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

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23 28 0

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 iwillteachyoutoberich.com

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
  4. Yes, these expenses WILL come up. People like to believe they’re the exception. BUT YOU’RE NOT. YOU WILL HAVE KIDS. YOUR KIDS WILL BE WHINY AND REQUIRE LOTS OF DIAPERS. THEY WILL POOP ALL OVER THE PLACE AND REQUIRE 10X MORE PAPER TOWELS AND CLOTHES AND CRIBS. PLEASE BELIEVE THIS.

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.

23 28 0

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84 Comments

23 28 0
 
  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.

    4. Yes, these expenses WILL come up. People like to believe they’re the exception. BUT YOU’RE NOT. YOU WILL HAVE KIDS. YOUR KIDS WILL BE WHINY AND REQUIRE LOTS OF DIAPERS. THEY WILL POOP ALL OVER THE PLACE AND REQUIRE 10X MORE PAPER TOWELS AND CLOTHES AND CRIBS. PLEASE BELIEVE THIS.

    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

    Congratulations. We become what we Put In. Africans lack such Knwledge in Thinking Creatively about the Future. Listen, The Idea has just come now iam e-mailing. “I NEED TO TELL YOUR KNOWLEDGE TO AFRICAN YOUNG YOUTH / ADULTS”. Ten years from now African Economy would change – Guys iam Serouse. Very few have access to Internet Technology in Africa or We told know. It’s very sad.
    Regards.

    Richard Chansa.

  11. Ramit, I am in the process of getting married and am happy I have saved for it like you have suggested. I have a few friends who have done the same. One thing to note, is that no matter how much you save, it becomes a lower bar on what you are willing to spend. Knowing that you saved $20,000 for a wedding, you end up spending $24,000. Going that extra 10% – 20% over appears inevitable. Psycologically that money you saved wears away at your ability to keep costs down as you say to yourself “That’s ok, I budgeted for it, going a little over won’t hurt and it will save me time, look better, we’ll make it up in the wedding gifts, ect…”. It’s only at the point where you feel that you’ve “spent” money, after the savings are gone, that you start taking a hard line with wedding expenses. I absolutely recommend saving for your wedding, but I also recommend setting your budget for your wedding at 20% below what you saved. And convince yourself and your spouse that you can’t go over that budget, you don’t have the money! You will go over.. but at least you still have the “buffer” savings.

  12. You claim the point is moot but the “president” (emperor) is a moron and a statist, though. Taxes are also going up. Here in MA we’ve seen a 25% increase in sales tax and that means a reduction in how much I can purchase. That is all making a significant change in my spending and savings habits.

    Sure I’m still saving but to claim that politics has zero effect isn’t true. It shouldn’t stop us from saving. If anything the buffoon in the white house should be reason more than ever to save our money because things aren’t getting any better.

    I’ve debated getting the vasectomy so that I never have to deal with the piles of crap filled diapers if in the chance I do end up getting married someday.

    • I love the latest reply to my post on weddings: “This is such BS. We had a simple wedding, where friends did most of the work with us. We had about 70 guests, it didn’t cost a fortune (we paid for it all ourselves) and everyone still (11 years later) says it was the best wedding they have ever attended.” Strikingly similar to 200 other comments…yet I bet if I took 10 minutes to look at his personal finances, I could find 3 things that are “such BS” about his spending.

  13. 33k for downpayment…….FAIL

  14. Ramit – I really appreciate how your advice has really helped me, being in my 20s with no kids, ability to move to lower-cost apartment, etc, streamline and take control of my finances. I just started a 401(k) at my work and am steadily moving forward to save in that and significantly reduce my credit card debt.

    One suggestion, though – sometimes I think either you really DON’T know what it’s like to be older than a 20-something with kids (especially a woman), OR you don’t put the disclaimer that your advice is more targeted for younger folks without families up front. For instance, I find it extremely difficult to digest, IF NOT OFFENSIVE that you recommend women especially get a part time job on top of having a full-time job and raising kids. We still live in a society where the bulk of childrearing and housework falls on the woman. It’s called the “second shift” – the work women do when they get home from their paying job. Hell, I have a hard enough time getting home, making dinner, getting to the gym, doing the dishes and getting into bed at a reasonable hour. That’s 100x more complicated if you have kids, and quite simply, the CEO model doesn’t apply to women (and men) who already have the part-time job of raising kids.

    I think your advice is well-meaning, and is probably quite revolutionary for many people, especially people like me (though I often work 60+ per week at my nonprofit job, and I find it laughable to do a part-time job on top of that).

    Something to be conscious of. Either you’re giving advice for a more limited slice of the population, and you should be more up front about that, or you need to think critically about how relevant some of this advice is to people outside the 20somethingsingle bracket.

