Addicted to Saving Money

[Geoffrey]

I found this article thought provoking:

http://articles.moneycentral.msn.com/Investing/StockInvestingTrading/secret-millionaires-addicted-to-saving.aspx?page=all

The central premise is that many "savers" do so as a way of dealing with their anxiety/insecurity over possibility of one day running out of money. The author suggests that you might fall into this category if you:

> save more than 20% of your earned income each year
> spend and give away less than 3% of your total net worth each year
> increase your net worth by more than 5% from year to year

As for myself: guilty, guilty, guilty.

Continuing, the author suggests,

"Savers also experience a rush of good feelings -- happiness, relief or optimism -- right after they make a bank deposit, reduce their spending or make a long-term investment. This is often when they feel most vital and most pleased with themselves and are most able to relax and enjoy the other aspects of their lives.
. . .
But for Saver types, there's still a downside --- because this financially derived happiness is only temporary. The part of our mind that can never have enough soon realizes that survival is still far from ensured, and it wants another pleasurable experience -- more security, more abundance, more happiness -- so it looks for a way to save even more."

I must admit that I sometimes struggle with the question of whether I am simply frugal, or whether I am a compulsive saver. Any other addicts out there? Any thoughts/comments?

 

[NW-Bound]

For the individual as well as society, compulsive saving is WAY better than compulsive spending, This country already has too much of the latter. And I think the numbers of 20%, 3%, and 5% used in the quoted criteria are a bit low.

And by the way, do not worry too much about it. This condition is reversible, as I found out about myself.

 

[FIREd]

Guilty as charged. I get a rush when I make a deposit to my Vanguard account (like I did today). Go ahead, take me away to rehab. Better be a cheap establishment though, because I don't want to spend my savings on this... Nah, it's a good kind of addiction. It doesn't hurt anyone, doesn't destroy families, and makes me happy so I will let the "disease" run its course.

FIREdreamer, an unapologetic saver...

 

[bbbamI]

I don't think I've ever been addicted to saving money. I have to admit I used to be obsessed about how much money I would need in my retirement years and how I should invest it. Once I educated myself and changed some of my investment directions, I found myself checking my numbers too often and I would second-guess myself.

I finally learned that I should relax a bit, update my spreadsheet once per month and step away from it. Have I made all the right decisions? Probably not...but I feel confident that I have done the best I can.

I want to enjoy each day.....

 

[chinaco]

Funny way to spin it.... if you save you are an addict.

I suppose you need to be the Goldilocks saver not too much and not too little.

Where is the emoticon flying the finger when you need it?

 

[riskadverse]

I've always been better at saving than investing. This has served me well in accumulating enough to retire, but as the government increases it's inflation rate of the currency, I fear I'll ultimately end up a multi-millionaire who can't even live a modest lifestyle.

 

[slimm]

Family members and close friends have a tendency to get quite cross with me regarding my frugality - "You won't spend any money" , when shopping with the girls, is a common refrain OR "When are you going to buy a new truck"? Last year, after attending my SIL's b'day party, I was pulled over by local police, at the end of my bro's driveway. Apparently my vehicle looked suspicious in that part of town....oooh, I was angry. My truck is a 1999 Pickup that is well maintained and looks just fine....when not covered in ranch dust. The long circular driveway, I had just pulled out of, was lined with Escalades , BMWs, Lexus' and gosh knows what else...
I seriously doubt that a single vehicle was paid for. My bro still teases me about that episode!
When friends call to complain about the pressures or hassles of work - I hate my boss, or the new head of the department is such a pain in the rear....I think to myself, get a clue people!
Anyway, being mindful of money - not miserly - is the ultimate in freedom, as is having choices. Watching my nest egg continue to grow is a source of satisfaction for me - and I certainly don't feel deprived!
As an aside, when I first retired at 42, I was obsessed with the markets, and continually checked & rechecked my accounts on a daily basis. I had to learn to relax and just go with the flow....the anxiety was spiritually and emotionally depleting!

 

[CheapSinceBirth]

Yes I'm in the same category, I meet all those criteria and more. I have a very hard time buying anything in a retail store other than groceries. I especially have a hard time during the holiday season buying gifts unless they are perfect for the person. I hate buying gifts just to have a gift especially those that might not be used or needed. This year I have resorted to giving cash which my family does not approve. I also don't like the thought of others using their hard earned money buying me gifts. I guess it is guilt. I have a tremedously hard time spending money on those retail cards that others have given me. I have drawer full of them - is that weird or what.

