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The 10 Year Savings Strategy: Saving money after you’ve already handled the basics

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What do you do when you’re already saving, investing, and automating your money? What’s the next step?

The 10 Year Savings Strategy at

What to do after you’ve handled the basics. Use the 10 Year Savings Strategy to leave your friends in the dust.

I get this question a lot. “I’ve already set up my automatic infrastructure and I’m investing money every month. My 401(k) is maxed out and I have sub-savings accounts set up. What else should I be doing?”

So you’ve already handled the basics of personal finance: automation, negotiation, using my Scrooge Strategy advanced tactics, and you’re earning more. Maybe you have $10k in your account and you’re wondering what you should be doing next.

There’s always more to do. But be clear: Lots of people expect that after you handle the basics, you beat the next Mario level and get access to “secret” personal-finance investments.

While many people want “secret” alternative investments — despite all evidence pointing out that they don’t beat the market for individual investors — the truth is much more prosaic. It’s not sexy, but it will make you rich. Today, if you’re already handling your finances and are looking for the next step to get ahead, I’ll show you how to use the 10 Year Savings Strategy to leave your friends in the dust.

Step 1: Admit you’re like everyone else

If you’re already handling your money, you make more than you spend each month, and you’ve even implemented a Conscious Spending Plan and investment (as described in my personal finance book), this is for you.

The 10 Year Strategy involves asking people ten years older than you what they wish they’d saved for, and starting to save for that.

Sounds obvious, but it requires admitting that despite your superior financial abilities, you’re still going to have the same expenses as everyone else. Young people love to pretend we’re going to millionaires, work from the beach, and somehow magically make money and have low expenses all our life.

Here is what will happen to you as you get older:

  1. Yes, you WILL have a nice and very expensive wedding (even if you’re a hypocrite and think you’ll have a “small, beautiful” wedding)
  2. Yes, you WILL have kids and want to buy them nice stuff
  3. Yes, you will need things like family health insurance and life insurance and homeowners’ insurance and family vacations and other things that you can’t predict right now because you’re not in that life situation

How The 10-Year Savings Strategy works

From my book:

The Ten Year Savings Plan (216)

If you’re in your 20s and you ask someone in their 30s what they wish they’d saved for, they’ll say things you’d have NEVER thought about:

  • Diapers
  • Homeowner’s insurance, health insurance, life insurance
  • Family vacations

I want to show you how much this will affect you, so yesterday I put out a quick survey to people in their 20s, 30s, and 40s. I got over 2,000 responses, and the results are fascinating.

What people wish they’d saved for in their 20s, 30s, and 40s

Savings Wishes in 20s, 30s, And 40s

No, I didn’t run fancy statistics on the responses.

Really fascinating data in there.

People in their 20s wish they’d saved more for travel, in their 30s it starts switching to retirement, and by their 40s, people are predominantly concerned with retirement. When we’re younger, we save for ourselves, and as we get older, we increasingly care about saving for our family. These trends are similar for nearly everyone.

As I wrote in my book, “…ask your parents what they worry about most. I’ll bet you their answer is, simply, ‘money.'”

So you’re making more than you spend, possibly maxing out your investment accounts, and this sounds reasonable. So why don’t people do this? Let’s take a quick detour down whiner’s lane to see why most people don’t take the simple step of implementing the 10-Year Savings Strategy.

Why they don’t do it #1: “I hate the President / bailout / taxes”

I recently did an online web chat with over 600 people from a newspaper site. I was walking them through some of my Save $1,000 in 30 Days tips, and yet many of them wanted to complain about taxes, bailouts, furloughs, and the government. As you know, I have little patience for people who debate minutiae and get nothing done. For every single complainer, have they ever read one good personal finance book? Have they maxed out their accounts or, if they don’t have enough money, earned money on the side?

Of course not. Because it’s easier to complain and to point fingers than to do anything about your money.

Here’s a common exchange I have with complainers:

  • Complainer: “Hard to save when the governor is taking 50% in taxes and wasting it!!!!!!!”
  • Seemingly calm yet-about-to-explode Ramit: “Yeah, that really sucks…so what do you suggest?”
  • Complainer: “Who knows. But this state is headed for DOOM!!!!!!!!”

