7 ms·

> Since the amount needed is directly proportional to how much you currently make, it makes relatively little difference if your household brings in $70k or $14

by sirsar 11y ago

> Since the amount needed is directly proportional to how much you currently make, it makes relatively little difference if your household brings in $70k or $140k a year. I have to take issue with this. If your salary doubles, your needs do not double along with it. $100K is right around the 80th percentile of US household income. That means 80% of households (~250 million people) in the US are living on less than that. Maybe you can too, despite your paycheck being higher. And if your household's take-home pay suddenly increases from $70k to $140k, see if you can fight the urge to follow that increase with your spending habits. Keep the old car, pay off your debts, and save for a rainy day (layoff, medical emergency, etc). It absolutely baffles me that prevailing financial habits in the US seem to include spending as much money as possible.

f- 11y ago
The subsequent paragraphs address that, I think. It does not have to be this way, but the reality is that most people spend as much as they earn. You know, anecdotally, I talked to people in the Bay Area who claim that they couldn't really save any money even if they wanted to, because they were only making $120k a year. But I don't think it's a US-only phenomenon; it certainly happens in Europe, too. I suspect it comes down to a belief that a raise entitles you to a better life, right now: so you go out and buy more expensive groceries, get a nicer car, etc. I was actually raised in a fairly poor family and it's a habit I picked up very early on; took me a fair amount of work to overcome this.
- lfowles 11y ago
  > It does not have to be this way, but the reality is that most people spend as much as they earn. The trick here is to make savings part of the spending (or in other words.. "budgeting").
aianus 11y ago
> It absolutely baffles me that prevailing financial habits in the US seem to include spending as much money as possible. If you're an average American who works 50h a week, 50 weeks out of the year, wouldn't you want to feel compensated for that? And not in green paper IOUs but in goods and services? Beyond having a rainy day fund and moderate retirement fund I don't really see the point in saving. You can't take it with you...
- MaulingMonkey 11y ago
  > And not in green paper IOUs but in goods and services? Beyond covering my basic needs and having some toys, I don't really see the point in spending all my income. Goods and services? I already have those - more won't bring me happiness. Financial security means one less stressor in my life. A sunny day / early retirement fund means I can take more time off between jobs, on vacations, and be more aggressive about getting job terms I like. I can go out and have more experiences. I don't need to save up to buy the things I want, because I haven't wasted my money buying things that don't bring me happiness.
  - lmm 11y ago
    > Financial security means one less stressor in my life. A sunny day / early retirement fund means I can take more time off between jobs, on vacations, and be more aggressive about getting job terms I like. I can go out and have more experiences. I don't need to save up to buy the things I want, because I haven't wasted my money buying things that don't bring me happiness. Early retirement isn't great for happiness AIUI. Rather than saving up any extra money you're better off spending it soonish, whether that "spending" is on holidays, things, or just taking a sabbatical.
  - cloakandswagger 11y ago
    I used to hoard money as the feeling of security and preparedness it gave me out-weighed the pleasure I got from consumerism. Now I spend freely and without concern. That's the only tenable game plan in our Keynesian economy: spend your fiat before it's inflated away or redistributed during the next financial crisis.
- rhino369 11y ago
  >If you're an average American who works 50h a week,50 weeks out of the year Not to be pedantic (but im going to anyway), the average full time worker only works 1700 hours a year. Not 2500.
  - aianus 11y ago
    Where did you see that? At 8 hours a weekday, that's ~47.5 days off a year. Doesn't sound like the average American full-time worker to me. edit: s/workday/weekday/
edent 11y ago
The term is "Lifestyle Inflation". It's seductive. Now you don't have to slum it in an economy class seat. You're now able to afford a real laptop. You can treat yourself to... Near enough everyone does it. If you've ever thought "I'm going to buy the brand-name [pasta|batteries|phone|insurance]" you're susceptible too. The thing is, it's not much fun living as though you were poor - cutting coupons, spending time working out which vegetable gives you the most nutrition per Kg, scrimping and saving. So for every extra $£€ you make, you can give yourself a short-term dopamine hit at the expense of long-term planning. It's one of the reasons why, in the UK, we're moving to mandatory pension provision. Unless you take action, a fixed percentage of your wage will be placed into a pension scheme. As your wage rises, so will your long term savings.
- harperlee 11y ago
  > If you've ever thought "I'm going to buy the brand-name [pasta|batteries|phone|insurance]" I think that's the key. You stop needing to think about lots of things. There's a real cognitive cost of being poor.
  - zdkl 11y ago
    One could argue that is the point of currencies, to exchange labour for comfort. You exchange your work to spend cognitive power as you'd prefer instead as what you'd concretely need
- TeMPOraL 11y ago
  > If you've ever thought "I'm going to buy the brand-name [pasta|batteries|phone|insurance]" you're susceptible too. Of course I did. The thing is, in many cases it's totally right. Smartphones are a good example - you really don't want to buy the cheap ones. Not if you value your mental health. One has to approach this pragmatically though. Branded pasta is usually little different than unbranded one, for instance. And branded clothes - that's literally making money on people's vanity. > It's one of the reasons why, in the UK, we're moving to mandatory pension provision. Unless you take action, a fixed percentage of your wage will be placed into a pension scheme. As your wage rises, so will your long term savings. Great to hear that! It's one of the few things that are better for everyone if they're opt-out.
LordKano 11y ago
It's very easy to do. I am earning roughly triple what I earned 16 years ago and I'm living more comfortably but I'm just comfortable. I'm not living extravagantly by American middle-class standards. I drive an 11 year old, paid off vehicle. I live in a middle-class neighborhood, 15 miles outside of the city. I'm living comfortably on money that I would have killed to make back then. I went from an apartment to a house. Higher utilities. A couple of credit cards with modest balances. I had children. I started paying for health and life insurance. Contributions to a retirement account. It happens gradually and it's easy to not notice, until you reflect on long term changes. If my income tripled again, instantly, it would be a game changer. With my current standard of living, I could retire by 50. If it triples again but over the next 16 years, it would likely be a different story.

