42 percent of Americans have less than 10 thousand dollars saved for retirement. Yet according to a new study, they spend an average of $143,280 bucks so over $143,000 over 60 years simply treating themselves. Now according to the study, the average American spends almost $200 a month on non-essentials.
These are material items that they don’t really need. Treats, maybe luxury experiences, which is fine.
Mhm But, the study basically didn’t align with people saving for retirement, so it was maybe spending a little too much on self care things and maybe not putting enough into retirement.
Well you have to splurge sometimes. Well, I think that’s the idea, that you do need to splurge sometimes, but according to the study, under 25, people under the age of 25, were using 1/3 of their income on these luxury items.
I think this is where we all agree, is you can actually treat yourself, but also balance it with saving for the future, and here with some tips on how to do just that is financial expert New York Times bestselling author of “Rich Bitch” a simple 12-step Whoa I love that On getting your financial life together.
Finally, Nicole Lapin. (Sonia Batra) Thank you. (audience clapping) So, Nicole, I know you have some great principles and tricks about when to splurge and when not to, so can you share? Yeah, so don’t think of just not splurging cold turkey, it’s unrealistic. Think of a financial diet a lot like you’d think about a regular diet, right?
If you allow yourself small indulgences, you won’t end up binging later on.
So you have to allow yourself an equivalent of a financial hershey’s kiss so you don’t end up in the middle of the night gnoshing on a big ol’ hunk of chocolate cake because you’re so hungry and so deprived. Think of a spending plan in the same way you would think about an eating plan, something that is sustainable.
So, I break down your spending plan into the three E’s. I love alliteration, so essentials, end game, and extras. The essentials should account for about 70% of what you’re spending every month, so your housing, your transportation, your food.
And then 15% should go to the future you, so the retirement, the savings, whatever you’re saving up for. And then no more than 15% should go to the extras. So whatever does it for you, I am not going to tell you how to have fun, if you want your morning latte I am probably the only financial expert that’s going to say buy your morning latte.
Like just do it, do the mani-pedi, the yoga class whatever does it for you, because if you’re not treating yourself, you’re not stoked about staying on track, and that’s really what’s going to keep you going. So as long as it’s less than 15%, or within that 15% guideline, you’d say whatever is your splurge, it’s probably just ok. Yeah, travel, whatever you want. You had also a principle of, kind of weighing out your per use fee, and whether or not a splurge is worth it, can you explain?
Yeah, so the study explains that a lot of people are guilty about buying something material. I get it, experiential things are way more in these days. I am all about having that great experience for yourself. But think about that material splurge as a cost per use.
So, if you’re buying a blazer and it’s 200 bucks, but you’re going to wear it twice a week.
Factor in, of course, alterations and dry cleaning and all that, that‘s probably 2 bucks a wear. If it’s a ball gown, that might be like $500 a wear, and that’s maybe not worth it. But investing in yourself is probably one of the best investments that you can make. We often think in our careers, I’ll be happy when I get there, or I will be happy when I make X amount of money, but that equation is wrong. The happier you are, the more successful you are.
So, oftentimes spending a little bit more on yourself will make you more in the long run.
I think, Nicole, you need to award yourself occasionally, so you don’t feel bad about taking that vacation, I mean within reason, make sure it is a vacation that does fit your budget. Likewise, don’t feel guilty if you have that special night out or special dinner, a nice bottle of wine Absolutely and also If you did that every night, it would get boring It would be, it wouldn’t be special, and the thing I would add to that, that I’ve given a lot of thought to, to our explain called The Drs, is if you’re spending money on your health and maybe you’ve budgeted a certain amount of money for food, and instead of buying the $200 shirt you may wear one time, if you spend a little bit more money on food that’s going to help you be healthier and help you be happier, because that’s the one place I will say a lot of people, they’ll go, “Oh I never buy good things that are healthy for me. I think splurging on a massage, that could be okay right? (Nicole Lapin) I’m in! With your latte?
Or like if you need the help of, maybe a trainer or an exercise class, things that maybe splurges on your health and well-being. (Andrew Ordon) I think is money well-spent.
Yeah and, I always say on this explain, think about purchases like if you’re going to buy a mattress, and you spend $50 more and you’re going to sleep better for 8 hours a night, a third of your life, probably worth the 50 bucks. I love your perspective on this. Thank you, your time is money, I mean spend everything wisely especially your time. (audience applauding) Now, the book is called Rich Bitch right? Are men allowed to read it?
Thanks so much. Thank you.