Others complain that they simply don’t have enough money to save significant amounts of money. “If that’s true,” I tell them, “then you simply need to earn more money.” They don’t like to hear that. Often the responses are:

  • “Craigslist is only paying $10/hour” (So? You have to start somewhere. Or you can develop your skills to get a higher-paying job. Or network. Just get off your ass! Note that my readers have earned thousands and thousands of dollars following my strategies to earn more.)
  • “Easy for u to say but u dont have kids” (True. I wish it were easier, but it’s called “work” for a reason)
  • “I’m too exhausted after work and kids to get a part-time job” (That’s your choice, but if you make no changes to your work situation, why do you expect your finances to change?)

Complaining is fun for about 10 seconds. Then you realize that these same people will be complaining for the next three decades, while you’ll quietly be automating your money and growing your bank account and investment accounts each month — automatically.

I can’t emphasize this enough: Complaining is contagious. Even though I’m an eternal optimist, even I find myself complaining about the world when I get around these people, so I avoid them like the plague.

Yet there’s an even more insidious type of excuse that is all-too-common, especially online.

Why they don’t do it #2: “That’s too simple”

This excuse is common around programmers, kooky Ron-Paul/real-estate/gold fans, and reddit users. “Oh Ramit,” they chide, “long-term indexing doesn’t work! You’re just telling losers to stay losers by trying to “match” the market. You need to invest in [insert crazy investing strategy here, including “only alternative energy stocks” or “only bonds” or “opportunistic stock purchasing with alternative strategies including hedge funds and private equity”].

For many people, especially those who deal with highly technical information in their day jobs, something must be difficult to be useful. Yet as a professor in the much-maligned communications department at Stanford told me, “The value of this material is not in the difficulty, but in the usefulness.”

There are some valid reasons for this skepticism — including the fact that most personal-finance advice is terrible, boring, and trite — but to object to the overall strategy is to throw the baby out with the bathwater. Many of these people love timing the market (even though market timing doesn’t work). They love the allure of hedge funds (even though hedge funds are not as impressive as you think).

Yet they insist that the current buy-and-hold strategy doesn’t work and that saving for expenses ten years down the road is “not enough.” Unfortunately, you can’t simply be skeptical and call that a strategy. To have any credibility, you need to show me real, peer-reviewed research showing that your strategy is better than the time-tested approach of low-cost indexing. Otherwise, you’re simply another pie-in-the-sky dreamer.

Let me add one more thing: Nobody cares what you think. Or what I think. What matters is if you’ve executed on your plan. If you ask these people if they’ve invested using their “alternative” strategies, the answer is invariably this: “Oh, uh…not yet.” Try it. It’s fun to ask.

A few months ago, I wrote how I intentionally bulked up by strategically gaining 25lbs in one year using psychological techniques including commitment and attribution theory.

I picked one person to help me: my co-worker, Brian. No, he isn’t a huge bodybuilder. And no, he doesn’t read Men’s Health every day or bring a giant jar of creatine to work every day. But out of all the people who offered advice, Brian is the only person I know who consistently goes to the gym almost every single day. I’d rather learn from the person who is boringly disciplined rather than someone who has sexy ideas.

I didn’t pick the person who had the fanciest weight-training strategy. I picked the guy who went to the gym every day.

Here’s another example from Ian Rogers:

I told Kid Rock I was doing the Cool J workout and he laughed, “You are the worst spokesman for his book! Just what he needs, a skinny white kid telling people, ‘hey look at me, I did the Cool J workout!’ That’s like me wearing Russel Simmons clothes!” Probably true. But I’m also probably one of the only people on earth who did everything the book told me to for six months. I completed the LL Cool J Platinum Workout 100%. In its entirety. End-to-end. Anyone else? Anyone?

Exactly. It’s not about the difficulty, but the fact that you need to get it done. So if this seems too simple and you dismiss it, good! The ease of it is a barrier that’s caused you to select yourself out of it. The rest of us will get it done and scoff at you 10 years from now.

When you pick advice to follow, think carefully about how practical it is and how readily you can implement it. You know all these investment sites and blogs? How many of their readers have actually implemented the advice? How many of you have?

The point is action, not ideas. If your neighborhood skeptic hasn’t taken measurable action and isn’t willing to show you what exactly he’s done with his own money, politely smile and calmly walk quickly. And then handle your own finances while he exists in Kooky Kook land.

The survey responses above are all iwillteach readers, which means they’re (1) nerdy and (2) far ahead of most people in their finances. But even they wish they’d saved more money. You can always save more. When you get down to the nitty-gritty, you notice the differences in what they wish they’d saved for, and in how you approach it (savings account, CD laddering, investing, etc). But if you simply save for the big things in your next 10 years, you will be ahead of the game by far.

