How do you find balance between saving for college and retirement, with things like vacation and home remodeling?
This is something I struggle with, and something that DH and I are not always in agreement on. I realize that we are very fortunate to be in this position, and that not everyone has the extra income needed to even be forced to make this type of decision. We are both savers by nature, which is good. I think DH is overly concerned about retirement savings and would like to loosen the purse strings a little. Getting rid of the powder blue tub and sinks that are over 50 years old are near the top of my list right now! And for once in my life, I’d like to book a little bit of a luxury vacation. While I’m glad we got a night on the Vegas strip as part of Spring Break, it sure would have been nice to be staying in one of the beautiful resorts instead of the Travelodge.
So how do you do it? Can you ever feel like you’ve saved enough?
I think balance is important. We are frugal and do not live a lifestyle similar to most in my income bracket. We take 1-2 vacations per year each of at least 1 week in duration. We favor cruises and all inclusive vacations, which are not terribly expensive. We also do some inexpensive weekends away each year as well. We try to buy everything on sale when possible (I’m always looking for a coupon or a deal), and we are not big on expensive clothes and other expensive items. We live in a nice, but modest home, and drive solid entry level vehicles until they die. We eat out regularly, but mostly at good, but inexpensive restaurants (I’m a serious Yelper), with a few fancy meals per year. I pack lunch most days, and D mostly took a packed lunch to school. For entertainment, I’m always looking for a good deal - Groupons, Moviepasses, specials, etc. We almost always get the cheap seats at the theater, concerts, sports events, etc. We just try to keep the costs of everything reasonable to allow for savings. And my D took a full ride to a good flagship. These and similar savings allow me to save quite a bit for retirement and my family to live a very comfortable lifestyle. D does not feel like she was deprived (she did everything), but we weren’t keeping up with the Jones’s at all. At the current rate (barring unforeseen circumstances), I’ll be able to semi-retire at around 50 (will do something afterwards to maintain health insurance). D will also receive a small six-figure college graduation gift.
This is a little old-school and a little nutty, but it works for us: once our “needs” are covered (and we count both college savings and retirement as “needs,” though we have set a dollar amount on what we are willing to pay for college that is probably lower than some CC parents), DH and I each write down on a 3x5 card what our wants are (one want per card). Then we lay them out on the counter and together we arrange them in preference/priority order. This involves some haggling, like, “I’ll give you a week in a mid-level resort if you’ll move up the bathroom remodel above the new car.” A want can be a big-ticket or a recurring small-ticket item. For example, a week vacation, or eating at a better restaurant every Friday night. Then we work our way through the wants cards, one at a time. It feels pretty satisfying, actually. I probably read it from one of those financial self-help books, so it’s probably a plagiarized idea that I’ve forgotten.
Perhaps you and he need to look at the household finances together and figure out how much you together really have in relation to your retirement needs (with conservative estimates for investment income and enough extra buffer on the spending side for unexpected expenses) before arguing about possible current spending proposals.
Until both of ours were launched (which is fairly recently) we never went on a vacation that was not to a family residence. A couple summers when gas was high, we didn’t do that, either. We felt like our only priority was to save, and later on the old tub could be replaced. It’s not everyone’s way, but was the least stressful and most productive. Neither of ours had any college debt, which made choosing jobs and making ends meet easier on them.
Now, we do pay ourselves first, and splurge on an occasional (once a month) dinner out. Or we buy books. Or we stay in a hotel instead of sleeping at my parents or inlaws. If there’s something we want to do, we save up for it and pay cash. We did have to do a HELOC for some house repairs and that was hard to swallow, but sometimes you need to be sensible instead of cheap. I could stop working, but while I’m able I sleep better if I know we are accumulating money that can help with medical bills, etc. One of our kids has serious medical issues, permanently. At 25, we just don’t know what healthcare is going to look like next year when we aren’t covering the bills, so we are trying to be prepared, financially, to pay full price if that’s what it comes to.
Finding a balance is a matter of fiscal discipline, NOT how much your income is. I’ve had some influential people around me, particularly my parents and my uncle who have had experienced poverty during a time of war, that the discipline was naturally ingrained in me. I see around me way too many people living for today like there’s no tomorrow on borrowed money, it’s truly sad and even scary. When my boys were young, I read Aesop’s “The Ant and the Grasshopper” to instill in them, unconsciously from the early age, the value of saving.
For us it was the recognition that saving everything for tomorrow is totally useless when tomorrow never comes - as happened to some of our family members. Actually, it either didn’t come or they couldn’t actually DO anything (healthwise) when it came. Then too, we didn’t want to totally miss cool experiences with our lads when they were growing up with us. So, we decided early on to split the extra - pay needs first, then split between saving and enjoying, but our “enjoys” were rarely purchases (we’re perfectly fine with decades old things in our house and just one bathroom as long as they still work). Our “enjoys” were almost always travel and other experiences, sometimes pretty inexpensive times as we didn’t always have much left over, but always enjoyable times.
Not a single one of us regrets the choices we made. We may or may not have enough for retirement, but at least two of our three lads have assured us they will see to our needs in our older age if we’ve guessed incorrectly. They 100% appreciate the things we did with them and know we could have socked away the $$ for ourselves instead. They appreciate having gone places and done things over a potential inheritance.
The key, for us, is needs first, then splitting - and being sure there’s a split because having nothing for the future is not wise.
ps We’ve done all of this on <100K in annual income, but we’re above the median income and don’t live in a HCOL area. What one can do after needs are met depends upon those numbers and the area.
A relative of mine is 92 and still refusing to spend money on himself and his wife. They deserve better care than that provided by untrained family members.