by sirsar 11y ago

f- 11y ago

The subsequent paragraphs address that, I think. It does not have to be this way, but the reality is that most people spend as much as they earn. You know, anecdotally, I talked to people in the Bay Area who claim that they couldn't really save any money even if they wanted to, because they were only making $120k a year. But I don't think it's a US-only phenomenon; it certainly happens in Europe, too. I suspect it comes down to a belief that a raise entitles you to a better life, right now: so you go out and buy more expensive groceries, get a nicer car, etc. I was actually raised in a fairly poor family and it's a habit I picked up very early on; took me a fair amount of work to overcome this.

lfowles 11y ago
> It does not have to be this way, but the reality is that most people spend as much as they earn. The trick here is to make savings part of the spending (or in other words.. "budgeting").

aianus 11y ago

> It absolutely baffles me that prevailing financial habits in the US seem to include spending as much money as possible. If you're an average American who works 50h a week, 50 weeks out of the year, wouldn't you want to feel compensated for that? And not in green paper IOUs but in goods and services? Beyond having a rainy day fund and moderate retirement fund I don't really see the point in saving. You can't take it with you...

MaulingMonkey 11y ago
> And not in green paper IOUs but in goods and services? Beyond covering my basic needs and having some toys, I don't really see the point in spending all my income. Goods and services? I already have those - more won't bring me happiness. Financial security means one less stressor in my life. A sunny day / early retirement fund means I can take more time off between jobs, on vacations, and be more aggressive about getting job terms I like. I can go out and have more experiences. I don't need to save up to buy the things I want, because I haven't wasted my money buying things that don't bring me happiness.
- lmm 11y ago
  > Financial security means one less stressor in my life. A sunny day / early retirement fund means I can take more time off between jobs, on vacations, and be more aggressive about getting job terms I like. I can go out and have more experiences. I don't need to save up to buy the things I want, because I haven't wasted my money buying things that don't bring me happiness. Early retirement isn't great for happiness AIUI. Rather than saving up any extra money you're better off spending it soonish, whether that "spending" is on holidays, things, or just taking a sabbatical.
- cloakandswagger 11y ago
  I used to hoard money as the feeling of security and preparedness it gave me out-weighed the pleasure I got from consumerism. Now I spend freely and without concern. That's the only tenable game plan in our Keynesian economy: spend your fiat before it's inflated away or redistributed during the next financial crisis.
rhino369 11y ago
>If you're an average American who works 50h a week,50 weeks out of the year Not to be pedantic (but im going to anyway), the average full time worker only works 1700 hours a year. Not 2500.
- aianus 11y ago
  Where did you see that? At 8 hours a weekday, that's ~47.5 days off a year. Doesn't sound like the average American full-time worker to me. edit: s/workday/weekday/

edent 11y ago

The term is "Lifestyle Inflation". It's seductive. Now you don't have to slum it in an economy class seat. You're now able to afford a real laptop. You can treat yourself to... Near enough everyone does it. If you've ever thought "I'm going to buy the brand-name [pasta|batteries|phone|insurance]" you're susceptible too. The thing is, it's not much fun living as though you were poor - cutting coupons, spending time working out which vegetable gives you the most nutrition per Kg, scrimping and saving. So for every extra $£€ you make, you can give yourself a short-term dopamine hit at the expense of long-term planning. It's one of the reasons why, in the UK, we're moving to mandatory pension provision. Unless you take action, a fixed percentage of your wage will be placed into a pension scheme. As your wage rises, so will your long term savings.

harperlee 11y ago
> If you've ever thought "I'm going to buy the brand-name [pasta|batteries|phone|insurance]" I think that's the key. You stop needing to think about lots of things. There's a real cognitive cost of being poor.
- zdkl 11y ago
  One could argue that is the point of currencies, to exchange labour for comfort. You exchange your work to spend cognitive power as you'd prefer instead as what you'd concretely need
TeMPOraL 11y ago
> If you've ever thought "I'm going to buy the brand-name [pasta|batteries|phone|insurance]" you're susceptible too. Of course I did. The thing is, in many cases it's totally right. Smartphones are a good example - you really don't want to buy the cheap ones. Not if you value your mental health. One has to approach this pragmatically though. Branded pasta is usually little different than unbranded one, for instance. And branded clothes - that's literally making money on people's vanity. > It's one of the reasons why, in the UK, we're moving to mandatory pension provision. Unless you take action, a fixed percentage of your wage will be placed into a pension scheme. As your wage rises, so will your long term savings. Great to hear that! It's one of the few things that are better for everyone if they're opt-out.

LordKano 11y ago

It's very easy to do. I am earning roughly triple what I earned 16 years ago and I'm living more comfortably but I'm just comfortable. I'm not living extravagantly by American middle-class standards. I drive an 11 year old, paid off vehicle. I live in a middle-class neighborhood, 15 miles outside of the city. I'm living comfortably on money that I would have killed to make back then. I went from an apartment to a house. Higher utilities. A couple of credit cards with modest balances. I had children. I started paying for health and life insurance. Contributions to a retirement account. It happens gradually and it's easy to not notice, until you reflect on long term changes. If my income tripled again, instantly, it would be a game changer. With my current standard of living, I could retire by 50. If it triples again but over the next 16 years, it would likely be a different story.