Because Social Security isn’t going to cover many peoples’ basic expenses.
I have to question a LOT of the article’s assumptions about “the good life”.
For starters - why the heck have two homes. Two homes worth $800,000+??? You can get wonderful homes for one quarter that price in the Chicago area, and frankly, I wouldn’t want more than one.
And the cars - I have a car and a pickup. The truck was $20,000, the car $15,000 brand new, they work fine, and I expect to keep each of them a good ten years - why not? So what this budgets for one year for cars I only pay once every five years.
As for travel - $21,000 a year? A YEAR??? Are they traveling first class or something? My God, I rent an entire airplane when I travel, which is at least once a month, and I don’t spend half that on travel in a year, including hotels, cars, food, and yes, avgas.
Two thousand a month for food? What are they eating? Gold leaf?
Oh, and for the OP question - I save about 15% out of every paycheck. Some of that does get used over the course of the year for car repairs, unexpected emergencies, etc. - in part, that’s what savings are for.
I could save more if I didn’t fly, but so what? Flying is part of MY “good life”. Meanwhile, my debt is nearly non-existant, the bills are paid, and I’m living a good life indeed. On 1/4 to 1/5 the income this story maintains is necessary for “the good life”, whatever that is.
I agree, that’s bizarre. And according to the article, these people don’t even spend any vacation time at their “vacation home”! They go skiing or go to France or something! Thinking about it, they bear an uncanny resemblance to some of our neighbors who only come up to their Lake Michigan properties on summer weekends to mow the lawn.
Also, did you notice that the car budget assumes that these people are taking out LOANS whenever they get new cars? They’re paying $50,000-$100,00 per year just on the mortgages for their VACATION HOMES and $20,000 per year on travel and they still need to take out auto loans? Criminy!
If any families like this actually exist, they are clearly way too dumb to be allowed to have control of that much money. Maybe there’s some sort of charitable order of monks around that ministers to the rich and stupid that will look after their finances in exchange for a small donation.
You mean the Yen Buddhists, of course.
T. Pratchett
We save a lot; a little over a third. My husband’s attending law school next fall, so we’ve phased out his salary. We only live off mine. My salary’s pretty good, we’ve got a nice chunk of change saved up from Y2K (I was in a highly specialized area of IT at the time and made a killing) and we’re scaling back our spending.
Our plan is to not have to take out any loans for law school. So far, it looks as though we can swing it without having to make any major changes.
If you include payments toward mortgage principle and capital improvment on the house (which we aren’t doing much of currently), we probably save/invest more than third of our income. Definately 10% going straight into various retirement accounts (401ks are maxed, plus some deferred compenation). The same sort of ESPP arrangement msmith mentions. Additional money goes to short term savings - it bought a washer and dryer this winter. A car last year. Three vacations in the next four months.
We save exactly 0% of it. After rent and day-to-day bills that is what is left. No cable, no new CDs or anything. Not bad for college educated
Save nothing! Money is a tool and the worst use of a tool is to sit idle. Invest!
Zero. But then, I don’t see a point in saving. Another depression is just around the corner, and when that happens, any savings I may have will be worthless. There’s also always the possibility that I will be hit by a truck/develop brain cancer/die horribly in a fire after running in to save someone’s cat, and then I’ll have scrimped and saved for nothing. Living for the present, that’s the only way to go, especially if you’re not convinced you have much of a future.
There’s also the fact that I make around $800/month and need every penny of it. If I saved one percent a month that would only be $96 at year’s end. Most banks don’t even open savings accounts for amounts that small.
I don’t forsee us ever making the kind of money mentioned in the article. I gave up full time work when my son was born with medical problems (a $740,000 kid!) and we made up for the loss of income by being scaling way down and being cheap.
I save between 15 and 20% of every check and have the money skimmed off by my bank before I ever see my pay check hit my checking account.
I keep a checking and a savings account (that rolls over to a 401K periodically) and an ‘emergency fund’ for larger unexpected expenses, accounts for both kids college, and also small ‘fun’ accounts for holiday expenses and vacations. The ‘fun’ accounts have rarely reached the thousand dollar mark, but we make the holidays and vacations fit the budget and strive for ‘left overs’ which get recycled into the next year.
I also buy a little stock from work (because it’s a bargain) and then sell it when it accumulates (because I’m afraid of being Enron’ed). That goes into savings unless the emergency fund needs to topped up first.
My husband does pretty much the same.
I personally make very little money by grown-up standards, but all those little bits do add up over time.
By being cheap, I mean that we bought less house than we could afford and bought near the richer folks so we could benefit from their good schools. We buy good quality used cars (mine is 10 years old, but I’ve had it 8 years and it still looks and runs great). We also buy less ‘items’ than the average family and shop hard for bargains on everything from food to furniture.
We feel very fortunate that although we don’t really make alot of money, we have everything we think we need or want, including savings. Conversely, we make the things we think we need or want fit the budget. Saving is the first part of that budget.
Why should we leave inheritance aside? So what if I’ve given myself a paycut my entire life? My kids can benefit…
That’s a relief; from reading these posts, I was beginning to think I was hopelessly undersaving. I save around 18-20%.
If that’s what you want to invest for Bricker, go for it. Savings towards something is good - and that includes saving to make your kids life easier. We hope to have saved enough to pass some to our kids (probably most of it pre-inheritence when it will do them the most good, and when we have control over the results - i.e. college, home downpayments). But I’m not going to scrimp and deny myself so that they can blow an inheritance on a car they couldn’t afford without it, or a big trip to Europe.
We were lucky enough to benefit from an inherietence and I really hope my kids do the same. But as often as an inherientence does good, it can be blown quickly. My brother in law and his wife managed to spend his (then spend into bankruptcy) before their divorce. Neighbors of my parents sold the family farm - in a Twin Cities suburb. The houses aren’t being done built yet on the back 40 and most of the families are completely broke. There are safer investments than your own kids, and I’m not sure that in many cases, saving to pass it along isn’t nearly the same as blowing it irresponsibly now.