You're saving too much when the thing you're giving up is costing you more utility than the thing you'd be getting.
Giving up my 4th international vacation a year is worth retiring at 67.
Giving up lunch so I can afford to retire at 45 no longer feels worth it.
Every additional dollar you save will offer a decreasing marginal utility while every single dollar you forgo now will (assuming you are pragmatic and have cut the fat and not the muscle so to speak) will cost you more.
Somewhere in there is your 'not worth it'. Mine is different.
>At what point do you find yourself saving/ investing too much?
When you review your budget and find you are saving more than you need to reach your goals, and are compromising your ability to spend on other priorities as a result.
You need to review your budget, priorities and progress toward your goals and adjust how you allocate your funds so that you are using your money to do what you need and want. Reddit can't tell you your priorities - that's the personal part of personal finance.
My father has instilled an unshakable level of frugality in me, so I, too, sometimes feel like I forgo enjoyment when saving and investing. But then I run the numbers through my financial forecasting model and see that I'm on the path toward an early retirement, and it makes it worth it to me. I always ask myself this question before making a seemingly frivolous purchase: "Do I NEED this thing right now?" the answer is almost always "No." I have a specific number as a target so once I hit that number, I'll loosen the grip and start spending a little more.
You can't separate this topic from the the other two bullet points
* the age at which you'd like to either retire or leave your main job and just do your side hustle.
* what sort of income you hope to have from your investments.
If you can answer those two things then you can easily calculate whether or not you're saving too much. If it turns out you are, then by all means go buy a midlife crisis car and a Rolex. Or better yet buy one for me, because I did the same thing as you and barely managed to save enough.
Focus on intentional spending and not spending for the sake of “you’re suppose to”. I know several people who save a lot because there interest and hobbies are not centered around spending money. Obviously you should not deprive yourself of basic needs, and you should plan for upcoming expenses, but outside of that, if your life activities don’t involve spending money, don’t feel like you have to spend it.
I struggled with this for a while, I'm in a fortunate position where we can max out all our tax advantaged accounts and still have money left over. After our tax advantaged accounts, we spend money on traveling and hobbies. Whatever is left goes into my mega backdoor roth.
Remember, you can never get time back. It's the ultimate resource. Try and enjoy today, and if that costs a little money, that's okay.
Obviously you want to take care of your future, but your present life matters too, if not, more. You will likely be the better version of yourself physically than later on so find a good balance and enjoy it.
The Money Guy Show just did a great episode on this. [https://youtu.be/ST7uLSGXm\_0?si=iqPvlDExW2bRnksH](https://youtu.be/ST7uLSGXm_0?si=iqPvlDExW2bRnksH)
Invest in yourself. This post itself is a sign you're saving and investing too much. What's the point of being wealthy if you'll never use that money? Enjoy your life and buy things that will make you happy. I normally invest $1k a month separately from my 401k, but one month I decided to buy a TV that cost me close to $2000. Did I feel guilty? Yes. But I use this TV every day and enjoy the fu** out of it and makes me happy. You need to also invest in yourself and your happiness.
The issue is about whether the things you would spend your money on otherwise give you more security and fulfillment in life than investing more in your future self. For most, they can’t really afford to even spend anything on their future self so they should be throwing any available funds there to avoid possibly being old with little financial means and poor health, which is kind of the default in the world unfortunately.
I spend more on others than myself now after spending decades mostly saving and questioning why I bother to do it and am now happier for it. Yes, in a way it is still spending on myself because I benefit from it not necessarily fiscally but emotionally. I’m going to be able to retire comfortably if I never put another dollar into my retirement funds I know with quite near certainty partly because I live pretty thrifty anyway a bit out of amusement. I still contribute out of habit and paranoia, but another $20k+ / year for me shoved into retirement is absolutely not necessary so off it goes to something that brings me fulfillment rather than security. Most of what I spend money on now is charitable work.
I’ve kind of struggled with this as well. If you feel like you are investing too much, you probably are. I’d reassess and see where you are at and adjust if needed.
First off, I assume you make less than $161k per year (if you're single) since you're contributing to a Roth, so if you're investing $55k, that is an impressive amount to be socking away.
If you want practical advice, I suggest sitting down and making a detailed budget. Figure out how much you need to cover your normal expenses (rent, car, food, utilities, etc), how much you'd need to continue maxing out your 401k, pension, and Roth, how much you need to put aside for an emergency savings fund, then see what is left over. Whatever is left is potential "fun" money, but considering your saving/investing personality, you're probably not going to feel comfortable spending all of that. So, decide a percentage of the "fun" money you'll put towards investments, maybe 20%, and stick to that. That way, mentally, you know you're still putting money aside but you have 80% of your "fun" money to spend guilt free.
Personally, I keep a separate checking account for paying bills and transfer money to that every month to cover my fixed expenses. I also transfer money out of my main checking every paycheck towards savings/investments. Then, what is left in my checking account after the auto-transfers, I can manage guilt-free and either spend it going out to restaurants, going out with friends or my wife, vacations, and miscellaneous expenses I don't plan for.