    Thanks

    • Thanks for the comment. Just to be very clear, I *am* targeting a niche: Typically 20- and 30-somethings, typically earning above-average income, and typically single. Most of my readers know that, and I’m not trying to appeal to everyone because my advice would be generic and boring. So if certain tips don’t strike you as useful, then just skip ‘em. And I’ve told my readers: You should be reading multiple sources, not just me.

  15. Ramit, I’m not sure why you picked that comment to get snarky about in your reply. The man says he didn’t spend a fortune on his wedding and enjoyed it , meaning it can be done and the memories were great. Why would you bash his personal finances………….

  16. Um, looking at the diagram at the top of this page, for Automating your money: How it works, shouldn’t the 98% actually be 85%? There is a 5% investment going to three different places, leaving only 85% to go to guilt free spending. It is a typo, right? Because the 95% doesn’t make sense to me otherwise…

  17. I’m confused as to why you are so confident that everyone will spend gobs of money on their weddings. Plenty of people have simple weddings. My wedding, including EVERYTHING (dress, tux, food, etc) was $5K. and I know a lot of people manage to do it more cheaply than that.

    By all means, save for future expenses…that’s very wise. But don’t assume that you will need to fork over $20K for a wedding and that you have to buy your children designer clothes and take them to Disney.

    My husband I have been married for 12 years, have four kids, and we’re one of the happiest families I know, despite our inexpensive wedding and frugal living.

  18. I’m approaching 30, and I just got back from a year of traveling around the world, and yep, the next massive purchase for me will be a house!

    I think this is along the regular progression of getting older though… Although the opportunities to travel in your 20s is becoming much more of a possibility for “regular” people, than it was 10-20 years ago.

  19. You’re pointing out the obvious. You say you’re targeting young people with above-average incomes who have their shit together already. Then you tell them they’re going to want to save for a house and for retirement. They already know this — they have their shit together.

    I’m a young person (28), recently married (for *cheap* despite you thinking that’s impossible), making a good salary, and realizing that this is patently obvious to me. Also, I got a link to this article from J.D. Roth’s twitter. Last time I looked, he’s 40 and doesn’t have kids. That’s impossible, too, apparently.

    But seriously, you didn’t think that “house”, “retirement” and “family trips” were the absolutely most obvious savings goals you could possibly come up with?

    Finally, the overlay ad for your book that blocks my reading is obnoxious. With the lack of content in this post, the obnoxious ads, and the ad hominem attacks on people who disagree with you (the person with the inexpensive wedding who’s finances you criticize without even seeing), I’m starting to wonder if you’re becoming more of a snake oil salesman than a personal finance advisor. I guess there’s probably better money in it.

  20. Ramit,

    So what exactly is your advice here? Since this article is predicated on the belief that the reader is already “saving and automating”, what advice are you proffering? You seem to imply that if someone in this situation is unhappy with their personal finances, it is simply because they aren’t working 2 jobs. Instead, I offer this fact: these self-same people that you ostensibly speak for – that is, those who are doing everything right already – have every right to complain about taxes and bailouts and whatever else they see as unjust; they are doing what they should and it’s still somehow not enough. The government is not your friend. Particularly if you are a saver or high earner. Aside from correcting market failures, providing public goods and regulating monopolies (remember econ 101?), the government should not be spending your money. So yes, when these people complain about taxes, they are justified.

    Your second point about it being “too simple” is a little more useful. If a financial product or strategy seems too complex, it is. However, aside from mentioning buy and hold investing and index funds, you offer nothing really. Since 85% of all investing advice from any reputable source says essentially the same thing, why does this post even exist? Please try harder. K? Thanks.

  21. I think you have to consider the demographics as well. I believe Ramit lives in an expensive city so I understand where he gets his numbers.

    You just have to adjust his guidance towards towards the expense commensurate for your area. I live in Houston, Texas and a cousin just had a “lavish” wedding for under 15K. I’m in my early twenties and several of my friends have gotten married for well under 10k.

    The point is to save X amount each month so that you won’t be hit with the burden of paying off your wedding for years to come.

    I read Ramit’s book and took most of his advice but tweaked it to my likings. However, I should say that I fall into his category of a single person making above average income (with respect to Texas).

    If I was married with kids, I’m not sure how much of his advice I could apply since I have no idea what raising kids is all about.

  22. Can’t view the charts. The iPaper and other embeds are timing out :(

  23. Morgan in Seattle Link to this comment

    In regards to Elizabeth’s comment, “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.” I am a 40-year-old woman who read Sethi’s book because it was recommended by Tim Ferris, the author of The Four Hour Workweek, and has excellent advice on automating personal finances. So I am older than Sethi’s target audience.

    Being older, I have experienced 3 marriages and divorces (I gave the first husband a second chance and remarried him). Marriage by no means guarantees intimacy or happiness. It is not inevitable, nor necessary for intimacy. Living together is not even necessary for intimacy. Choosing not to marry does not equate to choosing to avoid intimacy. Since my last divorce I have been in the same intimate partnership for nearly 6 years, 4 of which were spent living together. I recently made the decision to have my own separate household and have never been happier.

