Feeling the squeeze from saving?

[CoryWM]

So I just did my budget for august using YNAB Pro. Which I'd recommend, is a nice little program. I use it more for entertainment than anything. I enjoy doing the buget etc. Anyways, next month will be the first month with rent+ deposit. For the first time with my new job I'm feeling the money squeeze.

Not that I don't have enough money. But with all my savings, it's begining to feel like is tight. It's not because I have too many bills. But I am saving 400+ dollars a month, roughly 20% of my income, and I plan to increase it on the first, when I am elidgeable for my 401k. Im shooting to be saving 600-800 a month. This still allows me 200 dollars fun money, 50 entertainment money. etc.

Now my question is, for the long time savers. Does it always feel like you're on a very fixed income? Cause you're always trying to save more. I'm not sure of the effects of feeling like you don't have enough money will do over time. Like if I feel I'm strapped for cash all year, is my tax return gonna turn into a spending spree, since I feel I've been money deprived?

I know it's a way of thinking. I just need to get past, the feeling of being deprived, and feel enriched since I am enhancing my life in the future.

[humandraydel]

Yes, it pretty much feels like you are on a (somewhat) tight fixed income. There are some differences that make it a GOOD thing, though. For instance, you now know exactly how much money you can blow every month and not have to feel guilty about it! Plus, you know that even as you blow that money, your net worth is growing! Also, the increased security usually makes it worth passing up a few of the wants.

[scfr]

Not sure if I qualify as a long-time saver (was an "awkward baby saver" for awhile and have been a "serious saver" for about 14 years), but in my experience the feeling that you are being squeezed and deprived does go away in a few years, and you begin to feel increasingly confident and free.

[disneysteve]

Originally Posted by CoryWM

Not that I don't have enough money. But with all my savings, it's begining to feel like is tight.

Now my question is, for the long time savers. Does it always feel like you're on a very fixed income?

Like if I feel I'm strapped for cash all year

I think you really need to look at why you feel cash strapped. Is there something you wish you could be doing with your money but feel you can't afford? Do you feel you are making sacrifices today that you aren't happy making?

If so, perhaps you need to loosen the savings belt a tiny bit. Maybe save 19% of income instead of 20%. If, however, you've really got all the money you need or want right now, it is probably more a mindset thing and you will probably get used to it. Keep tracking your savings and enjoy watching those numbers go up and up (this week's market performance not withstanding).

[Ima saver]

The longer you are a saver, the easier it gets!

[pearlieq]

You're not alone. DH and I both feel that way sometimes. Creating an artifical sense of scarcity can feel remarkably like the real thing on occasion!

Here's how we cope:

1.) We budget in money for fun. It may not be as much as we want, but it's something.
2.) We actively remind ourselves that investing in our future is more important than the little luxuries we give up. Watching savings balances go up and loan balances go down can be lots of fun!
3.) We find cheaper ways to get things we want. We may not be able to afford the vacation we want everyt time, but I can usually tag along on DH's business trips for the cost of a plane ticket. I may not be willing to pay for a manicure weekly, but that doesn't mean I can't ask for one for a birthday or Christmas present.
4.) Enjoy small bits of "found" money. Unless you've got severe debt, use small rebate checks, refunds, winnings, etc. purely for fun. It can be a nice lift.

It does get easier over time, but you've got to make sure not to keep the limits too tight. Find a healthy balance you can live with.

[cptacek]

I think if you limit yourself to a certain amount of money, you will fill your time with activities that fit into that budget. I think in the past you have written about not knowing what to do now that you are out of school (? I think) and have a job for the first time. If you stick to this budget, you will find things you like to do and people you like to do that with that fits within that budget, and it won't occur to you to spend more because you get into that habit.

But, as DisneySteve said, if you have something you really want to do, and lowering your savings by 1% a month will do it, then do that. If you stick to this budget for 3-4 months, and that feeling never goes away, gradually increase the money in your fun budget 1-2%, and then try that for a couple months to see how that feels. Because you are starting so young, it will be easier to establish good habits than it will be to break bad habits later on.

Hopefully you are in a job that you can see income increases in the future. If so, then can you discipline yourself to wait for that raise, and then up your savings by half of it, keeping the other half of it to spend as you please?

[autoxer]

Originally Posted by CoryWM

Now my question is, for the long time savers. Does it always feel like you're on a very fixed income?