You're saving too much when the thing you're giving up is costing you more utility than the thing you'd be getting. Giving up my 4th international vacation a year is worth retiring at 67. Giving up lunch so I can afford to retire at 45 no longer feels worth it. Every additional dollar you save will offer a decreasing marginal utility while every single dollar you forgo now will (assuming you are pragmatic and have cut the fat and not the muscle so to speak) will cost you more. Somewhere in there is your 'not worth it'. Mine is different.
What are your two side hustles?
>At what point do you find yourself saving/ investing too much? When you review your budget and find you are saving more than you need to reach your goals, and are compromising your ability to spend on other priorities as a result. You need to review your budget, priorities and progress toward your goals and adjust how you allocate your funds so that you are using your money to do what you need and want. Reddit can't tell you your priorities - that's the personal part of personal finance.
Maybe set a 'fun fund' aside for guilt-free spending, you've earned it!
My father has instilled an unshakable level of frugality in me, so I, too, sometimes feel like I forgo enjoyment when saving and investing. But then I run the numbers through my financial forecasting model and see that I'm on the path toward an early retirement, and it makes it worth it to me. I always ask myself this question before making a seemingly frivolous purchase: "Do I NEED this thing right now?" the answer is almost always "No." I have a specific number as a target so once I hit that number, I'll loosen the grip and start spending a little more.
Retirement spending is great, but imo id rather be middle class when im old and have fun now than have no fun and be rich and old.
You can't separate this topic from the the other two bullet points * the age at which you'd like to either retire or leave your main job and just do your side hustle. * what sort of income you hope to have from your investments. If you can answer those two things then you can easily calculate whether or not you're saving too much. If it turns out you are, then by all means go buy a midlife crisis car and a Rolex. Or better yet buy one for me, because I did the same thing as you and barely managed to save enough.
I’m interested to know what the two side hustles are.
Focus on intentional spending and not spending for the sake of “you’re suppose to”. I know several people who save a lot because there interest and hobbies are not centered around spending money. Obviously you should not deprive yourself of basic needs, and you should plan for upcoming expenses, but outside of that, if your life activities don’t involve spending money, don’t feel like you have to spend it.
I struggled with this for a while, I'm in a fortunate position where we can max out all our tax advantaged accounts and still have money left over. After our tax advantaged accounts, we spend money on traveling and hobbies. Whatever is left goes into my mega backdoor roth. Remember, you can never get time back. It's the ultimate resource. Try and enjoy today, and if that costs a little money, that's okay.
Obviously you want to take care of your future, but your present life matters too, if not, more. You will likely be the better version of yourself physically than later on so find a good balance and enjoy it.
Figure out a realistic retirement goal. See what you need to save to meet said goals. Feel free to spend any extra money.
I agree with those that have mentioned if you’re sacrificing your happiness then it’s time to reevaluate.
The Money Guy Show just did a great episode on this. [https://youtu.be/ST7uLSGXm\_0?si=iqPvlDExW2bRnksH](https://youtu.be/ST7uLSGXm_0?si=iqPvlDExW2bRnksH)
Invest in yourself. This post itself is a sign you're saving and investing too much. What's the point of being wealthy if you'll never use that money? Enjoy your life and buy things that will make you happy. I normally invest $1k a month separately from my 401k, but one month I decided to buy a TV that cost me close to $2000. Did I feel guilty? Yes. But I use this TV every day and enjoy the fu** out of it and makes me happy. You need to also invest in yourself and your happiness.
The issue is about whether the things you would spend your money on otherwise give you more security and fulfillment in life than investing more in your future self. For most, they can’t really afford to even spend anything on their future self so they should be throwing any available funds there to avoid possibly being old with little financial means and poor health, which is kind of the default in the world unfortunately. I spend more on others than myself now after spending decades mostly saving and questioning why I bother to do it and am now happier for it. Yes, in a way it is still spending on myself because I benefit from it not necessarily fiscally but emotionally. I’m going to be able to retire comfortably if I never put another dollar into my retirement funds I know with quite near certainty partly because I live pretty thrifty anyway a bit out of amusement. I still contribute out of habit and paranoia, but another $20k+ / year for me shoved into retirement is absolutely not necessary so off it goes to something that brings me fulfillment rather than security. Most of what I spend money on now is charitable work.
I’ve kind of struggled with this as well. If you feel like you are investing too much, you probably are. I’d reassess and see where you are at and adjust if needed.
First off, I assume you make less than $161k per year (if you're single) since you're contributing to a Roth, so if you're investing $55k, that is an impressive amount to be socking away. If you want practical advice, I suggest sitting down and making a detailed budget. Figure out how much you need to cover your normal expenses (rent, car, food, utilities, etc), how much you'd need to continue maxing out your 401k, pension, and Roth, how much you need to put aside for an emergency savings fund, then see what is left over. Whatever is left is potential "fun" money, but considering your saving/investing personality, you're probably not going to feel comfortable spending all of that. So, decide a percentage of the "fun" money you'll put towards investments, maybe 20%, and stick to that. That way, mentally, you know you're still putting money aside but you have 80% of your "fun" money to spend guilt free. Personally, I keep a separate checking account for paying bills and transfer money to that every month to cover my fixed expenses. I also transfer money out of my main checking every paycheck towards savings/investments. Then, what is left in my checking account after the auto-transfers, I can manage guilt-free and either spend it going out to restaurants, going out with friends or my wife, vacations, and miscellaneous expenses I don't plan for.