I think nearly all our vacations have either been gifts from our parents or they were tagged onto business trips or they were to shared family property. The last fabulous vacation we had was five years ago. We went to Jordan while our son was finishing up a program there. The house renovations were thought about for 15 years before we actually embarked on them. They were mostly paid for with inheritance money. We make sure we get the maximum match. I contribute to a SEP. We never see that money and don’t miss it. Our cars are old, but we splurge on wine and food from time to time. We were lucky to be able to tell our kids that they could attend any college in the country. Our financial advisors tell us we’re okay for retirement.
I have always believed that after current needs are met, retirement comes first then college savings. We started saving for the kids college the moment each was born. I have been lucky that grandparents have also saved and I hope to pay the favor forward and save for my own grandchildren one day.
We always tried to live frugally but not austerely. To me, experiences are much more important then things. So we spent on things the kids loved like ballet lessons and summer camp. We took trips, although many of them very inexpensive road trips and camping. But the kids also had Disney. We took the kids to the theater and concerts, museums etc. We all bought only inexpensive clothes and made what we had last. I drive an ancient minivan with 150,000 miles on it. Our house is in desperate need of renovations but those are cosmetic and so they can wait.
I feel like we have done a good job of balancing. The things we didn’t buy are things we don’t need. On the other hand, I wouldn’t trade the experiences we have all had together for anything in the world. I will also say that we have had the terrible experience of losing someone, and when that happens the lifetime of experiences that you didn’t forgo become even more valuable.
We are frugal and debt free and have always paid our 401Ks and 529s for the kids and then saved what was left. I think I’m where @Creekland is right now - worried that tomorrow may not be there, or that we won’t be in a position to enjoy it like we’d hoped. With a family member having been admitted to the hospital this week because their cancer is no longer in remission, it is in the forefront right now.
@ccprofandmomof2 - I really like that idea and think it’s something we could do and I need to bring it up with DH. We used to have quarterly budget meetings, but we’ve been on autopilot and haven’t had one in probably a year. It’s time, especially since the roof is getting old and the driveway is crumbling, and, well, it seems there’s always something. sigh
Spreadsheets. I plot out income and expenses and pension vesting and whatever else comes into play, and then come up with variations on the assumptions. And update the results monthly.
That way it’s more than just a “feeling” that we’re headed down the right path. Not that incomes and health and expenses can’t change, but at least we had a plan to work from. Or at least I did. DH would rather eat crushed glass than keep track of that stuff. Division of labor is a good thing. I’d rather eat crushed class than clean the trap in the bathroom.
I think everyone’s circumstances are different, but balance is always the key. Don’t deny oneself what life has to offer, but don’t forget to put aside what is needed to reasonably provide for the future. With regard to home projects, my philosophy is that there’s no point in putting off fixing or improving what I’d need to deal with anyway if/when we sell the house. Might as well enjoy the improvements while adding value or appeal of the home.
We started out as a “saving for tomorrow” couple and switched to a “living for today” family. Best thing we ever did.
Thoughts of a bus tour of Rome when I’m 70 does nothing for me. A powder day at Whistler with my brother and two nephews was epic.
W and I have dinner and a play tonight, had dinner and a concert last Friday, and have Cubs tickets at Wrigley in a couple of weeks. Some months we barely meet our bills and I don’t care at all.
Just want to say as a 24 year old, this is a great thread! Everyone says I should be aggressively putting money into my retirement accounts. Everyone says I should be maxing out my IRA. And I do have a lot saved. But it’s so hard for me to think about losing all that money in the short term. I’m very frugal, I’m not talking about splurging on luxuries, but won’t I need that money to buy a house? If my fiance and I each put $5500 towards retirement per year, won’t that be tens of thousands of dollars less to work with when we’re trying to achieve our family goals? It’s so stressful! Looking forward to reading everyone’s perspectives.
@rebeccar Only you can make that decision. I can only say that for me, retirement savings come before everything other than emergencies. You have no idea of the power you have now because of the compounding effect of the years ahead of you. If you miss this opportunity it is hard to ever catch up. Kids can take loans for college and choose to commute rather than dorm, but there are no loans for retirement.
We didn’t have much initially, so there wasn’t all that much to work with. We’ve always valued experiences over things individually and as a family. When H was taking 1-2 business trips a year, we would tag along whenever possible until S reached 5th grade and didn’t like being away from school.
We have no regrets and generally only had to pay airfare as the hotel & car was paid for by H’s employer. We had many nice experiences. We also went to national parks and Disneyland, which were fairly reasonable.
We often stayed with relatives or close friends or Holiday Inn or similar. Our house is fairly sound and to us continues to look fine and function well. I’d be fine with remodeling the bathrooms but it’s definitely NOT a priority. At some point we will have to replace our 1998 and 2000 cars, but no current plans. Now, we mostly stay at hotels but sometimes we still stay with loved ones.
@rebeccar It depends on your income. My first 2 years of working, I maxed out my 401k and saved any extra each month plus bonuses. I used the extra to buy and furnish my first house (put down the minimum). I think saving for retirement should start as soon as you start working and then saving for a home purchase. But maybe you don’t max out your retirement initially if that’s not affordable while saving for a home.
@rebeccar Seeing a reputable fee-only financial planner when you are just starting out is the wisest investment you will ever make. You should expect to pay $150-200 for an uncomplicated financial plan that will cover everything you need right now. Don’t go to anyone who is trying to sell you anything. I also really like Beth Kobliner’s book Get a Financial Life. I don’t think it’s updated recently, but most of the advice is timeless. I’m in the “save as much as you can in retirement accounts” camp, and it has really worked out well for me. Good luck!