I sometimes worry that I’m not saving enough money. It’s a silly obsession, given that we don’t have any consumer debt, we save more than one-third of our income, and I have a defined benefit pension plan at work. I try to strike a balance between saving and spending money, but I’ll admit that I mostly prefer not to spend. Boiling every decision down to a purely monetary one isn’t healthy, but try telling someone who suffers from anxiety not to worry. It’s hard to ignore that instinct.
Is there such thing as an unhealthy obsession with saving money? I asked myself this after reading one of those listicle posts – 12 ways to know you worry too much about retirement savings – and slowly nodding along with most of the points. Here are a few of them that hit home for me and my money saving obsession.
You have a double-digit savings rate but find it difficult to make ends meet
It’s not that we find it difficult to make ends meet, but I believe in giving a job to every single dollar that comes into our account each month and that can sometimes leave just a small buffer in case something comes up.
For example, I get paid once a month and as soon as that paycheque hits my bank account I pay off last month’s credit card balance in full, set aside my RRSP, TFSA, and RESP contributions, and then make sure there’s enough to cover any automatic bill payments. I want to be efficient with every dollar – and it doesn’t seem very efficient to have a bunch of dollars sitting in a chequing account and not earning any interest.
But once in a while, “something” comes up and we go over budget. I have to move money around between accounts to cover the extra expenses. It’s not ideal, and I know this, so it would make more sense to park $1,500 or so into my chequing account to cover any budget shortfalls.
You put off replacing or repairing important things in your home so you can save more money
I do budget for home maintenance and repair, plus set aside money for new clothes every month. Still, I find myself getting annoyed at discretionary purchases or things I think we can live without.
We have a decent sized list of items that need to be fixed or replaced. Usually the first thing that comes to mind is, “how much is that going to cost?” Too often, the purchase gets deferred until the item becomes unusable and has to be replaced.
Part of this thinking is because of the way I budget. I use a zero-based budget to plan our spending and saving for an entire calendar year. Some months have irregular expenses, such as house insurance premiums or Christmas presents. The zero-based budget allows me to smooth out our expenses so that we don’t have any major surpluses or shortfalls in a given month.
This is great if every single expense is accounted for, but of course life happens and we need to make adjustments. I’m not sure if I’m more annoyed by the unanticipated spending or the fact that I’ll have to move some numbers around on a spreadsheet to accommodate the spending.
You visit your budget daily trying to find ways to trim expenses so you can save more
There’s an incredible level of detail to be gleaned from a zero-based budget approach, especially when you have years of historical data from previous budgets.
As I input weekly expenses into my spreadsheet I’ll often look for ways to save in certain categories. The problem is, the savings in one category can easily be offset by going over budget in another category. Or, more specifically, spending just half of your clothing budget one month doesn’t necessarily mean you can squirrel that money away for good – you might as well add it to next month’s clothing budget.
You have a defined benefit plan or your employer contributes substantially to your pension
My defined benefit pension plan is designed to replace about 60 percent of my final salary in retirement. That’s a lot of money and something that, when combined with CPP and OAS, can provide a very comfortable retirement.
I save outside of my workplace pension. It might be overkill, but I think options equal freedom when it comes to retirement. I hope to max out my RRSP, my wife’s RRSP, and both of our TFSAs, in addition to what I get from my workplace pension and government benefits.
You like the idea of having an ambitious retirement nest egg and you are striving to reach that goal, but can’t explain what you will use that money for when you retire
Along the same lines, I have this ambitious goal to become financially free at 45 and to explore early retirement in my 50s. I obsess over saving money today so that my future self will have the flexibility and freedom to retire early, change careers, travel the world, give generously to charity, etc.
The problem is, I have no idea what my life will look like in 20 years and whether all the money we end up saving will be enough, too much, or too little for whatever life has in store. So I err on the side of, more money = better.
I’ve decided that I do have a bit of an unhealthy obsession with saving money. I am a personal finance blogger, after all.
It’s true that more money will give us more options in the future, however the trick is to not just enrich your future self at the expense of your present self. Smooth out your income and expenses throughout your life so that at any stage you’re never depriving yourself nor living in excess.
Readers: Do you have an irrational obsession with saving money? Can you save too much?