Learn to live a little, and automate savings

[xclonexclonex]

Ever since I started working full time in March 2011 at the age of 28, I have been pretty good at saving. At the time, I wasn’t entirely sure what I was saving for. I saved money out of fear that I might lose my job, and won’t have a salary to support myself.

I was fortunate to not have debt, so I was able to save over 50% of my income more often than not. All of this was funneled into a savings account. This was back when I was pretty ignorant about financial basics. I was glad that I was smart enough to not ever get in debt, and keeping my lifestyle in check.

Having said that, my outlook has changed over the last couple of years. I started investing at a fairly regular basis in last part of 2014, and I am happy to say I maxed out my Roth IRA in 2015.

So here is the target for 2016 at a high level -

• Automate money management and spend less time managing & thinking about money
• Budget a percentage of income for guilt free spending

The reason why I feel this is important is because I feel like I have never done this before, and also because as I am getting older, I don’t want to get caught up on money. After having more money than I’ve ever had in my life, I really feel I should live a little, and not put it off for later.

Of course, these high level goals depend on other factors, but I really should make an effort to change the way i live, and enjoy life in a responsible way.

[GrowingTheGreen]

You are right on the money re: automating. It's a key to success. Behavioral Econ shows that when people don't have to take part in the act of saving, they're able to save more. One of the reasons that auto-enrollment and auto-increases have helped increase defined contribution plan participation is because it is automated!

[xclonexclonex]

You are absolutely right. However setting up the automated process can be a little time taking. Not because its difficult, but because I don't know how much I want to save. My strategy up until now has been to spend as little as possible, and save as much as possible. Spending didn't enter into the equation at all.

So changing all that is going to require for me to have a plan. A spending and a saving plan.

[arebelspy]

My strategy up until now has been to spend as little as possible, and save as much as possible. Spending didn't enter into the equation at all.

Is "spending" in the second sentence supposed to be "investing?"

The first sentence describes us exactly. We spent as little as possible, saved all the rest, then invested it.

We never automated investing, we just automated our spending (put auto pay on our CCs, utility bills, etc.), then saved everything left over.

[xclonexclonex]

Well, what I meant to say when I said spending was - spending on things I enjoy. Living life a little. I didn't have much of a life until now except work, and play video games. While that has been very crucial in my wealth building so far, I want to focus on more experiences, and I want to allocate some time and money towards.

I also want to automate certain investments - like 401k. I will not be automating Roth IRA because after having conversations on this forum and after reading blogs, it seemed like a better idea to just invest in a lump sum.

But the goal for me now, is to automate bill paying, automate some investing, and automate funneling some money into a "fun" account.

[arebelspy]

Oh, yeah, you should definitely spend on things you value. That's absolutely the way to go. Optimize so all of your spending is on things that you value, and none is "wasted." Spending on pleasure isn't a waste.

[xclonexclonex]

Absolutely. This is the reason why I want to minimize all the things I don't really care about, and maximize spending on things that matter to me. I just need to figure out an efficient way to do this. I like to build systems like that. I am compulsive that way :p