Search

Stop Saving Your Money



And now for something a little different, basically the complete antithesis of sound financial advice.


A short rant if you will.


Maybe it’s simply symptomatic of the space I work in, my age or the echo chamber that I have unwillingly created for myself, but everyone seems to be obsessed with saving.


Undeniably saving money is essential, and everyone should ensure they have a 'rainy day' fund, but in my opinion, the modern-day fascination with saving instead of earning enough to support your lifestyle is largely detrimental to our overall quality of life.


I feel like all financial advisors spew the same 'power of compounding' storyline to reiterate the importance of saving money in your 20's and early 30's, and of course, they are theoretically correct, but this is far too narrow a lens.


Your finances should facilitate your life, not perpetually inhibit it until such time as you have saved an arbitrary amount that you deem adequate enough to allow you do the things you want.


Granted, some may disagree here, and each case is different, but sacrificing experiences and opportunities in your 20's and 30's for the promise of a cushy retirement is a questionable trade-off at best.


The allure of early retirement cannot be denied; paying your mortgage off a few years early is compelling, but when it comes at the expense of the most uninhibited years of your life, it hardly seems worth it.


Recent studies from the investment and wealth institute have shown that only 1 in 7 retirees are withdrawing principal from their retirement within a given year. The remaining retirees live off of their investments or even less.


In Nick Maggiulli's book 'keep on buying' he states,

According to a study by United Income, 'The average retired adult who dies in their 60s leaves behind $296k in net wealth, $313k in their 70s, $315k in their 80s, and $238k in their 90s.'

In short, retiree wealth tends to go up, not down, with age.


This suggests that more people should be asking, "Am I saving too much?" rather than "Am I saving enough?


Now I’m not saying not to save, but managing your finances isn’t simply about maxing out your bank balance.


It is essential that you take the time to figure out what you are truly saving for. Clarity around your exact requirement will ensure you strike the balance between spending in the present and savings smartly for the future.


Life isn’t simply a game of who can accumulate the most stuff first.


Don’t be perpetually long sighted.


Life’s too short.



With all that said, I could find myself in a similiar situation to this when I'm 80.