What's the point of amassing wealth and living below your means?

[clatoden99]

What's the point in having a lot of money, if you live like you don't have it?

The money you amassed buy you time, but if you can't spend it because you are always micromanaging, wouldn't it be easier to work a little longer to actually be able to make something with a part of that money?

[ua_guy]

I don't think there's anything wrong with that, or that there needs to be a point. Some people would prefer to live a modest lifestyle, and their wealth keeps their options open and helps weather against instability. Who are we to question their motive?

The term "wealth" is also very relative...for most people with wealth, they understand that expensive lifestyles and everyday "things" can erode wealth very quickly, and they learned from once earning very average incomes that for the most part, nobody becomes or stays rich by spending money they don't need to.

[FrankFacts]

I think it's really a lot of personal choices here. For many people, myself included, I think wealth is a path to freedom. I simply don't want a lot of the "things" that money can buy. Instead, I'd like to be able to quit working a little earlier, and having money enables that. For other people who really desire a lot of "things," then maybe saving money isn't a worthwhile choice.

[Singuy]

I look at it as a phase and not something permanent. I most likely will not live like Warren Buffet because obviously Warren likes to make money for the sake of the game..I however want to actually enjoy life with my wealth.

Phase 1: Get out of debt(everything that charges interest including mortgage
Phase 2: Massively accumulate money and start earning passive income through investments/CDs/whatever
Phase 3: Figure out an end goal in order to live on passive income forever
Phase 4: Spend every dime of the passive income minus 2.5%(to combat inflation). This means if you are getting a 5% passive income, spend only 2.5% of it.

So, if my passive income is 200k/year..that will leave me with 100k to spend and 100k saved. Yes I will be buying stupid crap like Porsche convertibles. Perhaps I'll get one/year just because...

[dawnwes]

I will be honest. We like working. We are in careers we enjoy and our goal is not to retire early. We have actually both talked about working part time during our retirement, because we like it. Dh also likes golf, so he wants time for that......

I don't forsee us having loads of money socked away either. We will be very comfortable, we can afford to send our kids to college, and live in a fairly nice home. I LIKE coming home to something nice. My goal is not to buy the cheapest home and pay it off so we can sock away all of our income. It just isn't. We do work hard and we would like to enjoy some luxuries.

However, I still feel we live below our means. Our home cost was $340K when we bought it. We put down $120K. The bank told us we could buy a $700K home. I told them I liked to eat.

So, to me, it is about balance. Living below my means, but not so far below that I can't enjoy life. Having some luxuries that are budgeted, and not going in to debt.

Dawn

ETA: However, we will not HAVE to work beyond retirement. We have both been paying into retirement since the age of 22.

[disneysteve]

The point of saving money and living below our means is so that we don't have to work until we die. I want to be able to retire some day and have years to enjoy a life of leisure, living off of the money we amassed during our working years. I see far too many people who spend every penny they make and more and are stuck working forever. No thanks.

[amarowsky]

I enjoy staying busy. It's satisfying. Live below my means and save to retire as soon as possible. Then take a job that is more rewarding to those around me. Maybe join my brother in researching for a university. That way I'll have my finances covered, and the extra income from working part time will satisfy my family and i's needs should the market fluctuate. Spare time will be spent on hobbies, keeping up close relationships, and travel. <31 years to go.

[feh]

What's the point in having a lot of money, if you live like you don't have it?

The money you amassed buy you time, but if you can't spend it because you are always micromanaging, wouldn't it be easier to work a little longer to actually be able to make something with a part of that money?

If you can live a decent lifestyle without working, I'd argue you are living like you have a lot of money. There's a difference between being financially independent and living ostentatiously.

[FLA]

my plan was to retire comfortably at 55 and have enough money left at the end to leave my kids a decent amount. I don't need or want a lot of material things. My situation changed so having lived frugally only helped matters.

[Fishindude77]

My thinking is that you need to amass enough to retire when you want to and live the lifestyle you want, off whatever pension of social security income you get plus the interest and other streams of income that your money generates, without getting into the principle.

You try not to get into the principle, because you don't know how long you are going to need income for. If we knew how long we were going to live, this planning would be a whole lot easier.

My dad is 85 and doing well. He has shared many stories of friends and acquaintances that retired too early, didn't manage their money well, or spent beyond their means in retirement. Next thing these folks are reverse mortgaging their homes, moving in with kids, etc. and pretty much in the poor house.

[ua_guy]

^^^ That's a very good point about independence. That's something that my parents talk about a lot. They are fiercely independent, and have always said they never want to be a burden on their children, and they will do whatever they can to have money to pay for their care when they get old so we don't have to. It's such a blessing to have parents who have planned...I'm at that age where I have friends with parents who are older and are starting to suffer major health issues, and the families are just in ruin trying to get through it all.

[LivingAlmostLarge]

It all depends. I think we live like we have money and enjoy it. But we also save and try to live responsible. I don't believe in deprivation. I think saving is just another line item in the budget. As income goes up so does saving, but SO does SPENDING! I'm not the type to take the entire raise and save it. Rather I save the same percentage or up it if I see needed and we enjoy the rest.

Living below our means gives us the flexibility to always make choices about how we spend our money. I don't like the idea of always being on the hook to work because we have to work. Working for fun and having the ability to take a job my DH chooses is key. We did that now, in our 30s we moved from a place we didn't like to a place we did. We did so because we've lived below our means for a long time. That allowed us to save and at the same time minimize the need for income because we never upgraded our lifestyle. It also makes my DH picking a new career possible and he can take his time to find a job he likes because of our flexibility.

[Permanent Temp]

What's the point in having a lot of money, if you live like you don't have it?

The money you amassed buy you time, but if you can't spend it because you are always micromanaging, wouldn't it be easier to work a little longer to actually be able to make something with a part of that money?

I'm not sure how you handle things or what you have gotten the idea what living below your means equals micromanaging, or not being able to spend money.

I live below my means or try to it has gotten out of wack lately. Living below my means is amazing though when I do manage it. If I want or need something a little pricey I save up for it and pay it in full so that I can enjoy it without interest.

Back when I had an emergency fund it was amazing to me that I could take cash out to cover something like a root canal, etc, instead of having to put it on the credit card and figure it out later.

I am now almost in a paycheck to paycheck situation again and it sucks. But I had a huge change in my life. We bought a house and the job I got pays me less than my last temp gig when things were really good and I had a 10K emergency fund that was run out in my time between jobs.

I dont think of living below my means as depriving myself. I think of it as making good use of my funds. Why covet over pricey things? And if I want something like that really bad then I can just save to pay for it. In my mind it's better to have a buffer and living with that piece of mind, instead of paying for nice things with your cash knowing your one disaster from losing them all.

[snafu]

OP, I hope you have a terrific crystal ball that views your future accurately. What will you be doing in 35 years, say 2050? What do you anticipate as New Worth?

We've enjoyed living below our means. We have what we need and like. We don't have much excess stuff to look after and I'm trying more consistently than in the past to sell, repurpose, donate or recycle the items we no longer use, enjoy or serve us in advance of buying something else.

It's a mixed bag and I admit to struggling with the process.

[TheCudder]

I think it all comes down to finding a good balance. I personally don't pinch pennies, but I do keep track of my spending and stash plenty away without feeling like I'm not living. Fact is, I feel that you tend to be able to enjoy certain things more at a younger age than you will post-retirement --- for example vacations, there's nothing more depressing than seeing old and barely able couples vacationing and they really can't do much aside from enjoying the views & eating.

So yeah, everyone has to find their own balance when it comes to finances and enjoying your life now and without jeopardizing your future.