Saving is a necessity. It's time to prioritize.
- If you spend more on alcohol and tobacco each month than you save, you are not saving enough. This one could be a full article of its own. Actually, there are plenty of books that cover this enough. Sometimes you need to stop and realize where all your money went and think which path would make your life better and more stress free.
- If you have credit card debt that you do not pay off each month, you are not saving enough. Credit card debt is evil. If you cannot afford to pay off your credit cards each month, you should not be eating out, going on vacation or buying expensive clothes. Send me an email or comment below to tell me your plan to pay off your debt when you retire and have little to no savings or income.
- If you get a new cell phone every year, but don't max out your 401(k), you are not saving enough. Maxing out your company's retirement plan is not a must, but if you spend money like there is no tomorrow, you'll need more when you retire than those who live a more modest lifestyle.
- If you spend more on your hair and nails than you save each month, you are not saving enough. It's nice to look pretty, but when you're 75 years old working as a greeter at Walmart, it won't be so pretty.
- If you spend more in the checkout line at the grocery store than you save each month, you are not saving enough. Simply eliminating spontaneous purchases as small as $2.00 can lead to better self-control on larger ticket items.
- If you spend more on going out to dinner each month than you save, you are not saving enough. Spending less money at restaurants gives you a win on three fronts. First, you cut expenses so you can save more. Second, you reduce your regular expenses so you need less spending money when you do retire. Third, you are likely to eat a healthier diet when you make it yourself and can control what ingredients go into your meals. Eating healthier leads to being healthier which leads to spending less on prescriptions and medical bills.
- If you spend more on your pets than you save each month, you are not saving enough. Pets are an important part of many people's lives. The key is not putting their needs above yours on a regular basis. If you aren't saving enough because of your pets' food and medical bills, consider having fewer four legged friends in your home until you can afford to save enough and treat your pets the way they deserve to be taken care of.
- If you aren't saving 15-20% of your income, you probably aren't saving enough. Without putting away at least 15% of your income, most people will not have large enough nest egg to retire and live off of their investments for more than 15 years.
Increasing regular savings to reach 20% of your income does not have to happen all at once. Rather than spending everything in your checking account before thinking about what you have to save, start with saving. Even if it's just $50 per month, those who start a regular savings plan that is part of their regular bill paying cycle tend to find the ability to increase it sooner than expected compared to those who try to wait until they can start big. Starting is the key. Those who don't start will never get to the end.