Yet most people constantly look for the fanciest next thing…instead of focusing on tried-and-true techniques. If you’d done this 10 years ago, you would quantitatively be ahead AND you’d feel great. But you can always start today.

What are you going to do today?

If you’re not earning more than you spend, automating your money, and maxing out your accounts, that can be your first goal. This is the majority of iwillteachyoutoberich readers.

If you’ve done all that and are looking for the next step, implement the 10-Year Savings Strategy using sub-accounts.

One more thing: You can’t just scoff at this for being too easy and do nothing. You have to consciously choose:

  1. I’m going to do this within the week
  2. I’m not going to do this because I’m going to do another strategy within the week
  3. I’m not at this stage yet…I’m going to pick up your book (or another book, or just do it) and get there

Note: There is no #4 (“I’m not going to do this at all…I’m just going to do nothing”) because that is a cop-out for losers. Get it done.

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  1. Hey now, I campaigned for Ron Paul but don’t invest in gold and thing long term buy and hold indexing is the best thing I’ve seen to do. Even the gold heavy Harry Browne Permanent Portfolio relies on an index fund to work effectively!

    But kidding aside great point that your personal politics just do not matter, and great overall idea. A monster post and lots of food for thought!

  2. 1. Yes, you WILL have a nice and very expensive wedding (even if you’re a hypocrite and think you’ll have a “small, beautiful” wedding)

    No. I simply wont get married.

    2. Yes, you WILL have kids and want to buy them nice stuff

    Wrong again.

    Repeating it in capital letters does not prove your point. It makes you annoying.

    Thinking outside the box does not make you a hypocrite. On the contrary…

    Here is what CAN happen as you get older:

    1. You will be earning more money from your primary job.
    2. Your passive income will be increasing.
    3. You will be more comfortable with yourself resulting in less unnecessary expenses.
    4. Financial security will allow you to live a less stressful and happier life.
    5. You will have plenty of time and money to enjoy your hobbies.

    It’s unfortunate you cannot see past the rat race.

  3. Yes, x, you could avoid marriage and children, but you’re an exception if you do. Most people do eventually get married, and a lot of people have kids. I’m sure Ramit could write a 100 page post giving advice to every type of person (“I plan to get married and have kids!”; “I’m never getting married!”; “I’m getting married but not having kids!”, etc) and you’d still find a way to say “But Ramit, you didn’t cover MY EXACT situation! This advice sucks!”

  4. Ramit, I love the blog but I have to say I was quite disappointed in the 10 year saving strategy. Here’s why.

    1. Yes, you WILL have a nice and very expensive wedding (even if you’re a hypocrite and think you’ll have a “small, beautiful” wedding)

    First of all, I’m not getting married. No, this isn’t just the talk of someone who can’t see far enough into the future. We all know the only benefit of getting married is in avoiding divorce. If you get divorced, you’re screwed. For anyone who would ever put themselves into that situation, I have no sympathy because it is completely avoidable. Marriage is a contract and (especially for guys) if you enter into it, you will be on the losing end from the get go. You recommend getting advice from your elders. What do they tell me? Don’t get married. That’s some advice I’ll be taking because I care too much about my assets.

    2. Yes, you WILL have kids and want to buy them nice stuff

    Actually I see kids as a complete waste of money, time, and freedom. There are many people out there who live child free (and loving it) and I will be one of them. Don’t believe it? Believe it when i get a vasectomy sometime in the near future.

    3. Yes, you will need things like family health insurance and life insurance and homeowners’ insurance and family vacations and other things that you can’t predict right now because you’re not in that life situation

    No dependents/family = No life/family health insurance. I won’t need homeowners’ insurance because, quite simply, I will never own a home. Plenty of blogs (including yours) talk about how purchasing a home is a poor way of becoming rich. Not only that, it’s a great way to tie yourself down to one location and be in debt for decades. So what will I do? I’ll be renting small for the rest of my life and investing the rest, thus substantially increasing my net worth and giving me the freedom to move when and where I want.


    Never say never right? There’s always the possibility that I will complete lose my mind and succumb to this madness. If I do, it will be my own fault and will join the rest of the masses who shouldn’t complain because they have chosen their own shackles. Until then, my 10 year plan is to continue to invest the maximum in my index funds and retire early, rich, and free. 🙂

  5. I love what you said about complainers. I try to tell my friends that all the time when they complain about every little thing. Just refusing to put those little things into words makes you a much happier person.

    I also think refusing to get married because of the fear of divorce is a bit extreme. Yes, the statistics are pretty alarming, but there are some risks that are worth taking. Money unfortunately is not the best companion and can’t love you back.