    So, ladies, please think twice before making negative generalizations about the unmarried and their ability to be intimate and happy.

  24. Ramit – here’s the thing. You say you’re offering advice to a target demographic, and then you mock people who are clearly outside that target demographic and are having less success with your advice. You call them “complainers.” Really – they’re not you’re target market and your advice is less relevant to their lives. I think you mentioned that you did this webinar for 600 people through a news service. Did you tell them that your advice is primarily for 20-somethings? Did you say that your advice won’t be ideal for many of them, and recommend some other sources? Because what I’m guessing is that you were brought in to give financial advice to a variety of people, and the advice was actually pretty limited, or didn’t really help a good chunk of the people on this webinar. That’s not cause to mock them, or make it seem like they “just don’t get it/don’t want to get it.” Do you see the difference?

  25. Good post –

    I wanted to make a couple of points –

    1. As far as weddings, of course there is a statistical distribution in the amount of money people spend on their weddings. However, the bulk of the people on a given distribution (+/- 1 standard deviation from average) are likely in the 20k catagory. I think the point is that you should plan for the worst and hope for the best. In this case, plan for 25k, hope you can get away with 10k then put that 15k towards a house down payment.

    2. House – My wife and I used to complain about a 1500/mo rent for a 1 bedroom in the SF bay area. Then we purchased (actually built) a house where our monthly housing costs (PITI) are now 4400/mo. Although we make this payment comfortably every month, we always imagined we were going to beat the system and buy a under-valued house, fix it up, etc…. Well, our house is worth significantly more than our note, but the note is still more than we originally expected.

    The whole point is cognitive dissonance. Again, there are exceptions to every rule, but the +/-1 standard deviation from average of the distribution all suffer from cognitive dissonance, or the ability to rationalize 1 idea as being true while simultaneously knowing it to be false. In these cases, one may imagine they can buy a smaller home than they can afford, or throw a less elaborate wedding, but on average, this does not happen. Do I have some study or objective data to back this up, heck no – Im making this up. However, I am making this up after attending countless weddings, listening to 20 and 30-somethings talk about how their wedding will be simple, or how they cant believe how much the bank would lend them for a house and how important it is to have a 500,000,000 BTU built-in BBQ next to their hot tub.

  26. The best post I’ve read on your blog Ramit. Please continue writing thought-provoking insight backed up by real data.

  27. Well, I don’t think that “complainers” means the same as “people who are outside the target demographic.” It means people who make excuses for not doing anything about their financial situation. Ramit sometimes puts things strongly, or even exaggerates, but so what? He’s trying to get your attention so you do something about your savings.

    I’m not in the target demographic by any stretch of the imagination, having gotten married with a justice of the peace ($15 tip), never bought a house and don’t want one, etc. When I was in my 20′s, few people had heard of money market funds or mutual funds. I lived through the 70′s with its inflation and wage and price controls. I discovered that a teacher’s salary ended up lower at retirement (in terms of real dollars) despite raises than at the start because of cost of living increases over the decades. BUT since I took Ramit’s advice and automated my saving, and now the savings are mounting up substantially. (I’m saving for future unexpected expenses because I know they will come.)

    One more comment about the impossibility of a working mother with children taking on a second paid job because she already has the second UNpaid job — absolutely right! But if you can’t add cash, you can decrease expenses the traditional way by bartering, exchanging babysitting with other parents, sharing a vacation house, shopping at thrift stores and yard sales, etc. Whatever you do, it is work!

  28. ““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?) ”

    ohhhh, love that response!

    I’m in my 30s, have a home, kid, marriage, car, savings, investments

    What is the next “next” step?

    I’m looking into Angel Investing- maybe you can talk more about that in future posts, such as, how to get started. Thanks

  29. There is one issue I have with your survey – shouldn’t people be saving for a car, rather than a down payment in a car? It seems like if you borrow money to buy a disposable item, you’re already losing the race. Wouldn’t it be better to buy a car you can afford?

    Also, I’m not sure why some of you seem so proud that you’re “smart enough” not to get married and have children. While it’s a good thing that those who are not suited for it don’t do it, it seems pretty obvious that if all or even most of the educated people don’t have children, we will be overrun with lower class children, and you will be paying for their services out of your higher taxes.

  30. yay, good post!

    omg, the commenters yelling about “NO YOU’RE WRONG I WON’T GET MARRIED OR HAVE CHILDREN”…uh, good for you? most of us will. just cause you won’t doesn’t make you any better or worse and just because some of us will doesn’t make us any better or worse. either way, you should just save. make a substitution…children = trip around the world, or marriage = that awesome car i want….chill out about it.

    anyways, i need to get on these tips, thanks for them!