I do get a "high" when I find perfect purchases for myself or others from craigslist or ebay at a real deal. But it takes a lot of time to search and find perfect items that way. This is about the only time I don't feel buyers remorse.

Do you think I need therapy? My family sure thinks I do.

 

[David1961]

Interesting way to look at it. At what point do personal values become an addiction? So are people who attend church every week addicted to religion? Are people who exercise regularly addicted to exercising? Are people who work addicted to work? I'd rather be a compulsive saver than a compulsive spender.

And thanks to the stock market, my net worth has NOT increased by 5% in the past last year, so I'm OK, I guess.

 

[jimnjana]

I think I will always be a saver but for now it is in remission... Up until about two years ago when I was preparing to leave Active Duty, I fit the description to a T. Wanting to get some projects etc out of the way while I was still working, focus shifted slowly from saving to spending, don't know if it was a twelve step process or not. Now I only think about what I could be saving, rather than actually doing it.

Jim

 

[Gardnr]

I also fit this description. And it's obviously better than the opposite side of the spectrum. Taken to an even greater extreme the obsession can be debilitating and detrimental. We've all heard of extreme misers who die with millions while living a very a bleak and meager lifestyle. That's no way to live.

But the criteria they laid out in the story don't constitute that kind of extreme obsession. But since it's so far from the norm in this society it's considered quite strange and quite frankly unacceptable. I think some people are actually threatened by it because they know they should be better about saving and not spending so wastefully. They don't want to be challenged and they don't want the societal norms to change.

 

[tightasadrum]

According to Webster, addiction is, " compulsive need for and use of a habit-forming substance (as heroin, nicotine, or alcohol) characterized by tolerance and by well-defined physiological symptoms upon withdrawal ; broadly : persistent compulsive use of a substance known by the user to be harmful." I don't think the emotional need to not spend money qualifies. That doesn't mean it can't be a problem; just ask my wife. Even my brother thinks I'm the worst cheap scape he knows. I prefer the word frugal. The key is to marry a person that compliments your strengths and weaknesses. Then, as a couple, you can average out as pretty normally.

 

[MasterBlaster]

I question the authors premise that feeling good about saving money is a bad thing. In my opinion any damn fool can rush out and blow their paycheck. It takes a certain level of maturity to be a saver and not a spender. The word the author needs to use is miser not savings addiction. That is the traditional negative spin on savers.

This gets back to the bigger question of ... How much is enough ?. And can you ever have enough ? and should I work and save for 1 more year to have more later ?

These issues are studied by academics and are sometimes called optimal lifetime spending/saving plans or lifetime consumption planning or something similar.

There is no right answer to the "now or later" issue of consumption.

 

[W2R]

Sounds like it was written by a credit card company!

Yes, many of us do all of these things because without them, we might never be able to retire. (Breaking news: pensions are failing right and left, and SS was never meant as sole support. )

It's sad when planning intelligently and saving for the future according to such a plan is regarded as pathological.

 

[Nords]

> spend and give away less than 3% of your total net worth each year

I think these guys need to become acquainted with the concept of the SWR, especially if they're paying 1% or more to a financial advisor.

Or maybe they're saying that expenses & charity combined are less than 3%.

But I find it much more difficult to effectively give away any of my net worth than it is to spend it, save it, or compound it.

> increase your net worth by more than 5% from year to year

They seem to think this happens only by saving and is unaffected by investing. But I guess that's correct for 2008.

 

[FANOFJESUS]

The central premise is that many "savers" do so as a way of dealing with their anxiety/insecurity over possibility of one day running out of money. The author suggests that you might fall into this category if you:

> save more than 20% of your earned income each year
> spend and give away less than 3% of your total net worth each year
> increase your net worth by more than 5% from year to year

As for myself: guilty, guilty, guilty.

But I am also YouTube - Loverboy - Lovin' Every Minute Of It

 

[freebird5825]

The central premise is that many "savers" do so as a way of dealing with their anxiety/insecurity over possibility of one day running out of money.
i will admit to major anxiety about being flat broke in the early years (20s) because i was!
> save more than 20% of your earned income each year
nope, saved between 5-19% while in career. just under the wire.
> spend and give away less than 3% of your total net worth each year
nope, i give my time in volunteering and some medium cash contributions. i was more cash generous pre-FIRE. i mostly give away things that i am no longer using. that keeps perfectly good stuff out of the landfills!
> increase your net worth by more than 5% from year to year
i wish! i'll let ya know next year.