Yes, it always feels like I'm on a fixed income, because I am on a fixed income. Even when I spent all of my money & ran up my credit cards, I was still on a fixed income. Now I save a large portion of my income & I run out of fun money & feel strapped for cash. It doesn't matter how much money I allot for fun money, I'll probably spend it all & be waiting for the next paycheck.

Originally Posted by CoryWM

I'm not sure of the effects of feeling like you don't have enough money will do over time. Like if I feel I'm strapped for cash all year, is my tax return gonna turn into a spending spree, since I feel I've been money deprived?

I save like a madman & have a couple spending binges each year. I would rather spend it in larger amounts, then spend it in little bits throughout the year. Earlier this year it was a vacation, and later this year it will probably be a new laptop. In between, I'll find less expensive ways to entertain myself, because those spending sprees are more satisfying to me.

Originally Posted by CoryWM

I know it's a way of thinking. I just need to get past, the feeling of being deprived, and feel enriched since I am enhancing my life in the future.

Start tracking your account balances to watch them grow. Then envision your own financial freedom (when you no longer need to work). Then you'll notice that everyone else is depriving themselves of financial freedom, just so they can buy more stuff.

[flatrock]

Unbudgeted life events will force you to spend your savings. You must always save to stay ahead of the game. Example last year we saved & had a nice Disney Vacation. Got back home from Disney in Mid July walked into the house and discovered it was about 92 degrees with the thermostat set at 74. Apparently a severe electrical strom had occurred while we were gone and a power surge has destroyed the compressor & other parts of the HVAC unit. No A/C in the hottest part of the year. In July you dont have much time to bargain shop this event cost $4800 and made a substantial dent in the savings emergency fund. Withour savings it would have went on a credit card which would have made a bad event much worse.

[CoryWM]

Awesome advice from everyone. I don't think I've limited myself too much yet. I just see it starting to get tighter. I was just hoping tht was a normal feel, and that I wasnt tryign to save too hard. Just like tryign to quit spending cold turkey you'd have a higher chance to fail. I get ambitious about the things I am interested in. Didn't wonna be tryign to forge ahead too fast.

Just alot of things are being added this next month, due to me being imployed for 90 days, and getting a new place to live.

So my expenses are going up by:
Health Insurance=97
Rent= 500(my Half)
Electricity=25(My Half)
Internet=20(my Half)
Basically 650 Dollars that I normally had for spending money is going towards bills.

My total bills now look like:
Health Insurance=97
Rent= 500(my Half)
Electricity=25(My Half)
Internet=20(my Half)
Cell Phone=45
Car Insurance=93
Car Payment=200
Food=160
Gas=80
Total=1220

Savings
EF=160
House=160
Investing=80
Total=400

1620 is the total that I have bugeted for sure. With my income varying from 2000-2200 after taxes. That still leaves me with some room to play.

I am considering putting my 401k plan at 20% that starts on the 1st of next month. Seeing if I can swing it. 400 dollars a month + 20% pretax income starting at the age 24, should do pretty well for me over the long run.

At the same time, I'm currently claiming 0 on my tax return, so they're keeping an average of 150+ out of each paycheck. Being single and living on my own, and making roughly 30-35k in a year I should get most of this back right? I am considering claiming 2. So that I get more money back each pay period, and if they don't take enough out, I can pay them using savings.

Does anyone know what the breakdown is for claiming 2? On claiming 0 I get about 83% of my pretax income.

Thanks
Cory

[Like2Plan]

Originally Posted by CoryWM

c

Does anyone know what the breakdown is for claiming 2? On claiming 0 I get about 83% of my pretax income.

Thanks
Cory

Cory,
Here is a link for you to help decide how much to withhold:
Link to IRS withholding calculator

[myself]

Don't forget that 20% going into your 401K pre-tax, will amount to you being on the middle to low end of the 15% bracket. Because you'll be taking out an extra $4,800/yr from your paycheck. You might want to see what difference you'd see if you took out x% up to your company match (if any), and then put the money into a Roth IRA.
But in any case you have to run the numbers yourself.

Congratulations on doing so well with planning this early in your life!

[Ima saver]

I think you are doing great. I would claim at least 1 dependent so that you aren't giving uncle sam an interest free loan every pay period.