  31. I like the idea of the 10 year and beyond concept. Ramit knows that even though he’s targeting 20-30 now, as he gets older his own priorities and interests are going to change his target audience. I was wondering when he was going to venture from personal to family financial issues. Especially when it comes to home businesses, its much much easier to start a business when you’re the only one on the hook, but to take the family down that road involves either a seriously prepared family or an idiot.
    Looking forward to the evolution in the writing, the savings survey was awesome!

  32. Fantastic Post Ramit — I look forward to more polls

    I know this (clearly, based on the dead horses above) is not your target audience, but I would have loved to see how people feel as ages go even higher. Will 50 year-olds be more concerned about kids or will retirement still be a big issue — what 70 & 80 year-olds worrying about retirement, health care, charity, legacy? I guess I feel like up to the age of 40 most people are still very much in the rat race a bit and the older perspective might bring some more texture. Thanks!

  33. Wow, lots of hate in these comments.

    Ramit, I really liked this. The take-away was still the same despite that I don’t intend to have children (and neither does my g/f). Plan for large expenses I will encounter on my path in life, whether or not it’s children or lots of travel or whatever hobby I choose. The action is not, “save for children.” The action is: ask and try to predict what your major expenses will be in 10 years and save for it. Don’t think you’re going to be above average and beat the system. Reality is sometimes harsh on us 20-somethings. Realize I am not an exception to every rule. Realize that reality will bite me sometimes and I will want to be prepared.

    Be mindful of whether I’m just complaining or actually taking action. Skepticism is good, but it’s still important to form some plan and execute it.

    These long, well-thought articles are exactly why I read this site and subscribe to your emails.

  34. This is probably the best post I’ve read on this site, and I’ve been reading for 2 1/2 years.

    You’re cool.

  35. Ramit – I read the initial “What people wished they saved for…” deal when you emailed it out yesterday and I’ve just reread it. I’m in my mid-20s, and this post really changed my mind about how much money I want to save vs. spend. I thought back to working summers in high school and my part-time job in college. What did I spend that on? Do I have any of the goods I bought with that money, or do I wish I had spent it differently? In most cases – I do wish I had either saved that money or spent it differently.

    The pdf of the charts has put my current savings in to a different perspective. I’m now thinking about the concrete things/people/travel I’ll be spending money on RATHER than just thinking about having chunks of cash in accounts. I find this really, really motivating, so thank you!

  36. I understand you can’t tailor your advice to include the handful of people who deviate from the societal norm and that you want to wake up the fraction of those people who are fooling themselves and will end up smack dab in the bell curve. But saying there are no exceptions whatsoever is clearly alienating those people, not convincing them they aren’t the exception afterall. No, Ramit, I won’t have kids, because I got my tubes tied at 24. And I think weddings are a waste of time and money, especially engagement rings and wedding dresses. If I ever get married it will be to obtain benefits I need and can get no other way.

  37. I really appreciate the sharing of your data! Once I pay off my student debts (5 years or less I think) I know my next savings goal! Saving up for a house. Thanks for this survey and the insights.

  38. Ramit – you seem to be one of the biggest complainers in these comments. Nearly every time someone disagrees with you, you change the subject and bash them anyway.

    And I agree with Tyler – the blatant book pimping is getting obnoxious.

    Also, your flowchart either has some poor path or is not designed well. How can 100% – 5% to 401(k) – 5% to Roth – 5% to savings = 95% left to pay credit card and other bills?

  39. I would have had an inexpensive wedding (think sunny, sunny Mexico), until I married a man with a very big, very close-knit family. Sure, I could have insisted on having things my way, but to me, family is more important than money, so we got married here and there were almost 200 guests (150 were his family, and it was only family as immediate as aunts, uncles, and first cousins). I didn’t save because I always assumed I’d have a very small wedding.

    I think Ramit’s advice is great because although my dream wedding consisted of 25 people and a beach, in the end that’s not what happened. The worst that can happen is that you save a ton, have a cheap wedding, and have a lot of cash left over…how is that a bad thing?

    I also think it’s funny how some people, at a young age, think they have their whole life figured out. I care more about my marriage than about financial security…I’d happily live in a van down by the river so long as we were together. And I’m not 100 percent sure about kids, but I think it’s a great idea to start saving anyway. I don’t pretend to know exactly what I’ll want in life 10 years down the road. If we don’t have kids, we could use the money to travel. If we do, we’ll be so thankful we saved it.

    Ramit is going off of survey results, so people who believe they are outside the norm should untwist their panties and chill out. It’s averages, people.

  40. This post was a lot like that Simpsons episode where the town thinks they found a skeleton of an angel at an archeological dig and at the end they find out that it’s just promotion for someone’s new outdoor mall.

    Still, fantastic data and analysis.