  6. @ X

    Hope for the best. Plan for the worst. I’m with Ramit on this one…

    Obviously this article is not written for 100% of the population. He’s trying to hit his reading audience and I’d be willing to bet it’s predominantly people who are married or have some interest in marriage and kids.

    Do you think he can’t see past the rat race? Have you not ready any other post?? Reading comprehension?

  7. I love the nay-sayers about marriage who talk about divorce as a reason not to get married even though they don’t know jack about marriage or divorce. Lovely.

    I’ll give you some background. I have a degree in psychology. I specialized in marriage and the family because I work in family court as, essentially, an entrance counselor. Just like when you get a student loan and you have to do that entrance “counseling”, which is to stay filling out a form about repayment and knowing the risks of borrowing, when you get a judgment in family court in my state, you have to talk to me.

    My main “clients”, if you want to call them that, are men who have to sit with me as I explain what their child support order means to them. Like Raymond and X above, these guys had it all figured out. Never getting married, never having kids. They met a girl, they lived together (or didn’t live together) and a condom broke. Or she said she was on the pill and wasn’t. Or it was a one in a million shot. Then, they had a second dose of hard reality: even the biggest feminists, the most pro-choice women you can meet, might not choose abortion.

    So now, they’re sitting in my office, looking at paying $120 a week to a woman they don’t even speak to any more, who moved 2,000 miles away. They have to listen to me rattle off the remedies the state will seek on the behalf of their ex-girlfriend if they don’t pay up: credit bureau reporting, seizure of driver’s license, termination of professional license, denial of passport, tax rebate seizure, liens against property, asset seizure, bank account seizure, and finally, when all else fails, jail time.

    Then, there’s the guys who sit in front of me after domestic violence court and insist they’ve never hit a woman in their lives. They’re not Chris Brown! But guess what — you sent her one too many cell phone texts after she cheated on you, which constitutes harassment under the state’s DV statute, and now you’re in front of me because you’ve got to pay the state a fine and register for the National Domestic Violence Registry. Hope you don’t work with children, the elderly, or in law enforcement, because you’ve just lost your job if you do. Also, because you were living together, she’s now in exclusive possession of your house because she needs somewhere to live, and it’s your fault she’s in this situation. If you were married, you could make an equitable distribution claim in your divorce paperwork, but you didn’t get married, so DV court — which is a summary judgment, not a full trial and finds in favor of the victim — is your only shot. You’re now going to have to go to civil court with your attorney and sue for your assets back.

    Sucks to be you.

    Oh, and there’s a personal note to this: I’m on my second marriage. My first ended in a very amicable divorce where we simply took our debts and assets accrued pre-marriage and walked away from each other. This is not the exception but the norm — most of the divorcing couples I see don’t like each other and want to just get as far away as possible — but they don’t hate each other. So we send them to mediation and they walk out with a pretty good compromise that doesn’t automatically screw men the way popular myth states it does.

    Truth be told, the only way to be able to not save up for Kids and Wedding/Girlfriend/Wife is to be a hermit and avoid intimate relationships all together. Even a same-sex partner can (and has) end up in my office, learning about what they now have to give up or pay to their ex-partner because a shouting match got a little too loud or a physical altercation went a little too far.

    But go on, keep believing marriage is the problem and if you avoid that, you’ll never have to worry about anyone but yourself. I can’t wait to see you in my office — you guys are always the most fun when you start bitching that life isn’t fair. 🙂

  8. To me, one of the big takeaways from this article is that you should start saving for major expenses that you know you will encounter in 5-10 years — even if you can’t anticipate them in your current situation. Peoples values change over time and we are influenced by things like wanting to conform to peer norms. If you think you are exempt from this, good for you, but realistically even the people in their 20’s who say “I will never have kids/get married!” will probably get married and have kids. I have met people like this.

  9. @Elizabeth

    “So now, they’re sitting in my office, looking at paying $120 a week to a woman they don’t even speak to any more, who moved 2,000 miles away.”

    If you have a kid (on purpose or accidentally) you have a responsibility to take care of it. If you got married and got a divorce you’d be paying child support as well. So your point is?

    “you sent her one too many cell phone texts after she cheated on you, which constitutes harassment under the state’s DV statute”

    Haha. Thanks for proving my point. I’m sure this individual who would try to screw you in DV court would believe in an “equitable distribution” in divorce. Did you double major in comedy?

  10. Richard Chansa Link to this comment

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