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Money management can be stressful, especially if you’ve been trying to create a financial plan without the help of a professional. With so many future life events to consider—getting married, starting a family, buying a home, paying off your student loans, traveling, retiring, and more—sometimes it can feel like you basically need to save every penny for your future. nothing is left over for the present.
Spending money is practically unavoidable. And while there are many thoughts about how much you should have saved at each age, the race to accumulate wealth can make it hard to focus on the here and now. That’s why it’s important to have some financial flexibility.
Having financial flexibility doesn’t mean letting go of the reins and losing caution when it comes to your money. It means striking a healthy balance between planning for the present and the future, explains Ashley Russo, a financial advisor at Northwestern Mutual.
“You give yourself the freedom to enjoy life today without taking away your future self,” she says.
Is there such a thing as being too strict with money?
Your future goals and current lifestyle can play a big role in how much money you have available to set aside for your dreams as you live life in the present. Someone who pays rent and student loans may have much less discretionary income compared to someone who has no debt, no children, and lives with their parents.
And as life progresses, both your income and expenses can increase. You may have to care for your own family, realize you need to move from an apartment to a house, care for an elderly parent, and more. There are so many life events that can change the way you’ve been planning, and sometimes it’s hard to pay for it all and still save for your own future.
So when it comes to how strict you should be with your money, the answer is: it depends on your goals.
Not everyone has to be as adamant about their savings as the popular media (influencers, billionaires, financial websites) insist they should be. It all depends on your goals and the time you have to achieve them.
If you’re 25 and want a modest retirement at 65, you’ll be able to get away with saving less each month compared to someone who is 35 and wants to retire early or travel the world.
“There are some people who want to retire early. If that’s really your priority, then you’re going to have to save more aggressively compared to people who gave themselves a longer runway because they want to retire at 60 or 65,” says Russo. “It all comes down to what your true desires are.”
Not understanding what you really want from your life could lead to undersaving or oversaving, that is, not having enough money or having too much money. But even having too much money doesn’t necessarily mean you’re more satisfied with life if you missed important occasions and decided to say no to cherished events to save or win. Extra money.
“We saw it in the pandemic,” says Russo. “Even though some people had extra money, it didn’t make them happier. There has to be a balance between having money, saving money and spending money.”
As humans, we want to have experiences with our money, he explains. Therefore, we need a balance between earning, saving and enjoying how we spend our income. But some people tend to put too much weight on one aspect over others.
At the height of the Covid-19 pandemic, many people began to limit their way of life due to financial uncertainty. Some people were afraid that their assets would be reduced and others were worried about being laid off and not having any income to support themselves and their families. Others realized it was time to make serious changes to their money management habits.
“There are some people who still aren’t living life the way they should because they haven’t finished [the pandemic]says Brett Gersack, Senior Wealth Advisor at Halbert Hargrove.
How do you practice financial flexibility?
When it comes to figuring out how to strike that balance between spending money now and saving for the future, you need to make a plan for how you want to use your money—aka a budget.
“It all starts with the budget,” explains Russo. “It’s very hard to know where you’re going if you don’t know where you are. With a budget, you’ll know how much you need for expenses, how much you can afford to save, and how much you have for other goals, like taking a trip or buying a house.”
With a budget, you need to take into account the things that really matter to you, like traveling, dining out, and celebrating birthdays. There are many platforms out there that can help you get started with budgeting seamlessly, but the Mint app lets you connect your bank accounts, investment accounts, bills, and credit cards so you can keep track of everything in one convenient place. It will analyze your spending to help you create a visual breakdown of where your money is going. Plus, it can help you keep an eye on your net worth.
Honesty is the most important policy when it comes to budgeting. Overspending in a certain category can certainly be stressful. But if you notice a consistent pattern of spending more than you’ve allowed for the same expenses, it could be a sign that you need to budget more to cover those costs.
Practicing mindful spending can also help you create a financial plan that strikes a balance between living your life now and saving for the future. Conscious spending means you’re buying the products or participating in experiences you really like while cutting costs on things you don’t really care about.
By cutting back on these expenses, you’re freeing up cash that you can redirect toward savings or other activities you enjoy. So maybe you love going to concerts, but you don’t really watch TV; You can create a plan that allows you to stop paying for your streaming services so you can use that money to buy concert tickets and increase your retirement contributions.
Information about Mint has been independently collected by Select and has not been reviewed or provided by Mint prior to publication.
Shows income, expenses, savings goals, credit score, investments, net worth
Categorize your expenses
Yes, but users can modify
Links to accounts
Yes, bank and credit cards.
Offered on both the App Store (for iOS) and Google Play (for Android)
Verisign scanning, multi-factor authentication and Touch ID mobile access
Preparing for a financially secure future can be stressful, especially when you feel pressured to spend money every time something comes up. But managing your money with financial flexibility in mind can take some of that stress away. By gaining clarity on what’s important to you, you can create a plan for how you’ll spend it while still saving for the future.
Editorial note: Any opinions, analyses, reviews, or recommendations expressed in this article are solely those of Select’s editorial staff and have not been reviewed, approved, or otherwise endorsed by any third party.