  41. Good lord. Ramit is using hyperbole (THERE ARE NO EXCEPTIONS!!!!!!!!!) to make a point — you MIGHT be an exception, but you are PROBABLY not. You probably ARE going to get married, spend more on a wedding than you’re planning to, buy a house, and have kids.

    To pretend you know exactly what you want now (at say, 25) for when you are 50 is the equivalent of adamantly stating when you are 5 that you hate all boys/girls and will never like them. It’s utterly ridiculous. All you can do is acknowledge that your current self cannot predict everything that will happen in your life, or everything that you will want, but it’s probably going to cost more than you think. So instead of spending so much energy being defensive, why don’t you critically think about his point, and whether you want to apply it to your finances?

  42. The general idea behind this post can be summed up in four words: save for the unexpected.

    For those saying you’ll never get married; fine, don’t get married. Save for a second house instead.

    For those saying you’ll never have children; fine, don’t have children. Save for a luxury car instead.

    This post is not about getting married, it’s not about having children, it’s not about paying for your sick nephews cancer treatment… it’s about being financially prepared for ANYTHING. Life happens, and it’s expensive! Prepare before life happens, it will be much cheaper financially and emotionally. Stress is expensive!

  43. Ramit, have you been talking to my mother? She keeps telling me I’ll change my mind and have kids, but she’s been quieter and quieter on that topic as I get further into my thirties…

    I think there are better ways to tell people that they should expect to have a savings cushion for things they haven’t thought about than to insist that they’re wrong about major life decisions.

    (FWIW, ten years ago my husband and I planned to have a “small, beautiful” (and cheap) wedding, and we did. We had a budget, and we came in under it. We’re not miracle workers – we just knew what we wanted.)

  44. There’s one thing I’m surprised nobody’s mentioned. Ramit, how can we possibly save for these things? Say you expect to get married, have kids, buy a car and house, and also would like to take vacations. You’re supposed to save $6376 per month? That’s 2.5 times what I make in a month. I don’t think it’s reasonable to tell me that I should just increase my income until I get there.

    This is something that has been frustrating me. I read lots of PF books and blogs, I budget carefully, pay my CC bill before the end of the month, have a 6-mo. emergency fund, and save for retirement. Yet it never seems to be enough. I use a retirement calculator and it tells me even if I max out my Roth IRA, inflation will leave me with like $20K per year to live on. Then I read posts like this that tell me I also should be saving for all these enormous unexpected expenses.

    There’s something wrong with this picture, Ramit. I’m not sure what it is–possibly, like is said in “Your Money or Your Life,” we should be focusing on lowering our needs and expectations, not raising them.

  45. awesome article, ramit. it’s the same stuff you’ve been saying all along, yet it’s still refreshing.. and the consistency keeps me a loyal reader :)

  46. @TK: Thank you!! for saying what I’ve been thinking as I’ve been scrolling through these comments…

    It seems to me Ramit’s just trying to fight against a tendency ALL of us have: the desire to think we’re absolutely unique, and that therefore averages, common problems, and therefore common _solutions_ don’t apply to us. It’s like those studies that routinely find that about 70 percent of us consider ourselves “above-average” drivers.

    Most of us were told in kindergarten that we were unique and special like snowflakes, and at some level we’ve never completely gotten over it–so of _course_ we tell ourselves “Yeah, most people do X, but I’m going to do Y” (just as a good number of bad drivers would rather not admit that they’re less-than-competent at something as simple as driving). It’s human nature, and the point of this post is to make you more aware of this foible, and figure out ways to hedge against it. Yes, you might be the exception who spends $15 and gets married in front of a JP–but you’re pretty much certain to pull the “But _I’m different_!” thing in _some_ area of your life. That seems to me what Ramit was saying about the couple who married frugally–he certainly wasn’t trying to bash their wedding or wish them misery as a couple. The point is that even if your “weak point” doesn’t happen to be in the wedding (or children, or whatever) category–you _will_ have a weak point, some unexpected large expense that you can’t simply opt out of, down the road. This can happen even if you have iron discipline and live like a monk (think how many people are bankrupted not by frivolous spending, but because of medical bills following unexpected illness).

    The point is that _no one can foresee everything about his/her own life_, but we tend not to want to admit this. I see this all the time teaching college students… 9 out of 10 of my 19-year-old students think being over 30 makes me ancient (I’m 33), because obviously _they_ are never going to be over 30… or if they do, it’s going to be in an unwrinkled, cellulite-free, just-as-idealistic-and-carefree-as-they-were-at-19 way. This is why we have the word “hubris,” guys! Because it’s a thing people have!! The same thing applies in other areas… we’re all going to die, for instance, but how many of us have made a will? Of those who haven’t, how many are avoiding it because at some level, we don’t see dying as a problem that we, personally, are really going to have?

