Keeping this up, one could theoretically retire with 16 years of working according to this calculator. It also shows americans saving the least https://networthify.com/calculator/earlyretirement
I saved a fair bit before kids. Then me and my partner made the decision that we wanted one of us at home to bring up the kids, and not have them raised by daycare workers. So now we have one income, and more expenses than before. I'm reasonably well paid, drive older small cars, don't have any particularly expensive hobbies or holidays. I still save, and contribute to a private pension, but the idea of saving 50% of my income is unachievable.
Now that's fine if you don't want kids, but I often think these lifestyle philosophies promote themselves as fantastic and obvious, and why doesn't everyone do it. But forget to balance them with the hidden sacrifices you have to make that they never seem to mention.
What sacrifices are you making to get to 50% savings?
Main differences in lifestyle are I don't buy shit (I don't even shop online at all most of the time so no temptation, when I consider buying an item I ask myself "do i really need this" and most often find that I don't, I try to get most items from nearby businesses, I don't subscribe to stuff may it be paying services or even newsletters, hell I even found half of my furniture on the streets or second hand), I cook like 90% of my meals (takeaway is an extra 2-3 times per month average, I bring my food to work, I try to do as much as possible from scrap), I don't spend as much time/money in bars or other social activities as them, and I don't take trips across the globe (I am lucky enough to have enough family-owned places to spend my vacations at, I also avoid flying far for ecological reasons).
I'd say I don't sacrifice much. I spent a month income on vacation this summer, went skiing in the alps this winter. I have hobbies I enjoy where I don't cheap out on gear or experiences.
I'm privileged to have an income that enables this. But still I'm baffled on how my peers with the same income use all their money. And I don't really see how they are able to spend most of their money, and how they benefit from it compared to me. For comparison, my salary is about $70K in Norway.
IF I'd felt I now sacrifices something of importance, it still would be worth it. I can take years off and do what I want, switch to a lower paying job with higher QoL etc, retire early or other things, while those not making the same "sacrifices" will have to work.
Probably on down payment on things they couldn't afford to buy by cash. Or there are plenty of hobbies that are very expensive.
"Warren Buffett lives in a modest house that's worth 0.001% of his total wealth".
Haha. Not very practical for most people. If you take "total wealth" to be assets - debts, my house is worth about 400% of my total wealth.
Both cars required a replacement battery within a year of buying, as well as new stereo wires for the Saxo which I had to acquire from a Peugeot 106 in a scrapyard and various bulbs for the Astra. These problems are less about age but more about previous owners and myself.
I can't wait until I can afford a newer car, something closer to 5-10 years old instead of 15-20, because I won't be praying that my car will pull off every time I haven't used it for 3 days.
That's what I was looking for. That being true, all the rest is indeed a matter of choice and not a matter of sacrifice.
The amount I live on has slowly gone up since I started working. It's just that when I get a raise or promotion or new job, I don't spend the new cash flow, I save it.
A couple years from now I'll probably be living on 30% of my take-home, but the amount I spend every month will probably have gone up slightly.
The question you should be asking is how much do you sacrifice by not saving?
I could get fired tomorrow and my bills would still all be paid for years. When I retire it's going to be in a big house with kids and grandkids that have their college paid for. I can retire at 45 if I really want to. Knowing all that is incredibly comforting and peaceful.
Just the feeling is worth it. I used to spend my entire paycheck on bills and put the next month's spending on a credit card. My net worth was negative. That way sucks. This way is better.
People probably thought I had more money before because of all the useless flashy crap I bought. Fuck those people, I'm doing way better than all of them now and I know it.
I used to drive a really nice car thinking it made me seem important or something. Now I know only idiots are fooled by that trick, and to everyone else the car just made me look broke and stupid.
Unless the person has a very high salary, the sacrifice is that they don't have kids.
All jokes aside, tbh I doubt that people start living frugal on half an income and then go on living paycheck to paycheck because of kids.
Because living frugal often means questioning your decisions and I doubt the motivation for parenthood withstands this easily, and also because I guess one can be frugal in a familial setting too, if you have a partner who shares your interest.
All the kids I see have way much more shit than their attention span could ever care for, parents want gardens even though it's expensive and unnecessary, buy new when they outgrow everything so fast anyways... They don't need all this stuff, exactly like we don't need most of it.
When it comes to my hobbies, I don't sacrifice anything, but I naturally like to do things that are inexpensive or for free like excercising and spending time outdoors, reading, watching movies... My most expensive hobby is probably indoor rock-climbing, which I don't do that often sadly, and the subscription to the martial arts club that I train at weekly. I just spent almost 500€ to attend PyCon this year, and nearly three times that much for my yearly holiday.
For me it's not even a concious act of saving, I just naturally live this way and don't need much. I don't like owning too many things, they feel like a burden. The money keeps accumulating (I saved 30K€ the last two years, living as described above), and I honestly don't know what to do with it or how to use it wisely in regards of the future... Real estate seems like a good investment, but comes with its own problems.
My question is how do you typically invest your savings? Do you invest it into stocks, or something like Lending Club?
Failing that, 5.56mm rounds and canned goods.
I hope by this you mean "Rewards come from hard work and delayed gratification" rather than "take from the rich, give to the poor".