National Savings Day – A Moment to Spend Shame Myself
Let’s talk about National Savings Day. I don’t mean to sound unenthused but, like many others, I struggle daily to figure out how to save the appropriate amount of income to comfortably retire. What’s worse is that I’m a financial advisor. If I look at what level of savings I should have at my current age/income level, technically I only have about 60% of the appropriate amount saved.
Why is it so hard to save? My wife, April, and I are supposed to save 10-15% of our combined marital gross income to be on the right track for retirement. To add to that, the later we start saving, the higher that percentage becomes. But what about all the other expenses? One kid in daycare at $1,000/month, two car payments, a mortgage, home repairs, having fun, vacations here and there, my wife’s wine… those are only a small amount of many other line items that divide up our dollars on a daily basis. But what are all of those things I just rattled off? Well, that is consumption.
April and I are fortunate for our incomes, but on many occasions, we participate as hyper-consumers. Yep, we spend too much of our money on stuff. What makes it harder is that I truly don’t feel like we overspend on things. But the problem with consumption is the components. We have to review the cost of house repairs, the types of wine April buys, the bakery we choose for our daughter’s birthday cake, the brand of shoes we put on our feet… these consumption trends are a direct drag on our ability to save the appropriate amount, and sometimes it’s just as important to consider all of these components as it is to save 10-15%.
If I’m you, I’m asking myself dude, why are you spend shaming yourself on a day dedicated to saving? Well, lifestyle creation or lifestyle drag (the act of consuming more as our incomes rise) is just as important to think about as the appropriate savings rate. We need to be mindful of the lifestyle we are supporting so that our savings can stretch to support that lifestyle, or some version of it, leading in to retirement. The amount of money we save has to support the lives we live. And no matter what your career path is, you have the ability to prepare for retirement.
So how can I prepare? Well awareness comes first. I’ve almost finished reading Stop Acting Rich by Thomas Stanley, where he lines out all of the ways we create big lifestyles and things we need to consider along the way. I may be spend shaming myself, but I know that every day I am trying to be more thoughtful about what we are buying and how it will affect our ability to save money. National Savings Day isn’t just about raising awareness for one day, it’s about making you aware of how you can change your everyday spending habits – and I’ve found a good place to start: every Jeep dealer in Kansas City has called me to remind me that my 2016 Jeep is in high demand for used cars. They are all so excited to get me into a brand new 2019 Jeep and start my new shiny five-year note to pay off. Nah, maybe I’ll just pay this one-off next year and drive it till I’m forced to get a new one. After all, once it’s paid off, I can take the money in my bank account that was saved for a new car and reallocate it into my 401(k), as I’m already used to the money not being there for consumption. First step towards better saving? I hope so.
Tim Accurso is a financial advisor at Prime Capital Investment Advisors. The preceding commentary is (1) the opinion of Tim Accurso and not necessarily the opinion of PCIA, (2) is for informational purposes only, and (3) should not be construed or acted upon as individualized legal advice. Please seek the advice of a lawyer. Advisory services offered through Prime Capital Investment Advisors, LLC. (“PCIA”), a federally registered investment advisor. PCIA: 6201 College Blvd., 7th Floor, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”).