    One more thing: Eventually, Ramit’s pretty much bound to say something that you’ll disagree with, or that will conflict with your particular situation. I’m not saying no one should ever leave less-than-adulatory comments… but could we at least try to be a little more thick-skinned? Imagine if this newsletter were actually written in such a way as to never, ever run the slightest risk of “offending” _anyone_… or if every other paragraph had a disclaimer a la “Note: The following piece of advice will apply if you’re a single dad with one adopted child, but won’t apply if you’re a lesbian with a domestic partner and two children conceived by IVF.” Remember, despite the conversational, accessible tone, this newsletter isn’t personally tailor-made for every single one of its readers… like Justin said above, you may have to adjust some of Ramit’s tips to your particular situation. If you want him to write a newsletter just for you (yes, you–that unique and beautiful snowflake!) you should probably be paying him more.

  47. Exactly. Some phenomenal comments on this post and some very, very stupid ones.

    The most absurd thing about many of the negative comments is the inability to take a strategy or tactic and apply it to the commenters’ own lives. If you’re not going to get married (which you probably are, despite what you think now), you’re still going to have many other expenses that you simply can’t predict yet. If you claim you’re determined to have a frugal wedding (which many people say, by the way), then the question to ask is this: “Under what conditions might I find significant future expenses that I didn’t predict?” Ever hear of the hedonic treadmill?

    I’m willing to bet one of the commenters who complained this post is “obvious” hasn’t cut costs, automated, created a Conscious Spending Plan, earned more, optimized his spending, maxed out investments, and created sub-accounts for his future 10+ year spending. I’m not being sarcastic — if you have, please let me know and I’ll call you because I’d love to profile you for my readers.

    “Obvious” doesn’t mean “easy.” But that’s the point of the post, isn’t it?

    As commenter Sara said:

    “To pretend you know exactly what you want now (at say, 25) for when you are 50 is the equivalent of adamantly stating when you are 5 that you hate all boys/girls and will never like them. It’s utterly ridiculous. All you can do is acknowledge that your current self cannot predict everything that will happen in your life, or everything that you will want, but it’s probably going to cost more than you think. So instead of spending so much energy being defensive, why don’t you critically think about his point, and whether you want to apply it to your finances?”

    Now that I’m writing, let me go on a little bit: One key insight of writing a blog for a large audience has been how entitled people feel in getting a tip that’s exactly written for their specific situation. “I’m 60 and widowed!” people say. Or, “But I’m gonna have a vasectomy!”

    A post addressing your specific situation is not going to happen here — you need to use your imagination and think about how to apply them to your life. And I’m not going to water down this blog with equivocations and qualifications (as ec213 points out).

    The sad thing about this is the smart people already know this. I have to write this comment for whiners who (1) constantly complain about this site, (2) will never buy anything, and (3) repeatedly threaten to leave.

    With that said, I LOVED writing this post and I love reading these comments even more. Look for MORE posts like this.

  48. Ramit, Just give em what they want man. I look forward to your next post:

    “The Ten Year Savings Plan: Snip Your Balls and Refuse True Love”

    In all seriousness the survey results we’re f’n great.

  49. I found the survey results fascinating and enjoyed the post as well. Looking forward to stepping up my personal savings plan.

    I am an anxious person by nature and gravitate towards worrying. I found that once I started saving for unexpected bills, my next car, and house down payment, etc I’ve worried about money much less and feel better overall about my finances. That alone has been worth it.

    Oh and out of all the weddings I’ve been to in my life (at least 20) only one was small and ‘frugal’. Seems like there’s a lot of anomalies in the comments. Just sayin’.

  50. I find if very sad the people who say “I’m not getting married or having kids because I’m protecting my assets.” If you don’t want to get married fine, but that is not the right reason. Get a clue, you may be “rich” but life will be empty, and none of your “riches” go with you. No one on their deathbed has said I wish I had more money. My wife stays home with our kids, when she could be making $80,000 plus a year, and I wouldn’t have it any other way. Does that mean everyone has to do this? No, but people need to realize what life is really about, and it is not your financial worth. Dave Ramsey has a much better outlook on life, and a good book to read is “The Retirementality.”

  51. [...] The 10 Year Savings Strategy: Saving money after you’ve already handled the basics | I Will Teach … [...]

  52. Great post Ramit… the main theme of the post can be summed up as envision your future and what you want it to be like, then plan accordingly to make it happen. Simple, yet powerful. Don’t listen to the complainers out there… it seems like there are a lot of self-centered people around that need to grow up a little.

    -Gen Y Investor

  53. Thanks for the awesome tips!! It always helps to have tons of great info.

  54. Most of the trolls commenting on this post are pretty annoying. These commenters remind me of my classmates in medical school always trying to outsmart the other students by raising their hand to contribute some obscure medical fact to a lecture. These students do this because they think they will get some “respect” from their peers. Really its not “respect” they get from their peers, but a please “shut the f*** up and let the professors and medical professionals teach us”. All of these trolls on this blog are trying to make themselves feel better by acting like they are the financial Gods that came up with this ever so OBVIOUS information in this post. STFU and sit the F down. If you are so God-like please write your best-selling book or create a webwide following based on your teachings because those paths are far more effective at garnering respect than being a troll on a blog. Yes a troll. Thats what we call people like you.

