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Why It’s a Good Idea to Moderate Everything

Even your savings!

I hope everyone enjoyed the Independence Day holiday last week. If you’re like me, you had your fair share of food, fireworks, and maybe a few adult beverages. I like to think I’ve done really well lately with a balance of healthy food and the occasional treat, but most of us will manage to over-indulge every now and then.

How many times have you heard the phrase “everything in moderation,” or some variation thereof? I’ve become a big believer in this approach, especially in this age of fad diets. The “no carb” diet, the “only eat fat” diet, paleo, you name it. I’m still convinced that nothing works better than the push-back approach: when you’re starting to get full, push back from the table. A good friend of ours has lost a ton of weight by eating what she wants, but only having half of the meal; the rest is saved for another meal. Her waistline and wallet thank her!

When we bring this concept back to money, many of us need to do a better job of moderating our spending. Clearly separating wants from needs, spending in accordance with our goals, and appreciating what we already have are all great ways to do this. Moderating our spending can also have a positive impact on the environment, by reducing the amount of waste entering our landfills.

Can you really save too much?

More recently, however, I’ve come across a couple of articles that make me wonder if it’s possible to SAVE too much. After reading them I realized that, yes, it is possible and, just like with eating, drinking, spending, or TV-watching, saving money also requires a balance. These articles refer more to spending in retirement, but there is still plenty to learn from this line of thinking for the years, or decades, leading up to retirement.

But, you ask, shouldn’t we strive to save every possible cent that we can? Yes, and no. After all, making wise choices with your money, and setting aside as much as you can, provides you with opportunity and freedom. But, at the same time, it doesn’t mean you should take it to such an extreme level that you feel as if you can’t enjoy some of the fruits of your labor now.

As you might expect, I watch our finances closely, and I must admit that there are plenty of times when I want to aggressively save more, mainly by minimizing or eliminating certain expenses. But, I’ve noticed that when I get this way, I have to intentionally stop myself from getting too anxious about not saving enough! Realizing that it’s okay to splurge on a nice dinner out, or a weekend trip that might cost a little more than we’d like to spend, every now and then helps to ease the anxiety by remembering that you have to live a little too.

Many studies have shown that elderly people wish they’d saved more money. But, these same studies also show that many of these same people don’t regret what they did, but rather what they DIDN’T do, during their younger years. And, let’s face it, life costs money.

Remember this framework

And that’s the beauty of the 50/20/30 budget (needs/financial goals/wants) that I wrote about before. I actually don’t like the term “budget,” so let’s call it a framework; it gives you some structure, but also allows for flexibility. After all, this post is about moderation, not complete rigidity! This framework lets you look back at the prior month, so you know how you did in relation to the target percentages. If your “buckets” are either above or below the target percentages, you can easily identify areas where you can make changes in the future to better align with the targets.

If you find that you’re devoting more than 20% of your take-home pay to your financial goals, allow yourself some slack to dial that back to the recommended 20% so you can spend a little more in the “wants” bucket. And you’ll be able to sleep at night, knowing that you are able to have some fun AND still be well-positioned for your savings and investment goals. How’s that for having your cake and eating it too?!

Balance is key to a happy and healthy life. If we don’t have it, we can feel stressed, out of control, or too restricted, which can lead us to over-correct or really go off the rails. Keep it in the middle of the road, don’t deprive yourself in extreme ways, and allow yourself some grace if you bend the rules every now and then.

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