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nikipedia's avatar

How do you balance spending and saving?

Asked by nikipedia (27475points) June 9th, 2010

I have been making an effort to be a responsible adult as far as money goes now that I am finally in a place in my life where I can save a little bit.

I have done okay, but not great, and have a little bit of money saved up. My expenses are minimal, I have everything I need, and the only things I really waste money on are running gear and races.

I decided recently that I would like to take a trip this summer, probably to somewhere far away and expensive, but it also is completely counterproductive to my savings goals.

So how do you balance the two in your life? Can I take this trip if I try to do it as cheaply as possible?

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21 Answers

Tropical_Willie's avatar

@nikipedia
If you have 3 to 6 months of expenses in savings than you start FUN FUND. We have vacation fund and a car fund in separate accounts. Pay cash or set an amount to spend and don’t go over.

Cruiser's avatar

Cut out the race expenses to help pay for your trip or maybe find a sponsor for your race fees. Also lock up your savings you don’t “want” to touch in a CD or mutual fund so you don’t get tempted to spend it!

gailcalled's avatar

I do a yearly budget for expenses. They increase annually slightly due to COLA. Thus, I have a pretty good idea of how much, if any, discretionary income I will have.

I know what comes in and I know what must go out.

tranquilsea's avatar

We put money aside every month and pay it like a bill.

ItsAHabit's avatar

If you consistently spend less than you earn and conservatively invest the difference, you can become a millionaire over time. You might be inspired to save by reading “the Millionaire Next Door.” The failure to defer gratification is the major cause of financial problems.

YARNLADY's avatar

We put a substantial amount of our money in savings, and then carefully spend the rest – housing, food, medical, transportation first, and whatever is left on discretionary.

stranger_in_a_strange_land's avatar

For me, the savings accumulate naturally. Buying things causes clutter, which I despise. My severely limited social skills keep me away from costly entertainments. I pay cash for everything and don’t replace things simply because they are old or “unfashionable”. I’m a total contrarian in a consumer culture.

I had to travel so much in my previous career that I no longer find it enjoyable, thus no expensive “vacations”.

PandoraBoxx's avatar

Instead of planning on taking an expensive vacation, set up a certain amount of money, and plan to take a $600 vacation, or $2000 vacation, whatever’s in your vacation fund. All vacations are good, and overspending does not make it a better trip. One thing that you can do to offset expenses is to get a credit card that racks up airline points for everything you charge. Use it to replace any existing card, not supplement it, then charge everything and immediately pay it off. A coworker does this- he even charges groceries, and then immediately goes home and does an online bill pay for the amount of the purchase. He flies to Europe for free every two years, and gets free hotel nights.

boffin's avatar

How do you balance spending and saving?

Easy…. Save more than you spend!

lillycoyote's avatar

You might want to keep a spending journal for a while to see where your money actually goes. It’s amazing how much of it just kind of “leaks” out of your life without you even realizing it. You might say well, I only really spend money on the and that, once you really start to keep track of it you’re probably be surprised. Once you really know, can identify exactly where your money is going you can start to cut out/cut back on things you don’t need or find ways to do them cheaper. Like, do you buy coffee out? Do you buy lunch at work, or do you pack a lunch? It all really adds up over time.

Rarebear's avatar

I’m a penny pincher. I have no debt except my house. I don’t hold over a credit card. I save at least 10% of my income. AND I don’t skimp on vacations. Have fun!

PandoraBoxx's avatar

If you don’t plan vacations far enough in advance, you usually waste your vacation dollars by overpaying for airfare. The ticket that could cost you $1200 last minute only cost some of your fellow travelers $450 six months ago.

gailcalled's avatar

When I used to vacation in Cape Cod, I’d hit huge volumes of traffic heading towards my neck of the woods.

When I’d drive to Boston, the Bostonians were trying to get to the Berkshires.

The last (and I mean final) time I drove to NYC, every New Yorker was headed towards the Adirondacks.

So much pleasanter, easier, and cheaper to stay home and see new sights.

I am heading over to the Norman Rockwell museum this week. 24 years here and I’ve never managed the 30-minute drive. On the way I’ll visit the Berkshire Botanical gardens ($5.00 donation) and see the extravagance of late spring blooms.

kevbo's avatar

Maybe think about it in terms of how long it will take you to recoup what you lay out for your trip and whether you willing to give up that amount of time after your trip to get back on track with respect to your savings/financial goals. How quickly can you recover? Or, are you comfortable postponing your savings goals by a few months?

I wouldn’t ignore your impulse to travel. It came up for a reason. But, and maybe without analyzing it to death, think about what you need from your trip and whether there are more frugal options to get those same things. For example, I’ve long had a dream to hike the Pacific Crest Trail, which keeps getting sidetracked, so lately I’ve been thinking that maybe I can make a practice of enjoying regular local hikes.

nikipedia's avatar

@kevbo: Thanks. I think I can recover reasonably quickly; owing to some shenanigans by the university I get paid a lot more in the summer. I’ve been living reasonably comfortably on about 60% of what I will be making.

I have a good friend in Jakarta who won’t always be there, so I want to go while I have crash space and a tour guide who can guarantee a good time. Also I want to get the hell away from school.

kevbo's avatar

Sounds like a sweet deal. I’d do it.

stranger_in_a_strange_land's avatar

@gailcalled Exactly my position. People will spend $1000 a day to vacation where I live, so why bother going elsewhere? I just don’t plan on going anywhere in a hurry in early autumn, as the leaf-peepers have the roads jammed up.

PandoraBoxx's avatar

Depending on where you’re flying out of, airfare to Jakarta in July will run you around $2200 – $3000.

nikipedia's avatar

@PandoraBoxx: I can find it for about $1200 out of LAX…

gorillapaws's avatar

Being as well educated as you are, I’m sure you’re familiar with the power of compound numbers in investing. The exponential doubling of the doubling really can make a modest investment made early in life very substantial when you’re ready to retire.

I planned on starting to save when I was 18, but didn’t have the discipline. Now that I’m approaching 30, I’ve been trying to play catch-up over the past couple years, and have been saving as much as I can. I’ve tried to turn it into a kind of game, and it feels really good to have a safety-net.

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