    Obviously this blog isn’t about complex or advanced investing strategy. This blog is to get people who aren’t financially savvy or aren’t as savvy as they could be or for people who are OPEN MINDED and looking for new ways to save or new posts about the notion of saving and the psychological barriers we have to actually getting out and doing it. I think Ramit makes this clear time and time again. I think utilizing the polls to prove something we all thought was obvious is contributing more to the world of personal finance then rehashing the same advice over and over again. We need new angles and new evidence to shake up the MAJORITY of 20-30 year olds to get them to think about money in a healthy way. I thank Ramit for trying to do this in a respectable way.

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

  56. I liked this post. I would like to see more posts on the next step after mastering the basics theme.

    To all the posters who are commenting that the advice is useless because you won’t get married or have kids, you can’t expect to be spoon fed perfectly personalized advice all the time. Good lord, just read the post and then use your own brain to apply it to your life. Like, if you want to save for early retirement instead, substitute that for wedding + kids. Jeez, its really not that complicated…

  57. Ramit, a very generous post for you to put in the effort and insight to collecting this data.

    It really makes your conclusion much more powerful.

    As an aside, it seems to me there must be a much more progressive method of promoting comment and debate than on current blogs’ systems, why do they get dragged down by minutiae and nitpicking?

  58. I used to be a habitual complainer. “Waa I never have enough money… b/c I always have to pay back studnet loans.” I def kicked myself in the ass and made a change and started earning more through secondary income sources. It definitely changes the game and changes the way you do things. I am about to get married next year. My financee is an only child and her parents have been waiting for this day, so they are doing it big!

  59. Cool…

    really insightful post! I think when we alwys talk abt investing and investing…. its very important to emphasiz on saving too!:)

    http://www.myfinancemyway.blogspot.com

  60. This. This is a very good post. Bravo!

    Save now. Invest now. Start your business and chase your dreams. Now. Don’t wait until tomorrow when you wish you did that yesterday, or 10 years from now when you wish you did it 10 years ago.

    Do it now.

    I believe that is the message, and I like it!

  61. How am I supposed to save $6000 a month, when I make a quarter of that?

  62. [...] 9, 2009 by wellheeled A couple days ago, Ramit blogged about 10-year saving strategy to “leave your friends in the dust” after you’ve already handled the basics of [...]

  63. Planning for the future is important, no doubt, but I have to say this method doesn’t really motivate me. I guess it just cuts everything into too finely a piece. I’d rather save for my situation now (i.e. retirement), so that I have more financial flexibility later when these things (weddings, kids) come up.

    But if this will motivate people to save, then more power to them!

    Love the diapers as an example.. but I just can’t quite work up the same motivation saving for smelly diapers as I do for my golden years. ;)

    http://wellheeled.wordpress.com/2009/07/09/why-im-not-saving-for-my-childs-diapers/

  64. First, I love your tone and style of writing. It’s refreshing and so different from other PF bloggers. I may not always agree but I do in this case. I’m 38 and when I was in my 20s, I thought I would not have kids. Of course, now I do want kids.

    As for weddings, many of my artsy, ‘alternative’ friends said they would elope, but they all ended up having a wedding! Even my artsy rebel sister held a big wedding banquet AFTER eloping. I actually did elope and skipped the whoel thing, but I am the ONLY one who did this, out of dozens of friends & family members. So if you’re 20something and think you will buck the wedding trend, think again. 99% of you will have a wedding and it will probably be bigger than you think and it may even be at a church even if you haven’t stepped foot in one since you were a child.

  65. Since most of us can’t max out our retirement accounts and save for each of these things all at once… The key struggle I run into is how to balance long term (retirement) savings and mid/short term goals (car, wedding, home, vacations).

    I can easily figure out how much I value “X” and how much to spend on that per a month. But looking at whats left, it is abstract to figure out how much I value this “retirement” thing and how much I value saving up for a home that I suspect I may or may not want to purchase in the next 3-15 years.

    Even if I don’t split each thing into a Fund (which I am personally a fan of) and lump it all into some future cash reserves fund, it is very difficult to analyze how much should be there and how much should be locked away in a 401k until I’m OLD.

    Judging by this post alone, I would quit saving for retirement and save for a house and diapers. Obviously that isn’t your point, but core question isn’t WHAT I want to save for or IF I should save, rather how much in cash vs retirement (vs enjoying life now by not working part time or forgoing everything).