 

[tuixiu]

That 5% figure makes no sense, especially for younger people since net worth increases are non-linear given growth of net worth over time compared to income.

If I'm 25 years old and have a net worth of 20k I'm probably not doing that bad given new career, student loans, starting out accumulating stuff, etc. Assuming I increase that by 5% for 40 years I've got $140k at age 65, surely not where most would want to be.

Taking 3% inflation into account I've got the equiv of $44k after my four decades of work.

Like most absolute numbers applied to a diverse field (like oft-criticized net worth calculator in MillNextDoor) it makes sense for some but not most.

 

[bow-tie]

By that definition, I guess I could be considered addicted. But my shiddy job constantly reminds me of why I'm savinig so much..............

 

[tmm99]

I am a saver by his definition (well except for this year for
> increase your net worth by more than 5% from year to year
The market took my net worth down a bit despite my 30+% saving rate.)
but

"Savers also experience a rush of good feelings -- happiness, relief or optimism -- right after they make a bank deposit, reduce their spending or make a long-term investment. This is often when they feel most vital and most pleased with themselves and are most able to relax and enjoy the other aspects of their lives.

That doesn't describe me. Making deposit is just a routine thing with not much emotion involved. (I am actually not even paying attention since it happens automatically.) I do get a rush of good feelings though when I go into a retirement calculator and see the result with newly saved money.

I wouldn't consider myself a saving addict by any definition. I am the one who is controlling it, not the other way around. I would gladly stop saving if someone gave me a million dollars or something.

tmm

 

[FUEGO]

I know I'm not addicted to savings, even though I fit all three criteria listed in the article. I view money as instrumentally valuable. It buys me and my family things, experiences, and security. Through diligent saving and investing, I plan to (eventually) have enough funds to live the remainder of my life as I see fit and do whatever I want. If that makes me addicted to something, then I guess I'll have to accept that nomenclature.

I would rather be a savings addict who is free from the requirement to work for a living at a relatively young age than someone who is 65 and still chained to a desk and working to put food on the table.

As with anything, moderation is the key. There is no reason to unduly sacrifice quality of life today in exchange for some golden ideal that early retirement holds. At the same time, it is not good to squander your wealth today on things that bring little enhancement to quality of life, when that money can grow significantly over the years and provide a better future quality of life for you.

 

[Khan]

I found this article thought provoking:

http://articles.moneycentral.msn.com/Investing/StockInvestingTrading/secret-millionaires-addicted-to-saving.aspx?page=all

The central premise is that many "savers" do so as a way of dealing with their anxiety/insecurity over possibility of one day running out of money. The author suggests that you might fall into this category if you:

> save more than 20% of your earned income each year
> spend and give away less than 3% of your total net worth each year
> increase your net worth by more than 5% from year to year

As for myself: guilty, guilty, guilty.

Continuing, the author suggests,

"Savers also experience a rush of good feelings -- happiness, relief or optimism -- right after they make a bank deposit, reduce their spending or make a long-term investment. This is often when they feel most vital and most pleased with themselves and are most able to relax and enjoy the other aspects of their lives.
. . .
But for Saver types, there's still a downside --- because this financially derived happiness is only temporary. The part of our mind that can never have enough soon realizes that survival is still far from ensured, and it wants another pleasurable experience -- more security, more abundance, more happiness -- so it looks for a way to save even more."

I must admit that I sometimes struggle with the question of whether I am simply frugal, or whether I am a compulsive saver. Any other addicts out there? Any thoughts/comments?

The last three or so years I was employed, I was saving around 50%.
I'm still saving, but it is less compulsive. I have to get past the idea that not saving is a moral failure; as long as income exceeds outgo by a few dollars, everything is copacetic.

 

[ziggy29]

Between savings and investments, we'll probably be putting 1/3 of after-tax income away. Hasn't stopped our net worth from dropping nearly 25% this year....

 

[Walt34]

I suppose we're guilty as well. Foolish us, living within our means and believing that things don't always go according to plan!

At one point we were saving 45% of our income to tax-deferred accounts because we were getting killed on taxes and we didn't want a 2nd home, RV, boat with a galley, etc. We had everything we needed and most of what we wanted, so why spend more? I drove the same pickup truck for 18 years because, well, the thing just wouldn't die.

 

[BunsGettingFirm]

If nothing else, this type of person can always find a job as a controller or CFO.