    I take my best guess, of course, and do what I can.

    http://stackingpennies.wordpress.com/2009/07/09/balancing-cash-goals-and-retirement-goals/

  66. Josh Rainwater Link to this comment

    I have to say Ramit… I really enjoyed this post. It’s not about some crazy awesome strategy for your specific situation, but extrapolating the advice from what you’re saying. As you say so many, many times, people get too specific and mired down in details; what really matters is simply making more money, and saving more money… period. There’s nothing wrong with either of those regardless of what situation you’re in.

    And for the record, I definitely like your approach to the 10-year savings plans. Most people would assume that 10 years down the road savings needs to be different than what you do for 6 months, and it’s refreshing to get evidence and support that simple is king.

  67. First, I’d like to know how I can we save any money when all the jobs in this country are being outsourced to India?! Second, I do not want any children, nor do I plan to get married. If I do, I certainly don’t need (or want) a $30,000 wedding. Get a clue.

  68. [...] The 10 Year Savings Strategy: Saving money after you’ve already handled the basics. I like that Ramit’s approach to money and financial advice is rooted in social psychology. He points out that people never want to believe they are most likely average or like everyone else. Ramit will also appear on tomorrow’s Consumerism Commentary Podcast. [...]

  69. Sarah unintentionally proves my point in many ways.

  70. Ramit,
    This is a great post… comprehensive and I love how you incorporate the psychological element in lack of action.
    It’s funny to watch when someone is disarmed of all of their lies, excuses, and stories. They either go on to prosper… or scramble to find new, more ridiculous excuses (the economy, India, not getting married, not having children.) Fascinating!
    Thanks,
    Andrew

  71. I was really surprised by all the negative comments here (Raymond’s post honestly made me feel a little sad, but I hope he has a nice life with his money…) but I just wanted to chime in and say that I loved this post and found it really useful and thought-provoking. Keep it up! :)

  72. Agree with those who have commented on how desires change over the years. It may come to pass that your current desire to have no kids, no spouse, no house…….. becomes a reality, but saving aggressively early will give you more options should your desires change. My wife and I look back at the year A.K. (before kids) and think about all the times we said ” our kids will never…….”, then see it come to pass. Saving is a hedge against future changes in life events or desires.

    “Life is what happens to you while you’re busy making other plans”-
    John Lennnon

  73. I like the advice but I dislike the condescension. The “YOU WILL” do this bothers me. I don’t like being told what I’m going to do, as if told by a prophet. I did get married, and we paid in cash, but not only was it not $20, we came in under budget. There is a good chance that I am sterile as a result of chemo, so the odds of having kids (though we’d like them) are low.

    And if you’re wise and thrifty, you can raise kids on much less than is typically done anyway, just like everything else. I have a couple of friends from whom I am learning a lot, should I ever get a turn.

    I don’t at all disagree with saving for big things coming around the next blind turn. But I do disagree with being told what they will be.

  74. I’m interested in finding out what people wish they’d spent less money on looking back at their 20s/30s/40s in order to have money for the travel/wedding/kids.

    In my 20s I did the Sensible Thing, moved back home and scrimped and cleared my student loans completely. Now I’m in a good financial position but looking back I really wish I’d spent more money on pretty frocks and partying.

    Anyone else?

  75. Obviously everyone is going to say they wish they had saved more when they were younger. Here at the present moment, it is easy to borrow money from the past self because it’s just a memory. No one takes the time to really think about the life changes it would have involved.

    There’s also a correspondence between savings and perceived life expectancy

  76. I am amazed at the negaitive comments here. The guy is offering advice on how to grow wealth and your dumping on him? People are missing the point of article. Yes, some of you may not get married (I didn’t) or have children (I don’t). But you will have expenses. If you save for a wedding and children (or other scenario) and don’t have any, you will still have a bundle of money that may be used for something else. A new car, roof, better home, dream vacation or maybe early retirement!

    Maybe you aren’t planning to get married. I’m betting there is something you are planning for or would like to have. A horse, land, boat etc. The point is to plan, save, grow wealth. You can’t plan for every contingency, and plans may need top be modified. Your needs and desires may change over time. But by saving and investing you will have the means to adapt.

    Not everything in his strategy is going to apply to every person or couple. Take what works for you and ignore the rest. The principles are sound.

    I think the excercise example was perfect. Most people complain, make excuses or make a semi hearted attempt and do not stick with a plan.

    I wish I had this information when I was 20. I had to figure it out on my own. Now I have multiple homes, a new car, a job and two self owned businesses. I am not rich, yet, but am well on my way.

    I leave you with these comments:

    - Compounding interest is a very powerful force.
    - If you keep doing the same thing over and over and expect different results, you’re nuts.
    - Anybody can get rich slowly.
    - Multiple streams of income.
    - If you don’t make an attempt, ten years from now you will just be ten years older. If you work at it, in ten years, you will be ten years older and – have your degree, home, invetsment, new car etc.
    - Just do it

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